TFC - Annual Report 2014 | FinancialReports.eu

Stock Code:1722

2014 Annual Report

培元•固本•創新•永續

http://mops.twse.com.tw http://www.taifer.com.tw Printed on APRIL 30, 2015

I. Spokesman of TFC:

	Spokesperson	ActingSpokesman
Name	Luo,Shih-Jih	Wang,GuangHua
Title	Vice President	Assistant Vice President
TEL	(02)2542-2231 ext706	(02)2542-2231 ext 681
E-mail	[email protected]	[email protected]

II. Address and Telephone Number of Headquarter and all Plants:

Headquarter

Address: (104) 6/F, No. 88, Section 2, Nanking East Road, Taipei Tel: (02)25422231 Fax: (02)25634597

Keelung Plant

Address: (203) No. 171, Chunghua Road, Keelung Tel: (02)24222151 Fax: (02)24223414 Kaohsiung Plant Address: (806) No. 3, Chenkung 2nd Road, Kaohsiung Tel: (07)8314141-9 Fax: (07)8415491 Hsinchu Plant Address: (300)No. 188, Section 3, Gongdao 5th Road, Hsinchu Tel: (035)713171-9 Fax: (035)712014

Hualien Plant

Address: (970)No. 15, Huadong, Minyi Li, Meilun, Hualien Tel: (038)223181-6 Fax: (038)221854 Miaoli Plant Address: (360) No. 210, Anli, Miaoli Tel: (037)260601-5 Fax: (037)267170 Taichung Complex Address: (435) No. 100, Section 2, Nandi Road, Wuqi District, Taichung Tel: (04) 26392358 Fax: (04) 26304295

III. Stock Transfer Office :

Name: Stock Affairs Team of TFC Website: www.taifer.com.tw Address: (104) 6/F, No. 88, Section 2, Nanking East Road, Taipei Tel: (02)25422231 Fax: (02)25317679

IV. Certified Accountants for the Financial Statements of the Recent Year:

Name of accountants: Yiwen Wang, Youwei Fan Name of accounting firm: Deloitte & Touche United Certified Public Accountants Address: 12/F , No.156, Section 3, Mingsheng Road East, Taipei Tel: (02)25459988 Fax: (02)25459966 Website: www.deloitte.com.tw

V. Name of the overseas exchange for the listing and trading of securities and the way to inquire the information about such overseas securities: none.

VI. Website of Taiwan Fertilizer Co., Ltd.: www.taifer.com.tw

Table Of Contents

Annual Report for 2014

Part One: Report to Shareholders ········································································ 1

Part	Two: Company Profile	Two: Company Profile
I.	Date	of Incorporation ............................................................................................................... 4
II.	Company History ..................................................................................................................... 4
Part	Three: Corporate Governance Report
I.	Organization Chart ······················································································ 13
II.	Information on Directors, Supervisors, President, Vice Presidents, and Management
	Team ······································································································ 17
	(I)	Information on Directors and Supervisors ····················································· 17
	(II)	Information on the President, Vice Presidents and Management Team ··················· 20
	(III)	Remuneration paid to Directors, Supervisors, President and Vice Presidents for
		the recent years ···················································································· 22
		1.Remuneration for Directors ··································································· 22
		2.Remuneration for Supervisors ································································· 24
		3.Remuneration for the President and Vice Presidents ······································· 25
		4.Names of Management Team for the Allotment of Employees’ Dividends and
		Allotment Conditions ··········································································· 26
	(IV)	Percentage of the total remuneration for Directors, Supervisors, Presidents and
		Vice Presidents of the Company paid over the past two years by the Company
		and all companies in the consolidated financial statements in the net income of
		individuals or individual financial reports after tax ·········································· 26
III.	Corporate Governance Conditions ···································································· 27
	(I)	Operation of the Board of Directors ·························································· 27
	(II)	Operation of the Audit Committee or the Participation in the Board of
		Directors by Supervisors ······································································· 28
	(III)	Conditions for Corporate Governance and Operation and Difference and
		Causes of Governance Practice Rules on Listed Companies ······························ 29
	(IV)	Disclosure of the Formation, Duties and Operation in Case of any
		Establishment of the Company’s Remuneration Committee ······························ 33
	(V)	Performance of social responsibilities ························································ 35
	(VI)	Conditions for performing good faith management by the Company and
		actions taken ····················································································· 40
	(VII) Disclosure of Inquiry Ways in Case of any Formulation of Corporate
		Governance Rules and Relevant Regulations by the Company. ·························· 41
	(VIII) Other Important Information Enough to Enhance the Understanding of the
		Operation of Corporate Governance ·························································· 42
	(IX)	Status of the Execution of the Internal Control System ···································· 48
	(X)	Punishment to the Company and its Personnel by Law and Punishment to its

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	Personnel in Breach of Internal Control Systems by the Company as well as
	Major Shortcomings and Improvements over the Recent Years and up to the
	Date of Publication of Annual Reports. ······················································ 49
	(XI) Important Resolutions of Meeting of Shareholders and the Board of Directors
	over the Recent Years and up to the Date of the Publication of Annual
	Reports ···························································································· 49
	(XII) Major Contents of Different Opinions of Directors or Supervisors on
	Important Resolutions with Records or Written Statements as Adopted by the
	Board of Directors over the Recent Years and up to the Date of the
	Publication of Annual Reports. ································································ 54
	(XIII) Summary of conditions for resignation and dismissal of the chairman, general
	manager, accounting supervisors, financial supervisors, internal audit
	supervisors and research and development supervisors of the Company for
	the recent years and up to the date of publication of the annual report ·················· 54
IV.	Information on Accountant Fees ······································································ 55
V.	Information on Changes in Certified Public Accountants. ········································· 56
VI.	Conditions where the Chairman of the Board, the President and Managers in Charge
	of Financial or Accounting Affairs Acted in Offices or Related Enterprises of
	Certified Public Accountants within the Recent Year. ·············································· 56
VII.	Transfer of shares of Directors, Supervisors and Management Team and
	shareholders representing more than 10 percent of shares and changes in their
	mortgage for the recent years and up to the date of the publication of the annual
	report ······································································································ 56
VIII.	Information Disclosing the Spouse, Kinship Within the Second Degree and
	Relationship between any of the Top Ten Shareholders in Percentage: ·························· 57
IX.	Percentage Number of Shares and Consolidate Percentage of the Company,
	Directors, Supervisor, Managers and the Businesses that are Controlled by the
	Company Directly or Indirectly on the Invested Company ········································ 58
Part	Four: Capital Overview ··············································································· 59
I.	Capital and Shares ······················································································· 59
	(I) Source of Capital Stock ········································································ 59
	(II) Structure of Shareholders ······································································ 59
	(III) Shareholding Distribution Status ······························································ 60
	(IV) List of Major Shareholders ···································································· 60
	(V) Market Price, Net Value, Earnings, Dividends Per Share of the Latest Fiscal
	Years, and Related Information ······························································· 61
	(VI) Company’s Dividend Policy and Implementation ·········································· 61
	(VII) Effect of the uncompensated rationed shares deliberated at this meeting of
	shareholders on the Company’s business performance and earnings per share········· 62
	(VIII) Dividends for Employees and Remuneration for Directors and Supervisors ··········· 62
	(IX) Buyback of the Shares of the Company ······················································ 65
II.	Corporate Bonds ························································································· 65

Table Of Contents

III.	Preferred Stocks ························································································· 65
IV.	Overseas Depositary Receipts ········································································· 65
V.	Employee Stock Options ··············································································· 65
VI.	Status of New Shares Issuance in Connection with Mergers and Acquisitions ················· 65
VII.	Financing Plans and Implementation ·································································· 65
Part	Five: Operation Highlights ··········································································· 66
I.	Business Activities ······················································································ 66
	(I) Business Scope ·················································································· 66
	(II) Summary of the Industry ······································································· 68
	(III) An Overview of Technologies and Research and Development ·························· 77
	(IV) Long-term and Short-term Business Development Plans ·································· 81
II.	An Overview of Markets and Production and Sales ················································ 85
	(I) Market Analysis ················································································· 85
	(II) Purposes of Major Products and Manufacturing Processes ······························· 97
	(III) Supply Conditions of Major Raw Materials ················································· 101
	(IV) List of leading sale customers over the recent two years ·································· 102
	(V) Table of Production Output over the Recent Two Years ··································· 103
	(VI) Table of Sales Values over the Recent Two Years ·········································· 104
	(VII) Key Performance Indicator ···································································· 105
III.	Employees ································································································ 105
	(I) Information on working employees over the past two years and up to the date
	of publication of the annual report ···························································· 105
	(II) Employees’ Productivity ······································································· 106
IV.	Information on Environmental Protection Expenditure ············································ 106
	(I) Total Amounts of Losses and Disposal Arising from Pollution to
	Environments ···················································································· 106
	(II) Future Solutions and Possible Expenditure ·················································· 107
V.	Working Environments and Employees’’ Personal Safety Protection Measures ··············· 108
VI.	Labor Capital Relationship ············································································· 108
	(I) Significant Labor Management Agreements ················································ 108
	(II) Code of Employees’ Conduct or Morality ··················································· 110
	(III) Further education and training for employees ··············································· 110
	(IV) Labor Disputes and Losses Arising thereof: None ········································· 110
VII.	Significant Contracts: ···················································································· 111
	(I) Supply and Sale Contracts ····································································· 111
	(II) Cooperation Contracts ·········································································· 111
	(III) Engineering and Other Contracts ····························································· 113
	(IV) Long-term Loan Contracts ····································································· 114
	(V) Land Development Contracts·································································· 115
Part	Six: Financial Summary ·············································································· 116
I.	Brief financial statements and comprehensive profit and loss statements for the
	recent five years ························································································· 116

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	(I) Information on brief financial statements and comprehensive profit and loss
	statements ························································································ 116
	(II) Information on Brief Balance Sheet and Profit and Loss Statement –
	Financial Accounting Standards in Our Country ··········································· 120
	(III) Certified public accountants and audit opinions ············································ 123
II.	Financial Analysis over the Recent Five Years ······················································ 124
III.	Auditing Report by Supervisors on Financial Statements over the Recent Years ·············· 130
IV.	Financial reports for recent years ····································································· 131
V.	Individual financial reports for recent years audited and certified by public
	accountants ······························································································· 200
VI.	Matters on difficulty in financial turnover in the Company and its affiliated entities
	for the current year and up to the date of the publication of the annual report ·················· 262
Part	Seven: Matters on Financial Standing and Operation Result Review and
	Analysis and Risks ··········································································· 263
I.	Financial Standing ······················································································· 263
II.	Operation Results························································································ 264
III.	Cash flows ································································································ 265
IV.	Effects of Significant Capital Expenses on Financial Affairs over the Recent Years ·········· 266
V.	An Overview of Conversion into Capital Investment ·············································· 268
VI.	Risk Management Organization ······································································· 270
VII.	Risk Matters and Evaluation ··········································································· 271
	(I) Effects of Changes in Interest Rates and Exchange Rates as well as Inflation
	on the Company’s Profits and Losses and Future Solutions ······························ 271
	(II) Policies on High Risk and High Leverage Investments, Capital Loan to
	Others, Endorsement Guarantee and Derivative Instrument Trading, Major
	Causes for Profit Making or Deficits and Future Solutions ······························· 272
	(III) Future Research and Development Plans and Estimated Investment in
	Research and Development ···································································· 272
	(IV) Effects of Changes in Significant Domestic and Foreign Policies and Laws on
	the Company’s Financial Affairs and Solutions thereto···································· 274
	(V) Effects of Technical Changes and Industrial Changes on the Company’s
	Financial Affairs and Solutions thereto ······················································ 274
	(VI) Effects of Changes in Corporate Images on Business Risk Management and
	Solutions thereto ················································································ 275
	(VII) Prospective Benefits from Acquisition, Possible Risks and Solutions ··················· 275
	(VIII) Prospective Benefits from Expansion of Plants, Possible Risks and Solutions
	thereto ····························································································· 275
	(IX) Risks in Concentrated Purchasing or Selling and Solutions thereto ····················· 277
	(X) Effects of Directors, Supervisors or Majority Shareholders with Shareholding
	Exceeding Ten Percent, Great Transfer of or Changes in Equity on the
	Company, Risks and Solutions thereto ······················································· 277
	(XI) Effects of Changes in Operating Rights on the Company, Risks and Solutions ········ 277
	(XII) Litigation or Non-litigation Events ··························································· 277

Table Of Contents

	(XIII) Other Significant Risks and Solutions ······················································· 281
VIII.	Other Significant Matters ·············································································· 281
Part	Eight: Specially Recorded Events ··································································· 282
I.	Information on Affiliated Companies ································································· 282
	(I) Consolidated Operation Report from Affiliates ············································· 282
	(II) Consolidated financial statements of related enterprises ·································· 286
	(III) Relationship Report ············································································· 340
II.	Conditions for Fulfilling Private Placement Negotiable Securities for recent years
	and up to the date of publication of the annual report ·············································· 340
III.	Conditions for holding or disposition of the Company’s shares by subsidiaries for
	the recent years and up to the date of publication of the annual report ·························· 340
IV.	Other Necessary Supplementary Statements ························································ 340
Part	Nine: Matters for Significant Effects on Shareholders’ Equity or Securities
	Prices as Set out in Paragraph 2, Clause 2 of Article 36 of Securities
	Trading Law for the current years and up to the publication of the
	annual report ·················································································· 340

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Part one ： Letter to Shareholders

Operation overview in 2014:

The world economy recovers slightly in 2014 but it is still restricted by Eurozone debts, currency and labor market. Under the guidance of the Chinese policies, China has switched from general high-speed development to the high-speed development in a novel way. The Japanese domestic demand is still weak and the oil price still decrease, which bring more uncertainties to the world. Due to the drop of the oil price, the international situation is expected to be better than that in 2013. The domestic enterprises all pose optimistic attitude towards the situations in 2014. In terms of the domestic demand, with the positive influence of the warmth of the international situations as well as the effect brought by the constant drop of oil price, the domestic consumption power may manifest promising trend.

After review of the year 2014, as part of “Wu Shuang” residential development of Nangang of this Company has been completed and delivered and recognized as income, the operating income of this Company has increased by 9.31% compared to that in the previous year (2013), the operating gross profit and operating income has greatly increased by 29.61% and 110.61% respectively compared to that in the previous year. However, the donation to Saudi-Arabia made by Jubail Company has effect on profit-making, which causes the decline in non-operating income of this Company by 35.60%. The final net income after tax is NT$3.068 billion, that is, 20.89% more than that in the previous year (2013).

The actual production of fertilizer products in 2014 was 466,517 tonnes, a decrease of 26.07% compared to 2013, 88,556 tonnes of chemical products, a decrease of 47.56% compared to 2013. The actual sales of fertilizer products was 955,090 tonnes, an increase of 0.73% compared to 2013, 174,928 tonnes of chemical products, an increase of 2.33% compared with 2013.

Regarding to the revenue and profit, the consolidated financial statements show that the income of 2014 was NT$17,510,273,000, an increase of 9.31% compared with that of NT$16,018,546,000 in 2013, operating profit of NT$1,659,950,000, an increase of 110.61% over 2013. The non-operating profit was NT$1,187,303,000, representing a decrease of 35.60% over 2013, and the net profit after taxes was NT$3,068,346,000, an increase of 20.89% compared to 2013. The non-operating profit or loss mainly includes the investment income of NT$1,676,767,000 under the equity method.

Regarding to the financial structure, the consolidated financial statements show that the Company's financial structure is sound, including the total assets of NT$70,496,937,000, liabilities of NT$18,104,322,000, the liabilities ratio of 25.68%, the current ratio of 179.10%, shareholders' equity of NT$52,392,615,000, net worth per share NT$53.46, the ratio of own funds of 74.32% as of December 31, 2014.

As for the investment planning, in terms of chemical fertilizer industry, Taichung plant's production workshops, terminals and storage facilities are being completed and have been put into operation since 2014. In 2015, the plant will continue to make phosphate fertilizer workshop relocation, nitrate concentration plan and the building of Taiwan Fertilizer Cambodia Plant and strength the energy integration of production base, including public system energy-saving, warehouse dehumidfication air-conditioner management, full use of superheated steam; at the same time, include Taichung Docklands into the free port zone to enhance the competitive advantages of docks and warehouses to expand trade logistics industry; in addition, Miaoli plant will also promote the plan of potassium sulfate and ammonium fertilizer factory to produce alternative raw materials and reduce production costs. Moreover, to continue to develop electronic grade chemicals business, the electronic grade

Report to Shareholders

ammonia aquatic line construction program will be completed in 2015, and the construction of sulfuric acid workshop and sulfanilic workshop will be carried out at the same time to strengthen the integration of production value chain.

In real estate development, Nangang Trade Park R5 residence development program were handed over in 2014 and 2015 respectively. The development plan of C2 hotel, contract was signed with two restaurants. Now the construction planning design is ongoing, and the C2 commercial office building has been leased; C3 continues to handle the related issues of bidding for land rights. The development plan of Hsinchu technology commercial park D7-A has started construction and the first and second phases of Hsinchu have been ongoing. In addition, the program of land change of the urban planned land of Dongming Road, Keelung and Kaohsiung special trade 7C redistricting case also progresses as schedule.

In health career, Hualien sightseeing hotel investment plan and the planning of leisure and health career have started. Taiwan Ocean Deep-sea Water Co., Ltd. focuses on the development of deep ocean water and collagen peptides and is responsible for the sales of health and care; Taiwan Fertilizer Biotech Co., Ltd. develops towards organic materials and positively expands the organic agriculture business.

Operation plan in 2015:

The Company will continue to extend the current competitive advantages in future and, in addition to s tably grasping and controlling all the operation risks and strengthening the operation performance of al l the businesses, keeps promoting the health career actively, focuses on the production and sales of org anic agricultural products, health care and preservation and leisure in order to make transformation gra dually and improve the integral competitiveness. By looking into 2015, with the gradual recovery of th e domestic and foreign economy, the company is expected to win the stable and fruitful operation resul ts in the second half of the year.

Future development strategy :

Looking into this year, 2015, in face of rapid changes in domestic and overseas industrial conditions, our company will continue to uphold the business philosophy of foundation consolidation, innovation and sustainable development to carry out restructuring and upgrading, and continue to targets at profit growth, competitiveness optimization and sustainable development to draw the development blueprint of three major businesses, namely, "fertilizer chemicals business", "real estate development business" and "health industry" , so as to achieve the goal of sustainable business and development by the use of diverse business development and multi-perspective modes of operation.

We will keep abiding by the mission and objective of “innovation and sustainable operation” as well as the steady and efficient operation mode to focus on the development of fertilizer chemical engineering, real estate and leisure and resort. We will motivate ourselves to make development, consolidate our core competitiveness and exert the leading force of the market in virtue of abundant resources; on the basis of the complete and integral risk control mechanism over the past 60years, we will endeavor to create long-term interests for our shareholders and make sustainable development! Special thanks will go to all the shareholders for your supports and encouragement and I also wish you

Good health and good luck!

Chairman:

Lee Fu-Hsing

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Part Two: Company Profile

I. Incorporation Date: May 1st, 1946

II. Company History:

Taiwan Fertilizer Company, TFC, established on May 1st, 1946, was originally a state-owned enterprise. In the period when it operated as a state-owned enterprise to cooperate with the agricultural policy of the government, it mainly produced fertilizer products for domestic market. With the operation and development of more than 60 years, it has been a largest modern fertilizer manufacturer in Taiwan and ensures the sufficient supply of all the fertilizers necessary for the agricultural development on every stage. It has made a great contribution to the development of the agricultural economy of Taiwan. Under the policy of transforming state-owned enterprises into non-governmental ones actively promoted by the government, it was privatized on September 1st, 1999, and is now a listed private corporation.

TFC, as the largest fertilizer manufacturer in Taiwan, annually supplies about 700,000 tons of products, accounting for above 70% of the total demand of Taiwan. TFC produces products such as ammonium sulphate, SSP, NPK fertilizer, organic fertilizer and so on and also imports urea, potassium chloride, calcium ammonium nitrate for direct sale. In addition, it produces and imports chemical products and electronic chemicals for the markets domestically and abroad. After its privatization, in order to cope with the changes in the internal and external circumstances, work with the industry development trend, promote diverse operation, besides the operation of fine fertilizers and chemicals, it has actively explored such businesses as deep ocean water, real estate development, biotechnology, cosmetic, healthcare products and foods, etc.

The history of the major developments of TFC until now are outlined as follows:

May 1946 Incorporated jointly by the former Resources Commission and Taiwan Provincial Government;
Dec.1968 The nitrogen fertilizer plant in Hsinchu was completed and formally put into production of urea and ammonium sulphate;
Oct. 1971 Acquired Muhua United Chemical Company and changed it into Miaoli Plant, which mainly produces anhydrous ammonia and urea;
Nov. 1977 Completed the installation of the melamine workshop of Hsinchu Plant;
Dec. 1977 Completed the second urea workshop of Miaoli Plant and put it into production; Dec. 1979 Entered into an agreement with Saudi Arabia to establish Al-Jubail Fertilizer Company in the Al-Jubail Industrial Zone of Saudi Arabia;
Jul. 1982 In order for the offtake of the urea from Al-Jubail Fertilizer Company, the urea workshop of Hsinchu Plant stopped production;
Jul. 1984 Hsinchu Plant stopped the production of anhydrous ammonia due to the insufficient natural gas domestically.
Apr. 1986 The General Management Office was relocated to 6-11/F, No. 88, Section 2, Nanking East Road, Taipei, newly bought;
May 1989 The land in the Nangang Plant Area of TFC was ordered to be laid out for Nangang Economic and Trading Park;

Company Profile

May 1991	The sulfamic acid workshop of Hsinchu Plant was put into formal production and its
	annual production capacity was 15,000 tons;
Jun. 1992	Miaoli Plant formally produced melamine with annual capacity of 10,000 tons;
May 1993	The melamine and sulfamic acid of Hsinchu Plant were certified by ISO-9002;
Dec. 1993	The nitric acid workshop of Kaohsiung Plant completed the commissioning of the
	updated plan and could produce 90,000 tons of nitric acid per year;
Feb. 1994	The sulphuric acid workshop of Hsinchu Plant completed the commissioning of the
	updated plan and could produce 120,000t sulphuric acid per year;
Mar. 1994	The ammonphosphate NPK workshop of Kaohsiung Plant completed the commissioning
	of the updated plan and could produce 72,000 tons ammonphosphate NPK per year;
Mar. 1995	The Executive Yuan passed the privatization of TFC;
Mar. 1998	Had the first release of stocks after privatization; with public placement by means of
	drawing lots, released 24.93% public stocks and smoothly completed listing;
Jun. 1998	Signed the cooperation letter of intent with Ministry of Economic
	Affairs regarding planning and development of Nangang Economic and Trading Park;
Jul. 1998	In order to work with the overall planning and development of Nangang
	Economic and Trading Park of the government, Nangang Plant was formally closed;
Sept.1999	Formally transformed into a private company;
Sept.1999	Due to the cancellation of the preferential price of the natural gas for fertilizer
	production, the anhydrous ammonia and urea workshop of Miaoli Plant stopped
	production;
Jun. 2000	The electronic chemical Phase I workshop construction project of Hsinchu Plant
	commenced;
Jul. 2000	Entered into the contract on the cooperative and united operation of gas stations with the
	gas station companies in Taiwan and thus formally entered the oil market;
Dec. 2000	Miaoli Plant stopped the production of melamine and plasticizer due to going out of
	economic benefit;
Jan.2001	The electronic chemical Phase I workshop construction project of Hsinchu Plant
	completed trial operation;
May 2001	The electronic chemical Phase I workshop of Hsinchu Plant came into batch production;
Feb. 2002	Via Hsinchu Plant, worked with Hsinchu Municipal Government for the planning and
	development of Hsinchu Science and Commerce New Metropolis Center Special Zone
	Program;
Jun. 2002	Had the Phase I enlargement project for the electronic chemicals of Hsinchu Plant;
Apr. 2003	The Phase I enlargement project for the electronic chemicals of Hsinchu Plant was
	completed and put into batch production;
May 2003	Agreed with Ministry of Economic Affairs to terminate the overall planning and
	development cooperation letter of intent for Nangang Economic and Trading Park and
	changed the development into independent development;

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Jan. 2004 With the four parcels of lands at Hsintein Road, etc. cooperated with the selected compiles to construct houses for sale;
Feb. 2004 Participated in the second capital increase in cash of Phalanx Biotech Chip Co., Ltd., which TFC reinvested, purchased 1,900 shares for NT$24.70 million (NT$13/share) and held 5.64% of the shares in such company;
Apr. 2004 Participated in Fuding Venture Capital Fund, invested NT$120million and held 9.76% of the shares in such fund;
May 2004 Entered into the land development agreement under the Hsinchu Science and Technology Special Zone Program with Hsinchu Municipal Government;
Oct.2004 Applied to Taichung Port Bureau to remit the land of petrochemical special zone as the land for the relocation of the plants in the future;
Nov. 2004 Via Hualien Plant, participated in the feasibility study report and Phase I investment plan of Deep Ocean Water Science and Technology Park;
Jan. 2005 Ministry of Economy released 200 million shares of TFC through after-hour auction and thus the shareholding ratio decreased to 24.07%; Invested in Eminent Venture Capital Fund, invested NT$ 100 million and held 10% of the shares in such fund;
Mar. 2005 The shares held by the government shifted to be managed by Ministry of Finance; May 2005 The shares held by the government shifted to be managed by Commission of Agriculture (COA);
Oct. 2005 Via the Plan of All Plants of TFC Relocated to Taichung Port, invested NT$6,465,600,000 in such plan;
Nov. 2005 The deep ocean water Phase 1 water taking facilities project of TFC in Hualien commenced;
Dec. 2005 With the R17 land at Nangang District, Taipei owned by TFC, invested in the construction of commercial residence and hotel; in accordance with the regulations of Taipei Municipal Government regarding urban renewal, R13 land was invested in with the adjacent lands for the construction of congregate housing;
Feb. 2006 By means of setting 50-year surface right, the land lots C6/C7/C8/C9 of TFC in Nangang Economic and Trading Park were developed by entrepreneurs;
May 2006 By means of setting 50-year surface right, the land lots C6/C7/C8/C9 of TFC in Nangang Economic and Trading Park were to be developed by entrepreneurs; through public tender, Chinatrust Commercial Bank won the bid;
Jun. 2006 Cooperated with Brand Food Company, a professional manufacturer, to invest in water treatment and the production and sale of and packed drinkable water/drink, etc., of Hualien Plant Deep Ocean Water Investment Program Phase 1;
Jun. 2006 To transact the relocation of the plants of TFC to Taichung Port Zone, established Taichung Plant New Construction Engineering Office;
Aug. 2006 Signed the cooperative investment contract with Brand Food Company to establish Taiwan Deep Ocean Water Co., Ltd and jointly ran the business of deep ocean water producing and selling packed drinkable water/drink, etc.;

Company Profile

Sept. 2006	Taiwan Deep Ocean Water Company in which TFC and Brand Food Company
	respectively held 50% shares held the initiator meeting, had initial capital NT$650
	million and completed the incorporation registration;
May 2007	The water taking engineering of TFC for deep ocean water completed the pipeline
	arrangement and the depth was -662m;
May 2007	The fish scale collagen protein workshop of TFC was put into operation formally;
	Invested about NT$614 million (not including land cost) in the development of Lot 25
	commercial and residential area land of TFC at the Economic and Trading Section of
	Nangang District, Taipei to construct the integrated buildings for sale;
Jul. 2007	Passed the capital reduction, dissolution and liquidation of the three subsidiaries Taiyu
	Company, Liansheng Company and Taichuang Company of TFC; In order to care
	farmers and vulnerable groups, agreed to establish the TFC Foundation and donated
	NT$30 million for such foundation; For the need of the development of new business in
	Hualien, established Hualien Ocean Holiday Zone Preparation Office;
Nov. 2007	Established TFC Foundation formally;
Nov. 2007	Invested NT$200 million in the park facilities and landscape works of Hualien Ocean
	Holiday Park of TFC in order to have perfect infrastructure and create a good investment
	environment;
Nov. 2007	The miss SHARK cosmetics of TFC were formally launched;
Feb. 2008	Cooperated with other developers to develop the Lot 66-1 and Lot 68-2 (R5 Area) at the
	Economic and Trading Section of Nangang District, Taipei as well as other adjacent
	lands to construct residential houses for sale;
May 2008	According to the law, repaired the polluted soil caused by Keelung 2nd Plant of TFC;
Aug. 2008	Nangang Economic and Trading Park Residential Project (R13) of TFC was
	commenced;
Nov. 2008	Affected by the large fluctuation of the international economy and the extraordinary
	fluctuation of the price of construction materials and international fertilizer production
	raw materials, TFC had to correct its Taichung Plant construction plan and change the
	investment into NT$ 10.081 billion; Phase 1 project was to be completed in April 2011
	and Phase 2 in October 2012;
Jun. 2009	In order to take social responsibilities, the general meeting of shareholders passed the
	resolution that TFC donated NT$50 million for the Ministry of Agriculture of Saudi Arab
	to establish an agricultural center;
Sept. 2009	David J. C. Chung, chairman of TFC, and Mr. Al-Sheaibi, executive vice president of
	the Fertilizer Department of SABIC, jointly signed on the resolution of shareholders of
	Al-Jubail Fertilizer Company on the amendment to the articles of association of
	Al-Jubail Fertilizer Company, changing the existence of Al-Jubail Fertilizer Company
	from 33 years into 53 years;
Nov. 2009	Invested totally NT$150 million in the cash capital increase of Taiwan Yes Deep Ocean
	Water Co., Ltd.;
May 2010	Invested NT$ 1.41 billion in the land for Hsinchu Plant of TFC for the development of

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Hsinchu Science and Business Park Phase 1;

Sept. 2010 Passed the resolution of setting November 30th, 2012 as the non-entity date, the date shifting all paper certificates of stock to soft copies;
Oct. 2010 Passed Nangang Economic and Trading Park C2, C3 and C4 Land Development Plan and Phase 1 C2 Development Plan;Passed the Feasibility Study Report on the Second 20,000t Anhydrous Ammonia Storage Tank Construction Scheme of Later Phase 2 of Taichung Plant;
Jan. 2011 Invested in and established Hsuchang Chemical Technology Company in Kunshan of Mainland China;
Jun. 2011 Planned to invest more USD969,020 in Hsuchang Chemical Technology Company.; Oct. 2011 Passed the resolution for Taichung Complex Phase 3 Construction Project and totally invested NT$1.7899 billion;
Nov. 2011 Transacted the capital decrease of NT$300 million once in the reinvested enterprise Taiwan Yes Deep Ocean Water Co., Ltd., then increased the capital in cash NT$ 300 million by issuing in multiple times; participated in the subscription of cash capital increase and the total investment reached NT$150 million;
Nov. 2011 Invested NT$100 million to establish TFC Biotech Products Marketing Subsidiary in which TFC held 100% shares;
Dec. 2011 Passed the resolutions on Electronic Chemical Distilling Equipment Relocation Project and Electronic Anhydrous Ammonia Production Line Construction Project and totally invested NT$339.95 million;
Dec. 2011 Invested NT$250 million in Taiwan Security Green Energy Biotech Venture Capital Co., Ltd.;
Dec. 2011 Established the Salary and Remuneration Committee and appointed Huifang Zhou, Yongqing Chen and Shengfeng You as the members of such committee;
Dec. 2012 Acquisition of 50% shares (35million shares) of Taiwan Deep Ocean Water Co., Ltd held by Brand Food Co., Ltd for NT$420 million (NT$12 per share) holding totally 100% shares of Deep Ocean Water Co., Ltd.
Feb. 2013 Agreed to call for a tender for the hotel project in Nangang Economic and Trading Park C2
Mar. 2013 By means of setting surface right, the land lots C3 (floor area 41,536.66 m2) of TFC in Nangang Economic and Trading Park were developed by entrepreneurs.
Apr. 2013 Reported the effect to retained earnings of the Company and the amount set aside for special reserve after the International Financial Report Standards (IFRS) was first adopted.
Aug. 2013 Passed the resolution for building the residual heat power generation system of 3-in-1 Plant under Taichung Complex Phase 3 Construction Project
Sep. 2013 Passed the planning and project budget for TFC, Kaohsiung Plant through urban land readjustment hosted by private sector
Oct. 2013 Passed the “donation of profit on the basis of cooperation with Saudi Arab” in the

Company Profile

shareholders’ meeting on June 25, 2015. Meanwhile, the MOU regarding this case was signed on October 1, 2013.

Oct. 2013 Planned to build the “Bioorganic Fertilizer Field”, with total investment amount NT$ 46,400 thousands
Nov. 2013 Passed the capital increment for investee “Taiwan Deep Ocean Water Co., Ltd.” of TFC.
Dec. 2013 Passed the adjustment of Hsinchu Technology Business Park to staged self- development project.
Dec. 2013 Passed “The Feasibility Report Regarding Taifer Deep Ocean Water Resort”
Dec. 2013 Passed the “lease for leisure tourist hotel in Nangang Economic and Trading Park Land Lot C2” and signed “agreement on cooperative planning” with awarded companies “Grand Hi-Lai Hotel” and “Caesar Park Hotel”
Jan. 2014 Passed the establishment of “Taifer (Samoa) International Co.”, “Taifer (Shanghai) Import and Export Co.”
Jan. 2014 Passed the cancellation of “Taichung Complex Construction Division”, “Electronic Chemical Products Construction Division” and “Preparatory Office of Hualien Ocean Resort”
Feb. 2014 Passed the investment of “Ding Tang Energy Technology Ltd.”
Feb. 2014 Passed the agreement with Jing Chun Co. to jointly provide endorsement guarantee to Hsuchang Chemical Technology (Cayman) Co.”. The extension of endorsement guarantee with Shanghai Commercial Bank was managed to the extent of limit set forth in the Company’s “Procedures for Fund Lending and Endorsement Guarantee”.
Mar. 2014 Hsinchu D7-A Office Building was initiated.
Dec. 2014 Nangang Wushuang (R5) Integrated Residential Community was obtained with permission for handover.
Dec. 2014 The Company made the investment by subscribing the cash capital increase of NTD 25million to Taizhuang Assets Management and Development Co., Ltd. and the total investment thus amounted to NTD 55million.
Feb. 2015 Passed the bidding scheme of Nangang C2 Office Building.

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Part Three: Corporate Governance Report

I. Organization System

(I) Corporation Organization

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

General Meeting of Shareholders
Supervisor
Board of Directors
Chairman
Audit Office Office of Board of Directors
Chairman Office
President
Vice President
Assistant VP
Keelung Plant Kaohsiung Plant Hsinchu Plant Hualien Plant Miaoli Plant Taichung Plant Industry Safety & Health Department Research and Development Department Marketing Department Trading Department Investment Department Property Management Department Land Development Department Enterprise Planning Department Information Department Financial Department Administrative Department
----- End of picture text -----

Corporate Governance Report

(II)Affairs in charge for each major departments

Name	Duties
Research and Development Department	1. To developand executeproductionplan and contact forproduction and sale;
	2. To manageproduction technology, qualityand efficiency;
	3. To supervise production equipment maintenance and supervision of the annual repairplan of theproductionplants;
	4. To developand execute engineering plan and capital expenditureplan;
	5. To manage the fixed assets and idle assets other than land;
	6. To research and develop new products and new technologies and transact related matters;and
	7. To handle other matters in relation toproduction,R&D,etc..
Production Plants	To be responsible forproduct manufacture andproduction management.
Trading Department	1. Purchase and supplyof the domestic and foreign raw materials;
	2.Dispatchingand inventorycontrol of raw materials;
	3. Storage and transportation management of products and materials and treatment of dull and waste materials;
	4. Dispatchingand inventorycontrol of raw materials;
	5. Work and labor bidding;
	6. Import & export and marketing and planning management of the bio-tech chemicalproducts;
	7. Other relevantpurchase and marketingof bio-tech chemicalproducts.
Marketing Department	1. To market,import,export, plan and manage various fertilizers;
	2. To handle customer complaints regardingfertilizerproducts;
	3. To compile information regarding business conditions in fertilizer markets and farmingconditions.
	4. To demonstrate and promote ideas of safe agriculture and fertilizer domesticallyand overseas
	5. Other business about thepromotions of fertilizers
Investment Department	1. To seek for,assess,select and studyinvestment opportunities;
	2. To research and execute domestic and overseas investment, cooperation, share participation,merger,venture capital,etc.;
	3. To research and execute technology introduction or cooperation, technical investment;
	4. To handle investment,feasibilitystudyand review;and
	5. To trace and review investment and reinvestmentperformance.
	6. To handle other investment related businesses
Land Development Department	1. Overall design of environment, building, landscape and interior decoration of the Company’s land and construction-related business.
	2. Environmental impact assessment and deliberation of urban design;
	3. Study and preparation of the construction demand of the development case, project budget,structural system and equipment system;
	4. Acquiringof all developmentpermissions;
	5. Preparation of the project bidding price, construction specification and construction,supervision and completion acceptance;

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Name	Duties
	6. Warrantyand repairingafter the completion of theproject;
	7. Planningof real estate construction and relevant engineeringbusiness.
Property management Department	1. Study, preparation and management of the overall land development strategy, annualplan and the individual businessplanning;
	2. Land development such as change of the urban planning, re-planning of the municipal land and the cityupgrade;
	3. Planning estimate, sales and after-sales service of the residential building development;
	4. Planningestimate of commercial real estate development;
	5. Utilization of the unused land and land management;
	6. Investment attraction,maintenance and management of real estate assets;
	7. Other related management and operation business of real estate and land.
Enterprise Planning Department	1. To research and execute operation policy, operation strategy, mid-term and long-termprojectplan and annual operationplan;
	2. To plan and carry forward operation and management systems and manage and examine operationperformance;
	3. To trace and examine operation meetingminutes,resolutions andproject affairs;
	4. To handle authorization bylevels and compile rules and regulations;and
	5. To handle other matters in relation to enterpriseplanning.
Information Department	1. Dealingwith the business of information system;
	2. Dealingwith information network;
	3. Dealingwith the other relevant business.
Financial Department	1. To developserviceplan,dispatch and control funds;
	2. To research and develop financial strategies and conduct financial analysis and prediction;
	3. Toplan and execute financial and wealth management matters;
	4. To research and developaccountingsystem;
	5. To conduct budget and final settlement and control cost and expense;
	6. Business related to investor relationship (IR);
	7. To handle other matters in relation to finance,accountingand statistics.
Administrative Department	1. Toplan and execute HR system, plan and execute organization and HR matters;
	2. To deal with labor and capital relationship;
	3. To manage instruments and transactgeneral affairs;
	4. To distribute and keepcash,securities,notes and deeds;
	5. To compilepublications;and
	6. To handle other matters out of the duties of the other departments and offices.
Office of Board of Directors	In charge of corporate governance, corporate social responsibility, integrity policies, preparation of the publications and dealing with the relevant administrative matters of board of directors and the stock matters.
Audit Office	To master and manage internal control and internal audit matters.

Corporate Governance Report

Name	Duties
Industry Safety & Health Department	1. To create the corporate culture of addressing security and build up the common sense of respectinglife and caringsecurity;
	2. To carry forward the work security management system, assist the plants in settingupESH(environment,securityand health)management system;
	3. To carryout work securitystatus audit and direction andprevent accidents;
	4. To carry out energy-saving and carbon emission reduction, improve environment and keepnatural ecology;
	5. To transact or assist the work security and environment appraisal for the incorporation of subsidiaries or new businesses;and
	6.Toplan,integrate and manage theproductionplan;
	7. To manage the production technique, quality and efficiency and promote the maintenance system of theproduction equipment;
	8. Toplan,integrate and manage the workplan and capital expenditure;
	9. To manage the fixed assets other than land and the unused assets;
	10. To handle other matters in relation to industrial security, health and environmentalprotection.

II.Information on Directors, Supervisors, President, Vice Presidents, and Management Team

(I)Information on Directors and Supervisors

Information on Directors and Supervisors (I)

																April 26th, 2015	April 26th, 2015	April 26th, 2015
Title	國籍或註冊地	Name	Election (Accession) Date	Terms	Date First Elected	Shareholding When Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Positions in TFC and/or Other Companies	Executives, Directors or Supervisors Who Are Spouses or within Two Degrees of Kinship
						Shares	%	Shares	%	Shares	%	Title	Title			Title	Name	Shares
Chairman	R.O.C	COA Representative: Li, Fuxing	101.06.27 101.06.27	3yrs 3yrs	94.05.20 101.06.27	235,886,376 0	24.07 -	235,886,376 0	24.07 -	- -	- -	- -	- -	Graduate School of Education, Tokyo Gakugei Univerisity, Japan MP	Chairman of Taifer Chemicals Internatinoal Inc.. Chairman of Taiwan Yes Deep Ocean Water Co., Ltd.;	- -	- -	- -
	R.O.C
Director	R.O.C	COA Representative: Chen Wen-De	101.06.27 (104.03.25)	3yrs 3yrs	94.05.20 104.03.25	235,886,376 0	24.07 -	235,886,376 0	24.07 -	- -	- -	- -	- -	Graduate School of Agronomy, National Taiwan University Director, Agriculture and Food Agency, Council of Agriculture,ExecutiveYuan	Vice Minister, Council of Agriculture, Executive Yuan	- -	- -	- -
	R.O.C
Director	R.O.C	COA Representative: Li, Canglang	101.06.27 101.06.27	3yrs 3yrs	94.05.20 101.06.27	235,886,376 0	24.07 -	235,886,376 0	24.07 -	- -	- -	- -	- -	Master, Department of Agronomy , National Chung Hsing University Chief secretary of Agriculture and Food Agency of Council of Agriculture	Director of Agriculture and Food Agency under Council of Agriculture	-	-	-
	R.O.C
Director	R.O.C	COA Representative: Li, Shiyu	101.06.27 101.06.27	3yrs 3yrs	94.05.20 98.07.01	235,886,376 12,039	24.07 -	235,886,376 2,039	24.07 -	- -	- -	- -	- -	Chairman of directors of Taiwan Fertilizer Industry Labor Federation Work Industry and Commerce	Business Section Chief of Hsinchu Factory of Taiwan Fertilizer Co., Ltd	- -	- -	- -
	R.O.C
Director	R.O.CCOA R.O.C Representative: Lin, Jianrong		101.06.27 101.06.27	3yrs 3yrs	94.05.20 101.06.27	235,886,376 0	24.07 -	235,886,376 0	24.07 -	- -	- -	- -	- -	MA in Education of Taiwan Normal University MP	Senior Consultant of Taiwan Yes Deep Ocean Water Co.,Ltd.	- -	- -	- -

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Title	國籍或註冊地	Name	Election (Accession) Date	Terms	Date First Elected	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Positions in TFC and/or Other Companies	Executives, Directors or Supervisors Who Are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who Are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who Are Spouses or within Two Degrees of Kinship
						Shares	%	Shares	%	Shares	%	Title	Title			Title	Name	Shares
Director	R.O.C	Cai, Changhai	101.06.27	3yrs	98.07.01	620,000	0.06	356,000	0.03	-	-	-	-	Chairman of China Medical University Hospital Chairman of Asia University PhD in Medicine, Teikyo University, Japan	Chairman of China Medical University Hospital Chairman of Asia University	-	-	-
Director	R.O.C	Hsu, Chinlien	102.06.25	3yrs	102.06.25	100,000	0.01	100,000	0.01					Department of Law, National Chung Hsing University Judge of Taiwan Pingtung District Court Judge of Taiwan Kaohsiung DistrictCourt	Chairman of Chung Cheng Law Office	-	-	-
Supervisor	R.O.C	Chunghwa Post Representative: Wu, Yuanren	101.06.27 (103.01.16)	3yrs 3yrs	98.07.01 0	9,558,000 0	0.97 -	24,422,000 0	2.49 -	- 2,000	- -	- -	- -	Master, Department of Business Management, Tatung University Director, Department of Capital Operations, Chung Hwa Post Co.,Ltd	VP of Chung Hwa Post Co., Ltd.	- -	- -	- -
	R.O.C
Supervisor	R.O.C	Chen, Zailai	101.06.27	3yrs	98.07.01	100,000	0.01	100,000	0.01	-	-	-	-	Chairman of Taiwan Machinery Company Professor of National Cheng Kung University PhD in Business Administration, University of California, USA	Part-time Professor of National Cheng Kung University	-	-	-
Supervisor	R.O.C	Cai, Linglan	101.06.27	3yrs	101.06.27	135,000	0.01	135,000	0.01	-	-	-	-	Honorary Financial Doctor of American United University Chairperson of Lan Sin Cultural and Educational Foundation Legislator of Legislative Yuan	National policy advisor, President Office	-	-	-

Note : The former director was Hu Xing-Hua. The Council of Agriculture, Executive Yuan has appointed Mr. Chen Wen-De to be director on Mar. 25, 2015.

Form 1: Key Shareholders of Corporate Shareholders

Form 1: Key Shareholders of Corporate Shareholders	Form 1: Key Shareholders of Corporate Shareholders
April 26, 2015
Name of Institutional Shareholder（Note 1）	Major Shareholders of Institutional Shareholder（Note 2）
Council of Agriculture,Executive Yuan	NA
ChungHwa Post Co.,Ltd.	NA

Note 1：For representative of institutional shareholder serving as the director or supervisor, fill the name of said institutional shareholder Note 2：Fill the name of major shareholders (top ten shareholders) and their shareholding ratio of said institutional shareholder.If its major shareholder is a corporation, then following form 2 shall be filled

Form 2: Key Shareholders as Corporations: None

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Corporate Governance Report

Information on Directors and Supervisors (II)

Conditions Name (Note 1)	Has above 5-year Work Experience and theFollowing ProfessionalQualifications?	Has above 5-year Work Experience and theFollowing ProfessionalQualifications?	Has above 5-year Work Experience and theFollowing ProfessionalQualifications?	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Number of Other Public Companies in Which the Individual Is Concurrentl y Serving asan Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private College	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and Been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Li,Fuxing														-
Chen Wende														-
Li,Canglang														-
Li,Shiyu														-
Lin,Jianrong												
Cai,Changhai														-
Hsu,Chinlien													
Wu,Yuanren														-
Chen,Zailai														-
Cai,Linglan														-

Note 1:Adjust the column as the case may be

Note2: Please tick with “ ” the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.
1.Not an employee of the Company or any of its affiliates.
2.Not a director or supervisor of the Company or any of its affiliates (The same does not apply, however, in cases where the person is an independent director of the Company, its parent Company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares).
3.Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
4.Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
5.Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top 5 in holdings.
6.Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified Company or institution that has a financial or business relationship with the Company.
7.Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, Company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
8.Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
9.Not a person of any conditions defined in Article 30 of the Company Law.
Not a governmental body, juridical person or its representative as defined in Article 27 of the Company Law.

(II) Information on the President, Vice Presidents and Management Team

April 26th, 2015

												April 26th, 2015	April 26th, 2015	April 26th, 2015
Title	Nationality	Name	Election (Accession) Date	Shares Held		Shares Held by Spouse, Under-age Children at Present		Shares Held in Others’ Name		Main Experience (Education)	Office Taken in the Company and other Companies at Present	Managers as Spouse or within 2-Degree Kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relation- ship
President	R.O.C.	Huang Li-Ai	(04/01/2014)	0	-	-	-	-	-	Department of Chemical Engineering, National Central University Vice President, Taiwan Fertilizer Co., Ltd	President, Taiwan Yes Deep Ocean Water Company Director, Tai Zhuang Asset Management and Development Co., Ltd. Director,Taifer Biotech Co.,Ltd	-	-	-
Vice President	R.O.C.	Luo Shih-Jih	(02/01/2013)	2,381	-	-	-	-	-	Department of Business Management, FuJen Catholic University Chief, Enterprise Planning Department, Taiwan Fertilizer Co.,Ltd	V.P., Taifer Biotech Co., Ltd Director, Taiwan Yes Deep Ocean Water Company	-	-	-
Vice President	R.O.C.	Chou Wei-Hsin	(04/23/2014)	14,311	-	-	-	-	-	Graduate School of Computer Application, AIT Asian Institute of Technology	None	-	-	-
										President, TR Electronic Chemical
										(Kunshan)Ltd.
Vice President	R.O.C.	Huang Yao-Hsing	(05/01/2014)	0	-	-	-	-	-	Ph.D., Graduate School of Material Science, National Chung Shan University Assistant VP, Taiwan Fertilizer Co., Ltd	Director of the Board, Jubail Fertilizer Company	-	-	-
Financial director	R.O.C.	Chien Chao-Jen	(01/01/2015)	628	-	-	-	-	-	Department of Accounting, Feng Chia University; Head, Hualien Plant of TFC	Supervisor, TR Electronic Chemical (Cayman) Ltd. Supervisor, TR Electronic Chemical (Kunshan)Ltd.	-	-	-
Head of Taichung Plant	R.O.C.	Huang Yao-Hsing	(05/01/2014)	0	-	-	-	-	-	Ph.D., Graduate School of Material Science, National Chung Shan University Assistant to V.P.,Taiwan Fertilizer Co.,Ltd	Director of the Board, Jubail Fertilizer Company	-	-	-
Head of Keelung Plant	R.O.C.	Chen Xin-Chang	(11/01/2014)	423	-	-	-	-	-	Department of Economy, Chinese Culture University Leader of Management Team, KeelungPlant of TFC	Vice head, Taichung Plant of TFC	-	-	-
Head of Kaohsiung Plant	R.O.C.	Chiang Chin-Cheng	(12/01/2014)	2,009	-	-	-	-	-	Department of Chemical Engineering, National Kaohsiung Junior College of Technology Leader of Industrial Safety Department of TRC	Head of Industrial Safety and Health Office, TFC	-	-	-

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Title	Nationality	Name	Election (Accession) Date	Shares Held	Shares Held	Shares Held by Spouse, Under-age Children at Present	Shares Held by Spouse, Under-age Children at Present	Shares Held in Others’ Name	Shares Held in Others’ Name	Main Experience (Education)	Office Taken in the Company and other Companies at Present	Managers as Spouse or within 2-Degree Kinship	Managers as Spouse or within 2-Degree Kinship	Managers as Spouse or within 2-Degree Kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relation- ship
Head of Hsinchu Plant	R.O.C.	Kang, Qiwan	(10/16/2014)	18,850	-	-	-	-	-	Department of Chemical Engineering, Ming Chi University of Technology; Vice Head,Hsinchu Plant of TFC	Head, Miaoli Plant of TFC	-	-	-
Head of Hualien Plant	R.O.C.	Liu, Kuo-Ying	(01/01/2015)	5,000	-	-	-	-	-	Graduate School of Public Administration, National Cheng Chi University Head of Procurement Office, TFC	V.P., Taiwan Yes Deep Ocean Water Company Director of the Board, Taifer Biotech Co., Ltd. Director of the Board, TaiAn Technologies Corp.	-	-	-
Head of Miaoli Plant	R.O.C.	Kang, Qiwan	(04/01/2013)	18,850	-	-	-	-	-	Department of Chemical Engineering, Ming Chi University of Technology; Vice Head,Hsinchu Plant of TFC	Head, Hsinchu Plant of TFC	-	-	-

Note 1 : Huang Mei-Ling, former financial director, resigned on Jan. 1, 2015. Note 2 : Pan Tong-Chi, former head of Hsinchu Plant, resigned on Oct. 16, 2014. Note 3: Peng Sheng-Long, former head of Keelung Plant, resigned on Nov. 1, 2014. Note 4 : Chen Po-Lai, former head of Taichung Plant and Kaohsiung Head, retired on Dec. 1, 2014. Note 5 : Chien Chao-Jen, former head of Hualien Plant, resigned on Jan. 1, 2015.

(III)Remuneration paid to directors, supervisors, president and vice presidents for the recent years

1.Remuneration for directors of the board (including independent directors) (Summary of ways for coordinative disclosure of names)

Unit: NT$K

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of Total Remuneration (A+B+C+D) to net income(%)	Ratio of Total Remuneration (A+B+C+D) to net income(%)	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Remuneration to Concurrent Employees	Ratio of Total Remuneration (A+B+C+D+E+ F+G) to net income(%)	Ratio of Total Remuneration (A+B+C+D+E+ F+G) to net income(%)	Get any Remuneratio n from the Invested Businesses Other than Subsidiaries
		Salary (A)				Surplus Bonus to Directors (C)		Business Execution Expense(D)				Salary, Bonus & Allowance etc. (E)		Severance Pay (F)		Profit Sharing-Employee Bonus (G)				Exercisable Employee Stock options (H)		(I)Number of new stocks that restrict the rights of the employees
		The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company	Companies in the Consolidate Financial Statements	The Company		Companies in the Consolidated Financial Statements		The Company	All Companies in	The Company	All Companies in the Financial Report	The Company	All Companie s
																					the Financial Report				in the Financial Report
																Cash	Stock	Cash	Stock
COA		6,570	6,570	-	-	31,773	31,773	2,770	2,770	1.34%	1.34%	1,608	1,608	-	-	140	-	140	-	-	-	-	-	1.40%	1.40%	None
Chairman	Representative Li,Fuxing
Director	Representative Hu,Xinghua
Director	Representative Li,Canglang
Director	Representative Lin,Jianrong
Director	Representative Li,Shiyu
Natural Person
Director	Cai,Changhai
Director	Hsu, Chinlien

Note: The Company does not have (1) continuous after-tax loss for the latest two years and (2) the insufficient holding of shares by the directors in the latest year lasting above three months, therefore, it is unnecessary to disclose the name and remuneration of individual Directors and Supervisors.

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Remuneration Scale Table

Remuneration Scale Table
Bracket	Names of Directors
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The Company	Companies in the Consolidated Financial Statements(I)	The Company	Companies in the Consolidated Financial Statements
Below 2,000,000
2,000,000(inclusive)~5,000,000	Lee, Canglang、Lin, Jianrong、 Hu, Hsinhua、Tsai, Changhai、 Hsu,Chinlien	Lee, Canglang、Lin, Jianrong、 Hu, Hsinhua、Tsai, Changhai、 Hsu,Chinlien	Lee, Canglang、Lin, Jianrong、 Hu, Hsinhua、Tsai, Changhai、 Hsu,Chinlien	Lee, Canglang、Lin, Jianrong、 Hu, Hsinhua、Tsai, Changhai、 Hsu,Chinlien
5,000,000(inclusive)~10,000,000	Li,Shiyu	Li,Shiyu	Li,Shiyu	Li,Shiyu
10,000,000(inclusive)~15,000,000	Li,Fuxing	Li,Fuxing	Li,Fuxing	Li,Fuxing
15,000,000(inclusive)~30,000,000	-	-	-	-
30,000,000(inclusive)~50,000,000	-	-	-	-
50,000,000(inclusive)~100,000,000	-	-	-	-
Above 100,000,000	-	-	-	-
Total	7	7	7	7

Note 1：The names of directors of the board are listed respectively and the remuneration amounts are disclosed in summary manner.

Note 2：The amount of remuneration for directors by surplus distribution is paid by the amount of allotment adopted by the Board of Directors for Surplus Distribution for 2014.

Note 3：The amount of remuneration for the legal representative includes the remuneration by surplus distribution acquired by the corporation, and the remuneration for surplus distribution for the representatives like Fuxing Li, Xinghua Hu, Canglang Li, Jianrong Lin, Shiyu Li, directors of public shares allotted by Council of Agriculture should all be acquired by Council of Agriculture and paid to the national treasury.

Note 4：The portion of non-fixed income for president exceeding fixed income (salary for 12 months) is paid to the treasury as specified.

Note 5：The retirement pension actually paid to directors for 2014 is NT$0K, with the provision for new system retirement pension for directors accounting for NT$0K, and provision for old system retirement pension for directors accounting for NT$0K.

II. Remuneration for Supervisors (Summary of ways for coordinative disclosure of names)

Unit: NT$ THOUSAND

									Unit: NT$THOUSAND	Unit: NT$THOUSAND
Title	Name			Remuneration to Supervisors					Ratio of Total Remuneration (A+B+C) to After-tax Net Income(%)		Get Any Remuneration from the Invested Businesses Other than Subsidiaries
		Salary (A)		Surplus Bonus to Supervisors (B)		Business Execution Expense (C)
		The Company	All Companies in the Financial Report	The Company	All Companies in the Financial Report	The Company	All Companies in the Financial Report		The Company	All Companies in the Financial Report
ChunghwaPost		-	-	13,617	13,617	720	720		0.47%	0.47%	None
Supervisor	Representative: YuanrenWu
Natural Person
Supervisor	LinglanCai
Natural Person
Supervisor	Zailai Chen
Remuneration Scale Table				SupervisorName Total of(A+B+C) TheCompany All Companies in the Financial Report Tsai,Linglan,Chen,Zailai,Wu Yuanren Tsai,Linglan,Chen,Zailai,Wu Yuanren - - - - - - - - - - 3 3
Bracket				SupervisorName
				Total of(A+B+C)
				TheCompany				All Companies in the Financial Report
Below 2,000,000
2,000,000(inclusive)~ 5,000,000(exclusive)				Tsai,Linglan,Chen,Zailai,Wu Yuanren				Tsai,Linglan,Chen,Zailai,Wu Yuanren
5,000,000(inclusive)~10,000,000(exclusive)
10,000,000(inclusive)~15,000,000(exclusive)				-				-
15,000,000(inclusive)~30,000,000(exclusive)				-				-
30,000,000(inclusive)~50,000,000(exclusive)				-				-
50,000,000(inclusive)~100,000,000(exclusive)				-				-
Above 100,000,000				-				-
Total				3				3

Note 1：The names of supervisors are listed respectively and the remuneration amounts are disclosed in summary manner.

Note 2：The surplus bonus to supervisors is recognized with the amount to be distributed passed at the surplus distribution meeting of the board of Directors of 2014. Note 3：The salary amount for the legal representative includes the surplus bonus to the juridical person;

Note 4：For FY2014, the actual severance pay to supervisors is NT$0,000, the new system severance pay to supervisors provided is NT$0,000 and the old system severance pay tosupervisors provided is NT$0,000.

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III. Remuneration for the President and Vice Presidents (Summary of ways for coordinative disclosure of names)

Unit: NT$ THOUSAND

Title	Name	Salary(A)	Salary(A)	Severance Pay(B)	Severance Pay(B)	Bonus andSpecial Expense(C)	Bonus andSpecial Expense(C)	ProfitSharing-Employee Bonus(D)	ProfitSharing-Employee Bonus(D)	ProfitSharing-Employee Bonus(D)	ProfitSharing-Employee Bonus(D)	Ratio ofTotal Remuneration(A+B+C+D) toAfter-tax Net Income (%)	Ratio ofTotal Remuneration(A+B+C+D) toAfter-tax Net Income (%)	ExercisableEmployee StockOptions	ExercisableEmployee StockOptions	Number of New Shares for	Number of New Shares for	Number of New Shares for	GetAny Remuneration fromthe Invested BusinessesOther than Subsidiaries
																Acquisition of Employee’ Rights		of Employee’
		The Company	All Companies intheFinancial Report	The Company	All Companies intheFinancial Report	The Company	All Companies intheFinancial Report	The Company		All Companies inthe Financial Report		The Company	All Companies inthe Financial Report	The Company	All Companiesin the Financial Report	The Company	All Companies inthe Financial Report
								Cash	Stock	Cash	Stock
President	Yang Ming-Hui	9,085	9,085	6,247	6,247	7,909	7,909	939	-	939	-	0.79%	0.79%	-	-	無	無		無
President	Huang Li-Ai
Vice President	Yang Tai
Vice President	Lo Shih-Jih
Vice President	Chou Wei-Xin
Vice President	Huang Yao-Xing

Remuneration Scale Table

Bracket	Names of President and Vice Presidents	Names of President and Vice Presidents
	TheCompany	All Companies in the Financial Report E
Below 2,000,000	YangTai	YangTai
2,000,000(inclusive)~5,000,000	Lo Shih-Jih,HuangYao-Xing,Chou Wei-Xin	Lo Shih-Jih,HuangYao-Xing,Chou Wei-Xin
5,000,000(inclusive)~10,000,000	YangMing-Hui,HuangLi-Ai	YangMing-Hui,HuangLi-Ai
10,000,000(inclusive)~15,000,000	-	-
15,000,000(inclusive)~30,000,000	-	-
30,000,000(inclusive)~50,000,000	-	-
50,000,000(inclusive)~100,000,000	-	-
Above 100,000,000	-	-
Total	6	6

Note1:The names of president and vice presidents are listed respectively and the remuneration amounts are disclosed in summary manner.

Note2:The surplus bonus to directors is recognized with the amount to be distributed passed at the surplus distribution meeting of the Board of Directors of 2014. Note3:The portion of non-fixed income for president exceeding fixed income (salary for 12 months) is paid to the treasury as specified. Note4:The retirement pension actually paid to president and vice president in 2014 is NT$6,247K, with the provision for new system retirement pension for president and vice president accounting for NT$0K, and provision for old system retirement pension for president and vice president accounting for NT$777K.

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4.Names of Management Team for the Allotment of Employees’ Dividends and Allotment Conditions

March 24.2015

Unit: NT$ THOUSAND

						Unit: NT$ THOUSAND
	Title	Name	Employee Bonus in Stock	Employee Bonus in Cash	Total	Raito of Total Amount to After-tax Net Income (%)
Managerial Officers	President	Yang,Minghuei	-	1,143	1,143	0.04%
	President	HuangLi-Ai
	Vicepresident	Yang,Tai
	Vicepresident	Luo,Shihri
	Vicepresident	Chou Wei-Xin
	Vicepresident	Huang,Liyuan
	GM of Finance	Chien Chao-Jen

Note1:The surplus bonus to employees is recognized herein with the amount to be distributed passed at the surplus distribution meeting of the board of Directors of 2014 and these amounts are recognized respectively and disclosed in summary manner.

(IV) Percentage of the total remuneration for directors, supervisors, Presidents and Vice Presidents of this Company paid over the past two years by this Company and all companies in the consolidated financial statements in the net income of individuals or individual financial reports after tax:

Year	After-tax NetIncome (NT$ thousand)	Director	Supervisor	Managerial Officer
102	2,538,071	1.53%	0.54%	0.85%
103	3,068,346	1.40%	0.47%	0.79%

According to the articles of association of the Company, the salary of the chairman is 1.25x the income of the president and the other directors of the board and supervisors may get NT$20,000 traffic fee per month as compensation.

According to the articles of association of the Company, after the provision of reserves, the after-tax net income will be put aside 2% as the compensation for Directors and Supervisors and 3% as bonus to employees.

Corporate Governance Report

III.Corporate Governance Conditions

(I) Operation of the Board of Directors

There have been12meetings of directors for the recent years, with the information on Directors and Supervisors attending the meeting or attending the meeting as non-voting delegates as follows:

Title	Name	Required Attendance in Person	Actual Attendance in Person	Attendance by Proxy	Attendance Rate (%)
Chairman	COA Representative: FuxingLi	12	-	100%
Director	COA Representative: Xinghua Hu	12	-	100%
Director	COA Representative: CanglangLi	12	-	100%
Director	COA Representative: JianrongLin	12	-	100%
Director	COA Representative: Shiyu Li	12	-	100%
Director	Changhai Cai	9	3	75%
Director	Chinlien, Hsu	12	-	100%	2014.1.16 on board
Supervisor	Chunghwa Post Representative: Yuanren Wu	12	-	100%
Supervisor	Zailai Chen	11	1	92%
Supervisor	Linglan Cai	10	2	83%
Other matters to be recorded: I. For matters set in in Clause 3 of Article 14 of Security Exchange Act and other matters on objection or reservation opinions and matters on resolutions of the Board of Directors with records or written statements, it is required to specify dates, number of meetings and content of proposals of directors, opinions of all independent directors and treatment of opinions of independent directors on the Company. II. For the execution of avoidance of interested proposals on directors, it is required to specify names of directors, content of proposals, reasons for avoidance of interests and conditions for presence in voting. III. Evaluation of the execution of the objectives with regard to the functions of the Board of Directors for the current year and for the recent years (such as the establishment of the auditing commission,andpromotion of information transparency,etc).

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(II) Operation of the Audit Committee or the Participation in the Board of Directors by Supervisors
1.Operation of the audit committee: N/A
2.Attendance of supervisors for board meeting

A total of 12(A) meetings of the Board of Directors were held in the latest period with the attendance of the supervisors as follows:

Title	Name	Actual Attendance(B)	Attendance Rate (%)[B/A] (Note)
Supervisor	Chunghwa Post Representative: Yuanren Wu	12	100%
Supervisor	Zailai Chen	11	92%
Supervisor	Linglan Cai	10	83%
Other mentionable items: I.Composition and responsibilities of supervisors: (I) Communication of the supervisors with the employees and shareholders of the Company(such as communication channels and ways, etc). (II)Communication of the supervisors with the internal audit officer and accountants: (such as matters on communication with the Company’s finance and business status, ways and results, etc). II. If there is any statement opinion made by supervisors attending the Board of Directors as non-voting delegates, it is required to specify dates and number of meetings of the Board of Directors, content of proposals, results of the meetings of directors as well as the treatment of statement opinions of supervisors on the Company.

Corporate Governance Report

(III) Conditions for Corporate Governance and Operation and Difference and Causes of Governance Practice Rules on Listed Companies

Items assessed			Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference from the code on the governance of listed companies and OTC companies and cause
	Yes	No		Abstracts
I. Does the Company prepare and disclose the code on the governance of the Company according to the_Code of_ Governance of the Listed Companies and OTC Companies?	V		The Company has prepared and disclosed the code on the governance of the Company according to the_Code of Governance of the_ Listed Companies and OTC Companies.		No difference
II. Shareholding structure and shareholders’rights of the Company (i) Does the Company prepare the internal operation regulations to deal with the shareholder’s suggestions, doubts, dispute and lawsuit? (ii) Does the Company grasp the main shareholders that control the Company and the name list of final controllers of the main shareholders? (iii) Does the Company establish and perform the risk control and firewallmechanism with the related enterprises? (iv) Does the Company prepare the internal specifications to prevent the Company personnel from trading the securities in virtue of the information that is not open to the public?	V		(i) The Company has designated the spokesman, agent and the unit in charge of stock matters so as to deal with the shareholders’ suggestions or relevant questions. (ii) The Company has designated special unit to charge the main shareholders and name list of final controllers of main shareholders and apply the change information according to the relevant provisions. (iii) The Company and three subsidiaries, in strict accordance with the criteria issued by the Securities and Futures Bureau, prepare the Procedures on the Treatment of the Assets Acquired or Disposed. The Company shall also prepare the_Operation Procedure of_ Capital Loan and the Endorsement Guarantee_in order to establish the proper risk control mechanism and firewall with the related enterprises. The business contact between the Company and all the related enterprises should be handled after the signature of the contract and submission to the board of directors for deliberation. (iv) The Company should prepare the _Operation Procedure on the Treatment of Major Information inside Taiwan Fertilizer_Co., Ltd._in order to specify the directors, supervisors, managers, employees and the personnel who are in other identities, occupations or controlling relationship but acquire the major internal information of the Company are all within the scope of application where insider training is prohibited.		No difference

III. Composition and responsibilities of board of directors (i) Does the board of directors require the members to prepare the diversified policies and then implement these policies? (ii) In addition to the salary and welfare committee and audit committee, is the Company willing to set up other committees with similar functions? (iii) Does the Company prepare the	V		(i) The Company has prepared the diversified policies and guidelines of the board of directors in the code on the governance of the Company. At present, the board of directors includes one female director and the general manager is also a female in order to improve the participation of female in decision making. The members of the board of directors are specialized in finance, laws, agriculture, fertilizer, operation and risk management in		No difference

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		Items assessed			Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference from the code on the governance of listed companies and OTC companies and cause
			Yes	No		Abstracts
(iv)		performance appraisal method of the board of directors and the mode			order to strengthen the structure and functions of the board of directors, lead the Company to face new challenges bravely and create a better future. (ii) The Company has set up the salary and welfare committee and will set up audit committee in 2018. (iii) The operation performance appraisal standard of the board of directors of the Company means appraising the indexes such as if the annual settlement and operation interests reach the settlement and operation interests of the previous year, the control rate of the annual settlement and operation interests, growth rate of the operation interests or if exceeding the target. What is more, according to the provisions of the organization of the Company’s salary and welfare committee, the committee will appraise the performance target of the directors, supervisors and managers of the Company on a regular basis each year and conclude the performance appraisal based on the contents and amount of the individual salary standard. (iv) The Company’s accountant signed in 2014 is not the director or supervisor or the shareholder of the Company. Therefore, the Company’s accountant signed enjoys the independence after the appraisal of the board of directors.
		of appraisal and conduct the regular
		performance appraisal on a yearly basis? Does the Company appraise the independence of the accountant signed on a regular basis?

IV.	Does the Company establish the channel to communicate with interested parties, and special zone for the interested parties on the website of the Company and properly		V		The Company has set the spokesman system. If required by the interested parties, they can communicate with the spokesman or all the business dealers at any time. The communication channel is smooth and the special zone for the interested parties is set in the website of the Company in order to respond the issues concerned by the interestedpartiesproperly.		No difference

	respond to the critical issues regarding the social responsibilities of the Company as concerned by the interested parties?
V. Does the Company entrust the professional stock				V	The Company has issued stocks in public and deals with the stock matters according to the criteria of stock treatment and the internal control system.		The company’s information is disclosed. The same as Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies.

VI. Information disclosure (i) Does the Company establish the website and reveal the information about finance and governance of Company? (ii) Does the Company implement other ways to reveal information (such as establishing English website,designatingspecialperson			V		(i) The Company has set the special column for serving the investors in its website in both Chinese and English version, revealed the information about finance and governance of Company and provided it to the investors for reference on a regular basis. (ii) The Companyhas designated aperson		No difference

Corporate Governance Report

Items assessed			Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference from the code on the governance of listed companies and OTC companies and cause
	Yes	No		Abstracts
to be in charge of the collection and disclosure of the Company’s information, implementing the spokesman system and putting the process of legal person forum on the Company’s website)?			to be liable for the collection and contact of all media information, in addition to the spokesmen system used for issuing the Company’s information. The data of the legal person forum is shown on the Company’s website and the specially-assigned person is also liable for the major information on the website.
VII. Does the Company have the major information that can help understand the operation governance of the Company(including but not limited to the rights and interests of employees, employee care, relationship of investors and suppliers, rights of the interested parties, further study of directors and supervisors, implementation of risk management policies, risk balance standard and client’s policies and the liability insurance purchased for the Company’s directors and supervisors)?	V		(i) Rights and interests of employees and employee care: they are handled according to the labor standard law, collective agreement and the rules and systems of the Company. The Company highlights the happiness of the employees and motivates and reserves talents according to the six policies of “establishing equal working environment, cultivating healthy occupational environment, reasonable treatment and work, complete talent cultivation system, complete employee welfare and smooth labor communication channel”, welcomes any opinion and suggestion proposed by the employees by establishing multiple channels and creates favorable feeling of participation and smooth bilateral communication channel. (ii) Relationship of investors: the Company aims at ensuring the rights and interests of the shareholders and treating all of them equally. According to the relevant provisions of the competent securities organ, the Company issues the major news such as the finance, business and change of the shareholders at Observation Website for News Disclosure and provides English version of the critical news such as the Company yearly, meeting handbook and the notice of having a meeting in order to fully publish the Company’s operation information. (iii) Relationship of suppliers: the Company shall develop, select and appraise the suppliers according to the measures on the management of suppliers in order to make the material quality stable, and ensure the safety of the sources. The Company also conducts regular audit, spot check and inspection to the products processed by entrusting others so that the products can meet the requirements of the relevant orders,regulations, quality		No difference

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Items assessed			Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference from the code on the governance of listed companies and OTC companies and cause
	Yes	No		Abstracts
			criteria as well as the customers. The Company keeps improve the capacity of managing the supplier’s quality, delivery and supply, service team and sustainable development, expects to establish long-term sustainable supply chain with the suppliers and assists the manufacturers in upstream and downstream improving green competitiveness in order to create long business opportunities. (iv) Rights of the interested parties: the Company always abides by the principle of integrity in maintaining and safeguarding the rights of all the interested parties. The Company has set smooth communication channel for different kinds of interested parties so that they could express their opinions at all times. (v) Further study of directors and supervisors: subject to the provisions of_Key Points on the Promotion of_ Further Study of the Directors and Supervisors of Listed Companies and OTC Companies_of Taiwan Stock Exchange Co., Ltd. Please refer to _Name List of Directors and Supervisors for Further Study in 2014 in the appendix of this chapter. (vi) Further study of managers: the Company’s general manager Huang Liyuan and the vice general manager Luo Shiri participated in 3-hour Reception Service course held on March 29, 2014 and 3-hour Enterprise Value course held on November 7, 2014, the vice general manager Huang Yaoxing and Zhou Weixin participated in the 3-hour Enterprise Value course held on November 7, 2014, the vice manager Yang Tai participated in the 3-hour Reception Service course held on March 29, 2014, the financial supervisor Huang Meiling participated in the 7-hour Five Basics for the Outstanding Financial Supervisor held at the Dun & Bradstreet Commercial Education and Training Center on August 29, 2014, 3-hour course on Enterprise’s Speech and Communication, Strengthening of Law Abidance and Governance of the Company and 3-hour Enterprise Value course on November 7, 2014. The internal audit supervisor Fan Xuan-Yung participated in the 18-hour Preliminary Further Study of Internal Auditors of Public Release Company held byAccountingResearch and

Corporate Governance Report

	Items assessed			Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference from the code on the governance of listed companies and OTC companies and cause
		Yes	No		Abstracts
				Development Foundation on June 3, 6 and 9, 2014 respectively and 3-hour Enterprise Value course held by the Company on November 7, 2014. (vii) Implementation of risk management policies and risk balance standard: subject to the Criteria on the Treatment of Internal Control System of the Company. The risk objectives are prepared according to the suitability of the Company objective and the units at different levels of the Company. The result of risk evaluation can help the Company design, modify and implement the control required on a timely basis. (viii)Implementation of client policies: the Company has prepared_Details on the_ Management_of Customer Relationship_ and the operation departments should set up the customer service center to communicate with customers. (ix) Insurance purchased for the directors and supervisors: the Company has purchased liability insurance which remains valid from April 1, 2014 to March 31, 2015 for the directors and supervisors from Chung Kuo Insurance Company according to the regulations.
VIII.	Does the Company prepare the self-evaluation report of Company governance or entrust the professional agency to prepare the governance appraisal report? (if so, please state the opinions of the board of directors, result of self-evaluation or entrusted appraisal, main insufficiencies or the suggestions and improvement) (Note 2)	V		The Company is listed as the first 6%-20% companies in the first Company governance appraisal result held by the Stock Exchange and Taipei Exchange. In order to ensure the completeness of law preparation, the Company prepared_Code of Conduct on the_ Corporate social responsibility,Code on the Governance of Company_and_Integrity _Operation Criteria_and designated special unit to prepare the relevant execution plans in order to implement the governance operation of the Company.		No difference

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(IV) Disclosure of the Formation, Duties and Operation in Case of any Establishment of the Company’s Remuneration Committee:
1.Information on members of Salary and Remuneration Committee

Identity (Note 1)	Condition Name	Whether Having Working Experiences for Five Years or More and the Following Professional Qualification	Whether Having Working Experiences for Five Years or More and the Following Professional Qualification	Whether Having Working Experiences for Five Years or More and the Following Professional Qualification	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Conditions for Compliance with Independency (Note 2)	Salary and Remuneration of Holding Concurrent Posts in Other Issuing Company Number of Members of Remuneration Committee
		Above Lecturers from Public or Private Colleges and Institutions Specializing in Commerce, Law Affairs, Finance, Accounting, etc	Judges, Procurators, Lawyers, Accountants or Other Professional and Technical Personnel Having Passed National Examinations and Obtained Certificates Needed by the Company	Having Working Experience in Commerce, Law, Finance and Accounting or Business Required by the Company	1	2	3	4	5	6	7	8
Others	Wang,Mingyan			V	V	V	V	V	V	V	V	V	0
Others	Wang,Richun		V		V	V	V	V	V	V	V	V	0
Others	You,Zhongzhe			V	V	V	V	V	V	V	V	V	0

Note 1: For the identity, please fill in directors, independent directors or others.
Note 2: If members meet the following conditions two years before election and during the period of holding office, please tick “ ” in the blank space below all condition codes.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or any of its affiliates (The same does not apply, however, in cases where the person is an independent director of the Company, its parent Company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top 5 in holdings.
(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified Company or institution that has a financial or business relationship with the Company.
(7) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, Company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.

(8) Not a person of any conditions defined in Article 30 of the Company Law.

Note 3:If members are directors respectively, please specify whether they comply with the provisions set out in Clause 5 of Article 6 of the Methods for Establishment of the Company’s Salary Committee and Exercise of Powers for Share Listed or Purchase at Securities Dealers.

Corporate Governance Report

2.Information on operation conditions of the Salary and Remuneration Committee
I. There are 3 members of Salary and Remuneration Committee of the Company.
II. Tenure of members of the current committee: From September 25th, 2012 to June30th, 2015, two meetings of Salary and Remuneration Committee (A) have been held for the recent years, with the qualification of members and presence at meetings as follows:

Title	Name	Number of Actual Presence (B)	Number of Authorized Presence	Actual Presence Rate (%) (B/A)(Note)
Convener	Wang,Mingyan	2	0	100%
Member	Wang,Richun	2	0	100%
	You,Zhongzhe	2	0	100%
Other matters to be recorded: I. If the Board of Directors fail to adopt or amend the recommendation of Salary and Remuneration Committee, it is required to specify dates and number of meetings of the Board of Directors, content of proposals, results of meetings of Board of Directors as well as the treatment of opinions of the Company towards Salary and Remuneration Committee (If the salary and remuneration adopted by the Board of Directors is superior to the proposal of Salary and Remuneration Committee, it is required to specify difference conditions and reasons). II. Resolution matters by Salary and Remuneration Committee. If members have any objection or reservations with records or a written statement, it is required to specify dates, number of meetings, content of proposals, opinions of all members and treatment of opinions on members of Salary and Remuneration Committee.

Note:

(1) If any member of Salary and Remuneration Committee leaves office before the end of the year, it is required to specify in the box of remarks the date of leaving office, actual attendance rate (%), and it will be calculated on the basis of the times of meetings of Salary and Remuneration Committee and actual times of presence in the period when they hold office.

(2) Before the date of the end of the year, if there is any reelection by Salary and Remuneration Committee, it is required to list old and new members of Salary and Remuneration Committee, and to specify such members as old members in the box of remarks as well as the dates of old positions or reelected dates. The actual presence rate (%) will be calculated on the basis of the times of meetings of Salary and Remuneration Committee and actual times of presence in the period when they hold office.

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(V)Performance of Social Responsibilities:

Items	Items				Operation circumstances (Note 1)	Difference with the code on the corporate social responsibility of listed companies and OTC companies and the cause
		Yes	No		Abstracts (Note 2)

I. Implementation of Company governance (i) Does the Company prepare the policies or systems on corporate social responsibility and the way to evaluate the performance? (ii) Does the Company hold the training on the education of corporate social responsibility regularly? (iii) Does the Company set the full-time (part-time) unit to promote the corporate social responsibility, ask the senior level authorized by the board of directors to handle it and report the actual situation to the board of directors? (iv) Does the Company prepare reasonable salary and welfare policies, combine the employee’s performance appraisal system with the corporate social responsibility and set up the effective award & punishment system?		v		(i) The Company has prepared the_Code of_ Conduct on the Corporate social responsibility of Taiwan Fertilizer Co., Ltd., abides by the corporate social responsibility on the basis of six principles, i.e., improving the Company governance and creating enterprise value, dealing with innovation strategy and developing enterprise foundation, high output with low consumption and effective production management, continuous energy-saving and emission reduction, protection of ecological environment, cultivating employees and fostering happy enterprise atmosphere, participating in social care and cultivate community development and regularly check the implementation effect on a yearly basis. (ii) The Company holds the training on the education of corporate social responsibility regularly and designates relevant personnel to participate in the courses of the external unit irregularly. (iii) The Company’s CSR Secretariat Office of Board of Directors serve as the special execution unit in charge of the promotion of planning and integration of CSR-related public affairs and whistle-blowing to the board of directors on a regular basis. (iv) The Company’s performance appraisal system is consolidated with the policies on the corporate social responsibility (such as energy-saving and emission reduction) and the relevant objective-reaching incentive award is also set.		No difference
	on the education of corporate social
	responsibility regularly? Does the Company set the full-time (part-time) unit to promote the corporate social responsibility, ask
	the senior level authorized by the
	board of directors to handle it and
	report the actual situation to the board
	of directors? Does the Company prepare reasonable salary and welfare policies, combine the employee’s performance appraisal system with the corporate social responsibility and set up the effective award & punishment system?
II. (i) (ii) (iii)	Development of sustainable development Does the Company endeavor to improve the utilization rate of all resources and use the renewable materials that exert less influence on the environment? Does the Company establish the proper environment management system based on the industrial features? Does the Company pay attention to the influence of climate change on operation, execute the room temperature gas check and the policies on energy-saving, emission reduction and reduction of gas?	v		(i) The Company waste acid generated at the Company’s production yard and the sludge of the sedimentation tank of the wastewater yard are recycled as the raw materials of other production procedures in order to reduce the influence on the environment. (ii) The Company’s main production plants have finished establishing ISO 14001 environment management system. Taichung Plant finished it in October 2014 and Miaoli Plant in June 2014. (iii) The Company conducted the 2012 greenhouse gas check of five plants (Keelung, Hualien, Hsinchu, Miaoli and Kaohsiung Plants) in 2013 according to ISO 14064 standard and obtained the statement of greenhouse gas check of the five plants above. The Company has established one product carbon check according to PAS 2050 standard and finished the estimate of		No difference

Corporate Governance Report

Items	Items				Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference with the code on the corporate social responsibility of listed companies and OTC companies and the cause
		Yes	No			Abstracts (Note 2)

					greenhouse gas emission of Taichung Plant.
III. Maintenance of public welfare (i) Does the Company prepare the relevant management policies and procedures according to the relevant regulations and the international human rights conventions? (ii) Does the Company establish the mechanism and channel for employee’s appeal and deal with such appeal properly? (iii) Does the Company provide the employees with safe and healthy working environment and carry out regular safety and health education to them? (iv) Does the Company establish the regular communication mechanism and notify the employees of the operation changes that may exert significant influence through a reasonable way? (v) Does the Company establish effective training plan on the development of professional skills? (vi) Does the Company prepare the relevant policies and appeal procedures for the protection of customers’ rights and interests forthe R & D, purchase, operation, production and service? ( vii) Does the Company abide by the relevant regulations and international criteria for the marketing and labeling of product and service? (viii) Does the Company evaluate if the supplier has records that affect the environment and society before dealing with business? (ix) Does the agreement by and between the Company and main supplier contain the terms that the agreement will be terminated or rescinded as long the supplier goes against the policies on the corporate social responsibility and exert great influence on the environment and society?		V		(i) The Company has prepared the Working Principle for the Working Staffs of Taiwan Fertilizer Co., Ltd._and the_Measures on the Retirement,_Care _and Severance of the Working Staffs of _Taiwan Fertilizer Co., Ltd._according to the spirit of international human rights conventions, labor standard law and the regulations on the retirement fees of the workers and published it on the Company’s internal website besides notifying all the employees via letter so that the employees can inquire it at all times. (ii) The Company has set internal appeal channel window according to the laws and announced on the internal website that the audit office deals with the appeals. (iii) The Company has established safe and healthy working environment for the employees and organized all kinds of activities that benefit employees’ metal health and thus wins Smoke Prevention Award, Health Promotion Award and the Healthy Working Environment-Health Excellence Award of Taipei Government in 2014. 1. Management of working environment: (1) Promoting 5S activities to help employees cultivate good safety and hygiene habit and improve working efficiency. (2) The Company holds safety and environmental protection report regularly—the Company holds Work Safety and Environmental Protection Report for every two months, covering the safety and environmental protection issues of the Company and all plants. The safety and environmental protection of the general management office are made every three months. (3) Conducting the employee’s safety and hygiene education training and all emergency drills regularly. (4) All kinds of safety protection appliances are prepared on the workplace and the employees are taught how to use them according to the regulations in order to avoid injury. (5) Monitoring the operation environment on a regular basis. 2. Promotion of employees’ mental			No difference
	the Company and main supplier
	contain the terms that the agreement
	will be terminated or rescinded as
	long the supplier goes against the
	policies on the corporate social
	responsibility and exert great
	influence on the environment and
	society?

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			Operation circumstances (Note 1)
Yes	No		Abstracts (Note 2)

		health: The Company holds physical examination for the employees yearly and helps trace the health indexes. The Company also holds the mental health speeches and activities irregularly such as those themed “Controlling Your Emotion”, “Lectures on Kidney Diseases of the Health Promotion Administration, Ministry of Health and Welfare”, “Lecture on Weight Management and Shaping Your Body (upper and lower)”, health promotion lecture "Keeping Health by Walking” and “Brief of Employees’ Physical Examination Report in 2014” in 2014 in order to promote the development of the employees’ work and mental health. 3. The Company has always abided by the relevant provisions of the competent organs in preparing management rules of safety and hygiene in order to promote the employees’ personal safety and health. (iv) The Company holds labor and capital meetings in the head office and all plants according to labor standard law and discussions and communications at all plants according to the Company’s Key Points for the Implementation of Labor and Capital Forum_on a yearly basis (v) The Company held the trainings and courses regarding the mental health and basic skills such as the correct working attitude, mental health, international etiquette and communication, coordination and operation of office documents and system in 2014 and all units held or participate in the professional courses and arranged the education trainings and courses of the cadres and supervisors at all levels in order to establish the effective career development for the staffs at all levels. (vi) The Company has specified in Article 23 of_Code of Conduct on the Corporate social responsibility_that the Company has prepared the policies of the customer’s rights in terms of R & D, purchase, production, operation and service and implements it as follows: 1. According to the Company’s_Details on the Management of Customer Relationship, the operating departments shall communicate with customers by establishing customer service center which shall be in

Corporate Governance Report

			Operation circumstances (Note 1)
Yes	No		Abstracts (Note 2)

		charge of the customer communication. To ensure the customer’s rights and interests with complete_Operation Procedure on_ the Management of Customer Complaint, the operating departments shall receive the complaints of both the existing and potential customers and deal with them as soon as possible, and trace the following improvement. The Company shall also set up fixed customer hotline for giving fast response to the customers. 2. The regulations on the treatment of customer complaint against production and operation of the Company have been explicitly specified in the Company’s_Criteria_ on Production Management. 3. The discussion and improvement of product or service R & D by the relevant R & D units have been specified in the_Critical Points on the_ Implementation of R & D Operation. the Company conducts the yearly performance discussion for the products and service listed to make improvement in order to satisfy the customers. (vii) According to Article 24 of the Company’s_Code of Conduct on_ Corporate social responsibility, the marketing and labeling of the Company's products and service shall meet the relevant regulations and international criteria and be implemented as follows. 1. The Company's packaging bag label and publicity articles of the fertilizers meet the relevant regulations of the domestic laws on fertilizer management. 2. The real estates developed by the Company, including the residential buildings sold as well as the commercial centers, offices or hotels leased are designed, established and managed according to the national architecture law. Therefore, the Company’s marketing of the sales or lease of the real estates above and the product data labeling are told to the customers honestly, which meets the requirements. (viii)he Company has revealed the principle of this article according to Article 25 of Code of Conduct on Corporate social responsibility. When signing the agreement with the supplier, the Companywill collect the credit of the

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Items				Operation circumstances (Note 1)	Difference with the code on the corporate social responsibility of listed companies and OTC companies and the cause
	Yes	No		Abstracts (Note 2)

			supplier preliminary, including their performance capacity, and if containing the unfavorable records such as pollution of the environment or raw materials. If such events are added in the commercial terms, the supplier should undertake the liabilities. (ix) The principle stated in this article has been specified in Article 25 of according to Article 25 of_Code of_ Conduct on Corporate social responsibility. The Company has specified some contents of the agreement with the supplier in the similar articles herein; for instance, the heavy metal inspection should be made for the imported raw materials; otherwise, the supplier means going against theprovisions.
IV. Strengthening of information disclosure (i) Does the Company reveal the critical and authentic information about the corporate social responsibility at its website and Observation Website for News Disclosure?	v		(i) Special zone for the corporate social responsibility has been set in the Company’s official website. The Company also plans to publish the first report on the corporate social responsibility at the end of 2015 and exhibit the contents on the official website and the Observation Website for News Disclosure so that all the interested parties can inquire it. The Company also put the regulations such as_Code of Conduct on Corporate_ social responsibility, Code on the _Governance of the Company_and _Integrity Operation Criteria_on the official website and the Observation Website for News Disclosure so that the relevant interested parties can inquire them.		No difference
V. If the Company has prepared the code of conduct on the corporate social responsibility according to the_Code of_ Conduct on_the_Corporate social responsibility of Listed Companies and OTC Companies, please state the difference between the operation and the code prepared: In April 2015, the Company prepared_Code of Conduct on Corporate social responsibility_which serves as the basis for the Company to undertake the corporate social responsibility. Prior to this Code, the Company still promoted all the business by abiding by the spirit of corporate social responsibility. The Company will publish the first report on the corporate social responsibility by the end of 2015, when the Company will implement the Company’s operation strategy based on the policies on the corporate social responsibility, promotion plan and guideline on execution management in order to realize the sustainable development.
VI. Critical information that helps understand the operation of corporate social responsibility: The Company has long-term focused on the human resources and resources, farmers, vulnerable group, agriculture, the disabled, arts and culture promotion and cultivation of good community atmosphere. For instance, in order to relieve the burdens of the farmers, for the fertilizers that are not subsidized the government, the Company does not increase the costs that are actually increased. The Company keeps financially sponsoring all kinds of public welfare teams and vulnerablegroups in 2014.
VII. Please make statement here if the Company’s report on the corporate social responsibility passes the investigation of the relevant verification agencies: None

Corporate Governance Report

(VI) Conditions for performing good faith management by the Company and actions taken

	Items				Operation circumstances (Note 1)	Difference with the integrity operation criteria of listed companies and OTC companies and the cause
		Yes	No		Abstracts

I. (i) (ii) (iii)	Conclusion of integrity operation policies and schemes Does the Company specify the policies and actions of integrity operation in the rules and external documents and implement the commitment of operation policies by the board of directors and management level actively? Does the Company conclude the action scheme against the non-integrity and define and implement the operation procedure, guide to action, punishment against violations and appeal system in the schemes? Does the Company take preventive measures for the operation activities with high dishonesty level in ii of Article 7 of_Integrity Operation_ Criteria of Listed Companies and _OTC Companies_or within other scope of business?	v		(i) The Company’s core value is integrity, which manifests the enterprise culture and commitment of the Company’s integrity. It is specified in the operation strategy by the Company for six years; the Company prepared_Integrity_ Operation_Criteria_in April 2015 in order to establish the enterprise culture of integrity operation. (ii) The board of directors of the Company It is approved that the_Code of Moral_ Conduct of Directors, Supervisors and Personnel_Above Level 1_on March 24, 2009 and the audit office should be liable for the execution supervision so that the behaviors and morals can be regulated when the Company deals with business and the interested parties of the Company better understand the moral rule of the Company. (iii) The preventive measures taken by the Company against the operation activities with high non-integrity risks in ii of Article 7 of Integrity Operation Criteria of Listed Companies and OTC Companies and other scope of business are described as follows: 1. According to the code of integrity of the directors, supervisors, Level 1 executives and employees as stated in_Code of Moral Conduct of_ Directors, Supervisors and Personnel _Above Level 1_and Working Criteria of Working Staffs of the Company, the personnel above are not allowed to charge commissions or the unjust interests. 2. The Company manages risks by dealing with the insurance of integrity operation for the manager and financialpersonnelyearly.		No difference

II. Implementation of integrity operation (i) Does the Company evaluate the integrity records of the transaction object and conclude the terms regarding the integrity behavior in the agreement signed with them? (ii) Does the Company set up the full-time (part-time) unit under the board of directors and in charge of promoting the enterprise integrity operation and report the execution to the board of directors regularly? (iii) Does the Company prepare the policies against interest conflict and provide and implement the proper statement channel? (iv) Does the Company establish effective accounting system and internal control system for the integrity		v		(i) Prior to the purchase, the Company evaluates the integrity records of the transaction object and specifies in the purchase agreement, trading agreement, etc. that the object shall, prior to the signature of the agreement or during the terms of this agreement, never give present to Party A’s employee in any form. Should Party B go against the regulations, Party A can terminate this agreement immediately as long as it is discovered and cancels Party B’s rights of trading with Party A or contracting Party A’s projects. (ii) In order to manage the integrity operation, the office of board of directors helps integrate the integrity and moral value in the Company’s operation strategy,organization of		No difference
(iv)

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	Items				Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference with the integrity operation criteria of listed companies and OTC companies and the cause
		Yes	No			Abstracts

(v)	operation and carry out regular audit by the internal audit unit or entrusting accountant? Does the Company hold regular internal and external education trainings on integrity operation regularly?			(iii) (iv) (v)	integrity operation planning, preparation and master of the laws and systems in order to ensure the preventive scheme for integrity operation, relevant operation procedures and guide to action can be supervised and executed by the audit office, evaluate if the preventive measures are effective and report the relevant operation to the board of directors regularly. According to_Code of Moral Conduct of_ Directors, Supervisors and Personnel _Above Level 1 Managers_of the Company, the directors, supervisors and personnel above Level 1 shall avoid involving in the interest conflict with the personal interests or the integral interests of the Company. In case of involving in the actions above, the personnel shall report to the inspectors, managers, executive of internal audit or other proper personnel so that it can be handled in a confidential manner. The Company shall, in strict accordance with securities transaction law, Company law, commercial accounting law, etc., issue the criteria of preparing the Company’s financial report in public and the managers shall establish accounting system and the internal control system according to the treatment criteria of internal control system. The audit office shall prepare the annual audit plan for check and the internal audit shall be reported to the board of directors in form of written audit report. The Company expressed the idea of integrity operation to the Company’s working staffs in the meetings or the education trainings irregularlyin 2014.
III. (i) (ii) (iii)	Operation of the Company’s whistle-blowing system Does the Company prepare the specific whistle-blowing and award &	v		(i) (ii)	The Company encourages the whistle-blowing of any behavior that is either illegal or goes against moral behavior. If an employee doubts or discovers that any director, supervisor or the person above Level 1 goes against the laws and rules or this Integrity Operation Criteria, he/she can report to any supervisor, manager, internal audit executive or other proper person. Upon the investigation of the case reported, the Company will award thewhistle-blower according to the relevant regulations. The Company deals with the whistle-blowing in a confidential manner and tries to protect the personal information and safety of the whistle-blower so that the		No difference
	punishment system, establish the convenient whistle-blowing channel and designate a person to deal with the accused? Does the Company conclude the operation procedures for the investigation of the whistle-blowing event and the relevant confidentiality
	mechanism? Does the Company take measures for
	protecting the whistle-blower from being punished improperly?

Corporate Governance Report

Items				Operation circumstances (Note 1)	Operation circumstances (Note 1)	Difference with the integrity operation criteria of listed companies and OTC companies and the cause
	Yes	No			Abstracts

			(iii)	whistle-blower can be free from any revenge or threats in any form. The Company keeps the reported information confidential and never punishes thewhistle-blower improperly.
IV. Strengthening of information disclosure (i) Doesthe Company specify the contents of Ethical Corporate Management Best Practice Principles for Taiwan Fertilizer Co., Ltd. and the promotion effect on the website as well as the Observation Website for News Disclosure?	V		The relevant specifications, information advocated and promotion effect of the Ethical Corporate Management Best Practice Principles for Taiwan Fertilizer Co., Ltd. are revealed on the internal website of the Company. The Integrity Operation Criteria and ode of Moral Conduct of Directors, Supervisors and Personnel Above Level 1 are revealed on the ObservationWebsiteforNewsDisclosure.			No difference
V. If the Company concludes the Ethical Corporate Management Best Practice Principles according to the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies", please state the difference of the operation with the criteria concluded: The Company prepared Ethical Corporate Management Best Practice Principles in April 2015 as the basis to put integrity operation into practice. Prior to these principles, the Company still abided by the spirit of integrity operation in promoting all of its businesses. The Company will implement the integrity operation in terms of operation and corporate governance byabidingbythe items stated herein in order to realize sustainable development.
VI. Other critical information that helps understand the operation of the Company’s integrity operation (such as the discussion and modification of the Company on the Ethical Corporate Management Best Practice Principles). The Company prepared Ethical Corporate Management Best Practice Principles in April 2015.

(VII) Disclosure of Inquiry Ways in Case of any Formulation of Corporate Governance Rules and Relevant Regulations by the Company: N.A.
(VIII) Other Important Information Enough to Enhance the Understanding of the Operation of Corporate Governance
1.The Company set up the second-term of Salary and Remuneration Committee on September 25, 2012, with members as Wang Mingting, Wang Richun and You Zhongzhe with the tenure ending on June 30, 2015.
2.The“Taiwan Fertilizer Co. Ltd. Procedures for Handling Material Inside Information” were passed by the 31st meeting of 30th BOD session on May 26,2009 with content as follows:

Article 1 (Purpose of these Procedures)

These Procedures are specially adopted to establish sound mechanisms for the handling and disclosure of material inside information by this Corporation, in order to prevent improper information disclosures and to ensure the consistency and accuracy of information released by this Corporation to the public.

These procedures are based on the letter FSC Audit No. 098009090 issued by Financial Supervisory Commission on March 15, 2009. The letter of amendment issued by FSC will be applied to the amendment of these procedures.

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Article 2 (Material inside information shall be handled in accordance with applicable laws and regulations and these Procedures)

This Corporation shall implement its handling and disclosure of material inside information in accordance with applicable laws and regulations, the rules and regulations of the Taiwan Stock Exchange Corporation or the GreTai Securities Market, and these Procedures

Article 3 (Scope of application)

These Procedures shall apply to all directors, supervisors, managerial officers, and employees of this Corporation. This Corporation shall ensure that any other person who acquires knowledge of this Corporation's material inside information due to their position, profession, or

relationship of control shall comply with the applicable provisions of these

Procedures.

The following persons as set forth in paragraph 1 of article 157 of Securticies Exchange Act shall be subject to the application of prohibition on insider trading, including:

1.A director, supervisor, and/or managerial officer of the Company, and/or a natural person designated to exercise powers as representative pursuant to Article 27, paragraph 1 of the Company Act (where a government agency or a juristic person acts as a shareholder of a Company, it may be elected as a director or supervisor of the Company provided that it shall designate a natural person as its proxy to exercise, in its behalf, the duties of a shareholder.
2.Shareholders holding more than ten percent of the shares of the Company.
3.Any person who has learned the information by reason of occupational or controlling
4.A person who, though no longer among those listed in the preceding three subparagraphs, has only lost such status within the last six months.
5.Any person who has learned the information from any of the persons named in the preceding four subparagraphs.
6.According to the paragraph 5 of the same article, the calculation of shares held by directors, supervisors, managerial officers, or shareholders holding more than ten percent of the total shares of an issuer shall include shares held by their spouse and minor children and those held under the names of the other parties. The applicable scope of managerial officers is as follows: (1) president and those who in the equivalent level; (2) vice president and those who in the equivalent level; (3) director and those who in the equivalent level; (4) head of financial department; (6) head of accounting department; (6) other persons who is entitled to manage affairs and sign for the Company. In consideration that each Company may have different titles to managerial officer, the titles are not the criteria for determination.

Corporate Governance Report

Article 4 (Scope of material inside information)

For the purposes of these Procedures, the term "material inside information" refers to information that, with reference to the Securities and Exchange Act, other applicable laws and regulations, and the applicable rules and regulations of the Taiwan Stock Exchange Corporation or the GreTai Securities Market.

Article 5 (Responsible unit in charge of the handling of material inside information)

Each business handling unit shall be the responsible units for handling inside information and respond material outside information. The content to be announced shall be approved by the vice president and above in next level.The legal affairs specialist, consultant, finance and taxation specialist and related professional personnel may be the counseling (unit). The finance division is designated as the sole window for announcement.

In addition to process examination and preservation for related documents, files and electronic records, the department shall also be responsible for reviewing the effect of material information to this Corporation. In order to correspond the impact and reaction arising from external material information, the “handling unit” (i.e. responsible unit) may call preceding related personnel for meeting and discussion.

Article 6 (Confidentiality firewall operations - Personnel)

This Corporation's directors, supervisors, managerial officers, and employees shall exercise the due care and fiduciary duty of a good administrator and act in good faith when performing their duties, and shall sign confidentiality agreements.

No director, supervisor, managerial officer, or employee with knowledge of material inside information of this Corporation may divulge the information to others.

No director, supervisor, managerial officer, or employee of this Corporation may inquire about or collect any non-public material inside information of this Corporation not related to their individual duties from a person with knowledge of such information, nor may they disclose to

others any non-public material inside information of this Corporation of which they become aware for reasons other than the performance of their duties. The directors, supervisors, managerial officers and employees who have possessed or learned material inside information shall inform his/her spouses, minor children and relatives in three-kinship to watch for confidentiality and prevention and shall not cause insider trading by using the material information of the Corporation

Article 7 (Confidentiality obligations of outside organizations and persons)

Any organization or person outside of this Corporation that is involved in any corporate action of this Corporation relating to a merger or acquisition, major memorandum of understanding, strategic alliance, other business partnership plans, or the signing of a major contract shall be required to sign a confidentiality agreement, and may not disclose to another party any material inside information of this Corporation's thus acquired.

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Article 8 (Confidentiality firewall operations - Documents and information)

Proper protection of confidentiality shall be given to files and documents containing this Corporation's material inside information when transmitted in written form. When transmitted by e-mail or other electronic means, such files and documents must be processed with appropriate security technology such as encryption or electronic signatures. Files and documents containing this Corporation's material inside information shall be backed up and stored in a secure location.

Article 9 (Operation of confidentiality firewalls)

This Corporation shall ensure that the firewalls specified in the preceding two articles are established, and take the following additional steps:

1.Adopt adequate control measures for the firewalls and perform periodic testing.
2.Enhance measures for custody and maintaining the secrecy of files and documents containing non-public material inside information of this Corporation.

Article 10 (Principles of disclosure of material inside information)

This Corporation shall comply with the following principles when making external disclosures of material inside information:

1.The information disclosed shall be accurate, complete, and timely.
2.There shall be a well-founded basis for the information disclosure.
3.The information shall be disclosed fairly.
4.The information shall be managed in compliance with the time and procedures stipulated by securities exchange related authorities and regulations.

Article 11 (Implementation of the spokesperson system)

Any disclosure of this Corporation's material inside information, except as otherwise provided by law or regulation, shall be made by this Corporation's spokesperson, or by a deputy spokesperson acting in such capacity in a confirmed sequential order. When necessary, the disclosure may be made directly by a responsible person of this Corporation.

This Corporation's spokesperson or deputy spokesperson shall communicate to outside parties only information within the scope authorized by this Corporation, and no personnel of this Corporation other than those serving as this Corporation's responsible person, spokesperson, or deputy spokesperson may disclose any material inside information of this Corporation to outside parties without authorization.

Article 12 (Record of disclosure of material inside information)

This Corporation shall keep records of the following in respect of any disclosure of information to outside parties:

1.The person who discloses the information, the date, and the time.
2.How the information is disclosed.
3.What information is disclosed.

Corporate Governance Report

4.What written material is delivered.

5.Any other relevant details.

Article 13 (Response to false media coverage)

If a media agency releases information that is in any respect inconsistent with material information disclosed by this Corporation, this Corporation shall promptly issue a clarification on the Market Observation Post System (MOPS) and request the media agency to correct the information.

Article 14 (Whistle-blowing of unusual events)

Any director, supervisor, managerial officer, or employee of this Corporation that becomes aware of any unauthorized disclosure of this Corporation's material inside information shall report to the responsible unit and the internal audit department of this Corporation as soon as practicable.

Upon receipt of a report made pursuant to the preceding paragraph, the responsible unit shall formulate corresponding measures. When necessary, it may invite members from the internal audit and other departments to meet for discussion of the measures, and shall keep a record of the results of the measures for future reference. The internal auditors shall also perform such audits as their duties may require.

As conducting a controlled trading, preceding controlled personnel shall report pursuant to laws in advance and notice the window unit. Meanwhile, the stock affairs unit shall record the trading in book for management as well as report and propose nencessary measures when there is unusual event occurs.

Article 15 (Disciplinary measures)

This Corporation shall take measures to discover those responsible and take appropriate legal action against any personnel under either of the following circumstances:

Personnel of this Corporation disclose material inside information without authorization to any outside party, or otherwise violate these Procedures or any other applicable law or regulation.

A spokesperson or deputy spokesperson of this Corporation communicates to any outside party any information beyond the scope authorized by this

Corporation, or otherwise violates these Procedures or any other applicable law or regulation.

If any person outside this Corporation divulges any material inside information of this Corporation, thereby causing damage to any property or interest of this Corporation, this Corporation shall pursue appropriate measures to hold the person 。 divulging the information legally liable.

Article 16 (Internal controls)

These Procedures shall be incorporated into this Corporation's internal control system. The internal auditors shall keep themselves regularly informed of the status of compliance with these Procedures and shall prepare related audit reports, so as to

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ensure full implementation of the procedures for handling material inside information.

Article 17 (Awareness campaigns)

At least once per year, this Corporation shall conduct educational campaigns to promote awareness among all directors, supervisors, managerial officers, and employees with respect to these Procedures and related laws and regulations. This Corporation shall also provide educational campaigns to new directors, supervisors, managerial officers, and employees in a timely manner.

Article 18 These Procedures, and any amendments to them, shall be drawn up by internal audit office shall be implemented upon approval by the Board of Directors.
3.The “Procedures for Handling Material Inside Information” above is not only available on our Intranet “Internal Audit Office – regulations & document” as references for employees, the propaganda regarding these procedures, insider trading prevention and relevant laws is also provided to directors, supervisors and managerial offices and relevant personnel every year (CDs were given to directors, supervisors, president and vice presidents for reference and e-mail were given to other chief officers, relevant personnel and colleagues via email on November 5,2013)

Corporate Governance Report

(IX) Status of the Execution of the Internal Control System

1.Company to the public Declaration for Internal Control System

Taiwan Fertilizer Co., Ltd. Declaration for Internal Control System Date: March 27, 2015

With respect to the internal control system for 2014, based on the self inspection result, we hereby represent as follows:

Ⅰ The Company acknowledges that it is the responsibility of the Board of Directors and the managers of the Company to establish implement and maintain the internal control system, and the Company has established the system for the purpose of providing reasonable assurance of the achievement of such targets as the operating result and efficiency (including profits, performance and safeguarding assets safety, etc.), the financial report reliability and the compliance with relevant statues.

Ⅱ The internal control system has its congenital limitation; notwithstanding a perfect design, the effective internal control system can only provide reasonable assurance of the achievement of the above three targets; furthermore, the internal control system effectiveness may vary according to the change of the environment and conditions, provided that internal control system of this Company is equipped with the self supervision mechanism and the Company can take any corrective action in case of any deficiency identified.

Ⅲ The Company shall judge the design of the internal control system and the effectiveness of the implementation thereof based on the judgment items of the effectiveness of the internal control system as provided in the Regulations Governing the Establishment of internal Control Systems by Public Companies (hereinafter referred to as “the Regulations”). The internal control system judgment adopted in the Regulations refers to the management based control process and divides the internal control system into five elements: 1. control environment; 2. risk evaluation; 3. control job; 4. information and communication; and 5.supervision. Each element contains a number of items. For the above items, refer to the Regulations.

Ⅳ The Company has adopted the above-mentioned internal control system judgment items to examine the design of the internal control system and the effectiveness of the implementation thereof.
Ⅴ Based on the preceding examination result, the Company deems that, the internal control system of the Company on December 31, 2014 (including the supervision and management of its subsidiary), including knowing about the operating result and the achievement of the efficiency and targets, financial whistle-blowing reliability and the design of and the implementation effectiveness of the internal control system regarding the compliance with relevant statues, is effective, and it can reasonably ensure the achievement of the above targets.

Ⅵ This Declaration shall be the main content of the annual report and prospectus of the Company and be disclosed to the public. In case of any false or hidden illegal matters, the above content disclosed shall involve the legal responsibilities in Article 20, Article 32, Article 171 and Article 174 in the Securities Exchange Act.

VII. It is hereby declared that this Declaration has been adopted by the Meeting of Directors of the Company on March 27, 2015. Among 7 directors present, there was 0 person holding the counter views, and the others all agreed upon the content in this Declaration.

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

Taiwan Fertilizer Co., Ltd.
Chairman: Signature & seal
President : Signature & seal
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2.If an accountant is entrusted to review the internal control system, the accountant’s audit report shall be disclosed: none.
(X) Punishment to the Company and its Personnel by Law and Punishment to its Personnel in Breach of Internal Control Systems by the Company as well as Major Shortcomings and Improvements over the Recent Years and up to the Date of Publication of Annual Reports: N.A..
(XI) Important Resolutions of Meeting of Shareholders and the Board of Directors over the Recent Years and up to the Date of the Publication of Annual Reports
1.General meeting of shareholders 2014 (June 24, 2014)

No.	Contents	Result ofexecution
1	The financial statements of the Company in 2013 were approved. No shareholders propose disagreement after theinquiry of the chairman.	All shareholders have been mailed for inquiry
2	The proposal for distribution of FY2013 profits was approved. No shareholders propose disagreement after the inquiry of the chairman.	All shareholders have been mailed. Dividends to shareholders, salary to directors and supervisors, and bonus to employees will be onthe basis of it.
3	Amendment of articles of incorporation of the Company was approved. No shareholders propose disagreement after theinquiry of the chairman.	Announced and implemented already.
4	Some revision of the procedures for acquisition and disposal of assets of the Company was approved. No shareholders propose disagreement after the inquiry of the chairman.	Announced and implemented already.
5	Some revision of the regulations on election of directors and supervisors of the Company was approved. No shareholders propose disagreement after the inquiry of the chairman.	Announced and implemented already.
6	Some revision of Rules of Procedure for Shareholders’ Meeting was approved. No shareholders propose disagreement after the inquiryof the chairman.	Announced and implemented already.

2.Major resolutions of the Board of Directors for 2014 and as at the publication date hereof

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Jan. 2014	1. The establishment of Taiwan Fertilizer (Samoa) Co., Ltd. and Taiwan Fertilizer (Shanghai) Import & Export Co., Ltd. was approved II. The withdrawal of Construction Engineering Office of Taichung Plant and abandonment of Measures on the Personnel Management of the Construction Engineering Office of Taichung Plant was approved. III. The withdrawal of construction engineering office of electrochemical products was approved. IV. The withdrawal ofpreparation office for Hualian Ocean Resort Park was approved.
Feb. 2014	I. It is approved that the financial statements, the declaration of business profit income tax 2014, and the declaration of undistributed profits in 2013 are audited and endorsed by Deloitte Taiwan. II. It is approved the agreement regarding the joint guarantee between the Company and Supertech Company for TR Electronic Chemical (Cayman) Ltd. (hereinafter referred to as "Cayman TREC”). According to the Procedures for Lending Funds to Other Parties and Endorsement & Guarantee of the Company, it will apply within the permitted limit (USD 5.43 million)to the Shanghai Commercial and Savings Bank for an extension.

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Jan. 2014

1.
The establishment of Taiwan Fertilizer (Samoa) Co., Ltd. and Taiwan Fertilizer (Shanghai)
Import & Export Co., Ltd. was approved
II.
The withdrawal of Construction Engineering Office of Taichung Plant and abandonment of
Measures on the Personnel Management of the Construction Engineering Office of Taichung
Plant was approved.
III. The withdrawal of construction engineering office of electrochemical products was approved.
IV. The withdrawal ofpreparation office for Hualian Ocean Resort Park was approved.

Feb. 2014

I.
It is approved that the financial statements, the declaration of business profit income tax
2014, and the declaration of undistributed profits in 2013 are audited and endorsed by
Deloitte Taiwan.
II.
It is approved the agreement regarding the joint guarantee between the Company and
Supertech Company for TR Electronic Chemical (Cayman) Ltd. (hereinafter referred to as
"Cayman TREC”). According to the Procedures for Lending Funds to Other Parties and
Endorsement & Guarantee of the Company, it will apply within the permitted limit (USD
5.43 million)to the Shanghai Commercial and Savings Bank for an extension.

Corporate Governance Report

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Mar. 2014	I. It is approved the plan that Company aims to hold the shareholders’ meeting of 2014 at Air Force Officers and Soldiers Activity Center (No. 145, Sec. 3, RenAi Road, Taipei City) on June 24, 2014 (Tuesday). II. Amendment of articles of incorporation of the Company was approved in the shareholders’ meeting. III. The financial statements of the Company in 2013 and the consolidated financial statements of the branches and affiliated companies were approved in the shareholders’ meeting. IV. The profit distribution of after-tax profits of the Company in 2013, NTD 2,538,070,594 was approved in the shareholders’ meeting. V. It is approved that the business report of the Company in 2013 will be reviewed by the Board of Directors, given to the supervisors to check and then submitted to the shareholders’ meeting. VI. It is approved that some revision of the rules for procedures of shareholders’ meeting in the shareholders’ meeting. VII. It is approved that some revision of_Internal Control System of Stock Units_of the Company. VIII. It is approved that some revision of_Criteria on the Statistics and Verification of Power of_ _Attorney of Board of Directors_of the Company. IX. It is approved the retirement of Yang Ming-Hui, former general manager of the Company. X. It is approved that Huang Li-Yuan was assigned as general manager, instead of Yang Ming-Hui. XI. It is approved that the vice manager Liu Kuo-Ying doubled as the vice execution manager of Taihai Company instead of the general manager of Taiwan Fertilizer Bio-tech Marketing Company, and President Lee Fu-Hsing served as the general manager of Taiwan Fertilizer Bio-tech Marketing Company. XII. It is approved that vice manager YangTai served as director ofTR Electronic Chemical (Kunshan) Ltd.
Apr. 2014	I. Some revision of the procedures for acquisition and disposal of assets of the Company was approved. II. The financial statements of the Company and the consolidated financial statements of the branches in the 1st quarter of 2014 were approved. III. It is approved the report of the reallocation of land of Hsinchu Plant in Phase 2. IX. It is approved the preliminary estimation of right transfer and the building and land selection principle of [urban upgrade plan and right transfer plan of the 2nd land No. 531, Subsection 1, Nangang Section, Nangang District, Taipei City”. V. It is approved that the chief auditor Chung Hsuan-Tang would be served by assistant V.P. Fan Hsuan-Yung. XI. Some revision of the regulations on election of directors and supervisors of the Company was approved. VII. The amended Article 16 of articles of incorporation of the Company was approved. VIII. Huang Yao-Hsing, assistant vice general manager of the Company was promoted as vice general manager and director of Taichung Plant and Chen Po-Lai, former head of Taichung Plant, would serve as special assistant to the chairman as well as head of Kaohsiung Plant. IX. It is approved the lease of C2 land office building and parking lot of Nangang Economic and Trade Park of the Company. X. It is approved NTD 3million short-term credit decided by the board of directors of TR Electronic Chemical (Kunshan) Ltd. to China Trust and issued the letter of the board of directors of the Companyon supportingTaiwan Fertilizer(Cayman)International Group.

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Mar. 2014

I.
It is approved the plan that Company aims to hold the shareholders’ meeting of 2014 at Air
Force Officers and Soldiers Activity Center (No. 145, Sec. 3, RenAi Road, Taipei City) on
June 24, 2014 (Tuesday).
II.
Amendment of articles of incorporation of the Company was approved in the shareholders’
meeting.
III. The financial statements of the Company in 2013 and the consolidated financial statements
of the branches and affiliated companies were approved in the shareholders’ meeting.
IV. The profit distribution of after-tax profits of the Company in 2013, NTD 2,538,070,594 was
approved in the shareholders’ meeting.
V.
It is approved that the business report of the Company in 2013 will be reviewed by the Board
of Directors, given to the supervisors to check and then submitted to the shareholders’
meeting.
VI. It is approved that some revision of the rules for procedures of shareholders’ meeting in the
shareholders’ meeting.
VII. It is approved that some revision of_Internal Control System of Stock Units_of the Company.
VIII. It is approved that some revision of_Criteria on the Statistics and Verification of Power of_
_Attorney of Board of Directors_of the Company.
IX. It is approved the retirement of Yang Ming-Hui, former general manager of the Company.
X. It is approved that Huang Li-Yuan was assigned as general manager, instead of Yang
Ming-Hui.
XI. It is approved that the vice manager Liu Kuo-Ying doubled as the vice execution manager of
Taihai Company instead of the general manager of Taiwan Fertilizer Bio-tech Marketing
Company, and President Lee Fu-Hsing served as the general manager of Taiwan Fertilizer
Bio-tech Marketing Company.
XII. It is approved that vice manager YangTai served as director ofTR Electronic Chemical (Kunshan) Ltd.

Apr. 2014

I.
Some revision of the procedures for acquisition and disposal of assets of the Company was
approved.
II.
The financial statements of the Company and the consolidated financial statements of the
branches in the 1st quarter of 2014 were approved.
III. It is approved the report of the reallocation of land of Hsinchu Plant in Phase 2.
IX. It is approved the preliminary estimation of right transfer and the building and land selection
principle of [urban upgrade plan and right transfer plan of the 2nd land No. 531, Subsection
1, Nangang Section, Nangang District, Taipei City”.
V.
It is approved that the chief auditor Chung Hsuan-Tang would be served by assistant V.P.
Fan Hsuan-Yung.
XI. Some revision of the regulations on election of directors and supervisors of the Company
was approved.
VII. The amended Article 16 of articles of incorporation of the Company was approved.
VIII. Huang Yao-Hsing, assistant vice general manager of the Company was promoted as vice
general manager and director of Taichung Plant and Chen Po-Lai, former head of Taichung
Plant, would serve as special assistant to the chairman as well as head of Kaohsiung Plant.
IX. It is approved the lease of C2 land office building and parking lot of Nangang Economic and
Trade Park of the Company.
X. It is approved NTD 3million short-term credit decided by the board of directors of TR
Electronic Chemical (Kunshan) Ltd. to China Trust and issued the letter of the board of
directors of the Companyon supportingTaiwan Fertilizer(Cayman)International Group.

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	XI. The amended Article 3 of articles of incorporation of the Companywas approved.
May 2014	I. It is approved the rotation of the supervisors of TR Electronic Chemical (Kunshan) Ltd. and TaichungPlant invested bythe Company;
June 2014	I. It is approved that Sung Chuan-Hsu served as the vice executive manager of Jubail Fertilizer Co., Ltd. II. It is approved that the joint guarantee of the Company and Jinqun Company for USD10million loan borrowed by TR Electronic Chemical Ltd. (hereinafter referred to as “Cayman TREC”) from Shanghai Commercial and Savings Bank which has requested the Company to repay the loan debt that is not agreed by the board of directors to continuously provide the joint guarantee (USD 4.57million); the debt shall be repaid before the extension (June 26, 2014) in order to maintain the good credit records of the Company and finish the loan extension of USD 5.43million of Cayman TREC.
July 2014	I. It is approved some revision of_Measures on the Long-term Investment of Taiwan Fertilizer_ Co., Ltd._and the_Measures on the Preparation and Audit of Investment Plan of Taiwan Fertilizer Co., Ltd. II. It is approved the reallocation land undertaken by Kaohsiung Plant. III. Chang Tsang-Lang, the director of investment office of the Company, and Ku De-Tien, research fellow of trading office of the Company, served as directors of Jubail Fertilizer Co., Ltd. IV. Ku De-Tien, research fellow of trading office of the Company, served as vice general manager of Taiwan Fertilizer Biotech Co., Ltd. V. It is approved that the remuneration of the directors and supervisors was distributed according to the distribution of profits of the Company in 2013. VI. It is approved that the cash dividend distributed to the shareholders in 2013 was NTD2/dividend. VII. It is approved that the consolidated financial statement in the 2ndquarter of 2014 of the Company and branches. XIII. It is approved the migration of Kaohsiung Nitric Acid No. 3 Plant/Nitric Acid No. 3 Plant and the export to Cambodia.
Aug. 2014	I. Lang Chi-Wan, the director of Hsinchu Plant of the Company, served as the director of TR Electronic Chemical (Cayman) Ltd. and TR Electronic Chemical (Kunshan) Ltd. II. The general manager of Taiwan Fertilizer Biotech Co., Ltd. invested by the Company was served byHuangLi-Ai,thegeneral manager of the Company.
Sep. 2014	I. It is approved the intermediate operation and capital of the Company. II. It is approved the establishment of Taifer (Cambodia) Co., Ltd. III. It is approved the establishment of hotel at Hsiameilun,Hualien as invested bythe Company.
Oct. 2014	I. Peng Sheng-Lung, the agent director of Keelung Plant served as the assistant of general manager office, and Chen Xin-Chang, the vice director of Taichung Plant, served as the director of Keelung Plant. II. The plant director of Kaohsiung Plant of the Company was served by Chiang Jin-Cheng, the director of industrial safety and health office. III. It is approved the consolidated financial statements in the 3rd quarter of 2014 of the Company and branches. IV. It is approved the Company did not participate in the cash capital increase of TR Electronic Chemical Ltd. in 2014. V. It is approved the Company provided endorsementguarantee of NTD 50million for Taiwan Yes

Corporate Governance Report

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	DeepOcean Water Co.,Ltd.
Nov. 2014	I. It is approved the Company participated in the cash capital increase of Taizhuang Assets Management Development Co., Ltd., the shares of which are totally held by the Company. II. It is approved the three-in-one plant of the original Taichung Plant in Phase 3 and the increase of waste heat power generation system, and further approved that it was changed as Miaoli three-in-one Plant (sulfuric acid plant, sulfanilic acid plant and potassium sulfate plant). III. It is approved the election of directors, supervisors and general manager of Taiwan Fertilizer (Cambodia) Co., Ltd. in Cambodia. IV. It is approved dealingwith the wastes cleaningof KaohsiungPlant.
Dec. 2014	I. It is approved that the legal representative and the supervisor of Taiwan (Xiamen) Import & Export Co., Ltd. would be served by Lee Fu-Hsing, the chairman of the Company and Huang Mei-Ling, the financial director of the Company respectively. II. It is approved the retirement of Fan Hsuan-Yung, the general manager assistant and the election of candidate of the supervisor served by Fan. III. It is approved the audit project of the Company in 2015. IV. It is approved some revision of_Measures on the Implementation of Surface Rights of Land_of the Company. V. It is approved the preparation of annual business proposal and operation budget of the Companyin 2015.
Jan. 2015	I. It is approved the fixed assets abandonment of buildings that have not reached the service life in Kaohsiung Plant. II. It is approved the lease of C2 land office building of Nangang Economic and Trade Park and the parking lot. III. It is approved that Chang Tsang-Lang, the director of the Company, was promoted as the vice general manager assistant and the director of land development office and investment office. IV. The vice executive manager of Taiwan Fertilizer Biotech Co., Ltd. invested by the Company would be served by Luo Shih-Jii, the vice general manager of the Company, and the supervisor would be served by Lin Hsueh-Zheng, the director.
Feb. 2015	I. It is approved that the operation of hotel of the Company at Hsiameilun, Hualien was authorized to others. II. It is approved that the financial statements, the declaration of business profit income tax 2015 and 2016, and the declaration of undistributed profits in 2013 and 2014 are audited and endorsed by Deloitte Taiwan. III. It is approved that the director of TR Electronic Chemical (Kunshan) Ltd. invested by the Company was replaced by Wu Chang-Lin, the director of the Company’s operation department. IV. It is approved that Wu Chang-Lin, the director of the Company, promoted to vice manager assistant, doubled as director of operation office and director of the chairman’s office. V. It is approved that general manager Huang Li-Ai, instead of Chang Tsang-Lang, was appointed as director of Jubail Fertilizer Co.,Ltd.
Mar. 2015	I. It is approved the statement of the internal control system of the Company in 2014. II. It is approved that the individual financial statement 2014 of the Company and the branches and the consolidated financial statement 2014 of its associated enterprises would be reported in the shareholders meeting.

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	III. It is approved that the profit distribution of after-tax profits of the Company in 2014, NTD 3,068,345,649 would be reported in the shareholders meeting. IV. It is approved that the business report of the Company in 2014 will be reviewed by the Board of Directors, given to the supervisors to check and then submitted to the shareholders’ meeting. V. Application of the fixed assets abandonment of the buildings that have not reached the service life in Kaohsiung in order to coordinate the land development; VI. It is approved that the liability insurance for the directors, supervisors and critical personnel would still be purchased from Chung Kuo Insurance Company, Limited. VII. It is approved that the plan that Company aims to hold the shareholders’ meeting of 2015 at Air Force Officers and Soldiers Activity Center (No. 145, Sec. 3, RenAi Road, Taipei City) on June 24, 2015 (Wednesday). VIII. It is approved the overall re-election of directors and supervisors of the Company. IX. It is approved the nomination duration, number of required personnel and acceptance of the directors (including independent directors), supervisor and candidates of the Company. X. It is approved that a shareholder with more than 1% of stocks has the right for proposals. XI. It is approved that vice manager assistance Chang Tsang-Lang doubled as the general manager of Mongolia Taizhuang Company. XII. The Company and Jinqun Company provided joint guarantee for USD 5.43million loan borrowed by TR Electronic Chemical Ltd. from Shanghai Commercial and Savings Bank. It is approved that the loan extension limit of USD 2.13million and USD 3.3million was extended byrenewingthe agreement.

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III. It is approved that the profit distribution of after-tax profits of the Company in 2014, NTD
3,068,345,649 would be reported in the shareholders meeting.
IV. It is approved that the business report of the Company in 2014 will be reviewed by the Board
of Directors, given to the supervisors to check and then submitted to the shareholders’
meeting.
V.
Application of the fixed assets abandonment of the buildings that have not reached the
service life in Kaohsiung in order to coordinate the land development;
VI. It is approved that the liability insurance for the directors, supervisors and critical personnel
would still be purchased from Chung Kuo Insurance Company, Limited.
VII. It is approved that the plan that Company aims to hold the shareholders’ meeting of 2015 at
Air Force Officers and Soldiers Activity Center (No. 145, Sec. 3, RenAi Road, Taipei City)
on June 24, 2015 (Wednesday).
VIII. It is approved the overall re-election of directors and supervisors of the Company.
IX. It is approved the nomination duration, number of required personnel and acceptance of the
directors (including independent directors), supervisor and candidates of the Company.
X. It is approved that a shareholder with more than 1% of stocks has the right for proposals.
XI. It is approved that vice manager assistance Chang Tsang-Lang doubled as the general
manager of Mongolia Taizhuang Company.
XII. The Company and Jinqun Company provided joint guarantee for USD 5.43million loan
borrowed by TR Electronic Chemical Ltd. from Shanghai Commercial and Savings Bank. It
is approved that the loan extension limit of USD 2.13million and USD 3.3million was
extended byrenewingthe agreement.

(XII) Major Contents of Different Opinions of Directors or Supervisors on Important Resolutions with Records or Written Statements as Adopted by the Board of Directors over the Recent Years and up to the Date of the Publication of Annual Reports: N.A.
(XIII) Summary of conditions for resignation and dismissal of the chairman, President, accounting supervisors, financial supervisors, internal audit supervisors and research and development supervisors of the Company for the recent years and up to the date of publication of the annual report

Summary of the conditions for resignation and dismissal of related personnel of theCompany

March 24, 2015

				March 24,2015
POSITION	NAME	DATE HIRED	DATE RESIGNED	REASON FOR RESIGNATION OR DISMISSAL
General Manager	YangMing-Hui	09/25/2012	04/01/2014	Retirement
Financial Director	HuangMei-Ling	12/01/2012	01/01/2015	Rotation
Chief Auditor	ChungHsuan-Tang	03/26/2013	05/01/2014	Retirement
Chief Auditor	Fan Hsuan-Yung	06/01/2014	01/01/2015	Rotation

Note: The related personnel of the Company so called refer to chairman, President, accounting chief, financial supervisors, internal audit supervisors and research and development supervisors, etc.

Corporate Governance Report

IV. Information on Accountant Fees

(I) Information of Fees to CPA and Scale Table

Name ofaccountingfirm	Name ofaccountant	Name ofaccountant	Durationofaudit	Remark
Deloitte & ToucheUnited Certified PublicAccountants	Wang Yiwen	Fan Youwei	1.1.2014~12.31.2014

Note:For this year, if the Company replaces accountants or accounting firm, the durations of audit shall be recognized respectively and the reason for such replacement shall be written in the column of “Remark”.

Unit: NT$ thousand

Fee category Scale of amount	Fee category Scale of amount	Audit fee	Non-audit fee	Total
1	Below 2,000,000		V
2	2,000,000(inclusive)~4,000,000
3	4,000,000(inclusive)~6,000,000	V
4	6,000,000(inclusive)~8,000,000			V
5	8,000,000(inclusive)~10,000,000
6	Above 10,000,000(inclusive)

(II) When the payment of non-audit public fees to certified public accountants, certified public accountants offices and their associated enterprises account for more than one fourth of public audit fees, it is required to disclose the amount of audit and non-audit public fees and content of non-audit services:

Information about Fees to Accountants

Unit: NT$ thousand

Nameof accounting firm	Name of accountant	Audit fee	Non-auditfee	Non-auditfee	Non-auditfee	Non-auditfee	Non-auditfee	Duration of audit
			Design of system	Business registration	Human resources	Others (Note 1)	Subtotal
Deloitte& Touche United Certified Public Accountants	Wang Yiwen	4,565	27	495	-	1,054	1576,	1.1.2014~ 12.31.2014
	Fan Youwei
Note1：Remedyof business income Tax fee：1,054

Note1:For this year, if the Company replaces accountants or accounting firm, the durations of audit shall be recognized respectively and the reason for such replacement shall be written in the column of “Remark”; and the information about the paid audit fee and non-audit fee shall be disclosed in order.

Note2:The non-audit fee shall be recognized respectively according to the service items. If the non-audit fee’s “Others” is up to 25% of the non-audit fee, the service items shall be written in the column of “Remark”.

(III) Where the accounting firm is replaced and the paid audit fee for such year is less than that of the year before such replacement, the amount of and the reason for the audit fees before and after such replacement shall be disclosed: N/A.
(IV) Where the audit fee is reduced by above 15% from the previous year, the amount, rate of and reason for such reduction shall be disclosed: N/A.
(V) Information on Changes in Certified Public Accountants: N.A.

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(VI) Conditions where the Chairman of the Board, the President and Managers in Charge of Financial or Accounting Affairs Acted in Offices or Related Enterprises of Certified Public Accountants within the Recent Year: N.A.
(VII) Transfer of shares of Directors, Supervisors and Management Team and shareholders representing more than 10 percent of shares and changes in their mortgage for the recent years and up to the date of the publication of the annual report

(I) Information on transfer of shares:

Title	Name	2014	2014	For 2015 ended April 25th	For 2015 ended April 25th
		HoldingIncrease (decrease)	Pledged Holding Increase(decrease)	HoldingIncrease (decrease)	Pledged Holding Increase(decrease)
Chairman	COA	0	0	0	0
	Representative: Li,Fuxing	0	0	0	0
Director	COA	0	0	0	0
	Representative: Chen Wen-De	0	0	0	0
Director	COA	0	0	0	0
	Representative: Li Canglang	0	0	0	0
Director	COA	0	0	0	0
	Representative: Li Shiyu	0	0	0	0
Director	COA	0	0	0	0
	Representative: Lin Jianrong	0	0	0	0
Director	Cai Changhai	0	0	0	0
Director	Hsu Chinlin Chinlin	0	0	0	0
Supervisor	Chunghwa Post	8,945,000	0	6,191,000	0
	Representative:Wu Yuanren	0	0	0	0
Supervisor	Chen Zailai	0	0	0	0
Supervisor	Cai Linglan	0	0	0	0
President	HuangLiyuan	0	0	0	0
Vice President	Luo Shihri	0	0	0	0
Vice President	Chu Weishin	0	0	0	0
Vice President	Huang Yao-Xing	0	0	0	0
GM of Finance	Chien Chao-Jen	0	0	0	0

(II) Information about stock pledge :

Stock Pledge with Related Party : none

Corporate Governance Report

VIII. Information Disclosing the Spouse, Kinship Within the Second Degree andRelationship between any of the Top Ten Shareholders in Percentage:

NAME(NOTE 1)	Shares held by the person	Shares held by the person	Shares held by spouse, under-age children at present	Shares held by spouse, under-age children at present	Total shares held in the name of others	Total shares held in the name of others	Name and relationship of the interested persons the Spouse, Kinship within the Second Degree and Relationship Between any of the Top Ten Shareholders in Percentage of Financial and Accounting Principles Public Notice 6 (Note 3)	Name and relationship of the interested persons the Spouse, Kinship within the Second Degree and Relationship Between any of the Top Ten Shareholders in Percentage of Financial and Accounting Principles Public Notice 6 (Note 3)
	Shares	Percentage (%)	Shares	Percentage (%)	Shares	Percentage (%)	Name	Relationship
Council of Agriculture, Executive Yuan Representative：Lee Fu-Hsing Chen Wen-De Lee Tsang-Lang Lin Chien-Jung Lee Shih-Yu	235,886,376	24.07%	0	0	0	0	None	None
	0	0	0	0	0	0	None	None
	0	0	0	0	0	0	None	None
	0	0	0	0	0	0	None	None
	0	0	0	0	0	0	None	None
	2,039	0	0	0	0	0	None	None
Nan Shan Life Insurance Co.,Ltd.	36,159,000	3.69%	0	0	0	0	None	None
Chung Hwa Post Co., Ltd. Representative : Wu Yuan-Jen	24,422,000	2.49%	0	0	0	0	None	None
	0	0	2,000	0	0	0	None	None
China Life Insurance CompanyLimited	23,954,000	2.44%	0	0	0	0	None	None
Emerging market account of Taiwan Bank Custody Fuda Investment Trust Fuda Series	19,334,300	1.97%	0	0	0	0	None	None
Shin KongLife Insurance Co.,Ltd	16,992,000	1.73%	0	0	0	0	None	None
Labor Insurance Fund	15,411,000	1.57%	0	0	0	0	None	None
Special account of Vanguard emerging market stock index fund in the custody of the Standard Chartered Bank under consignment	13,537,100	1.38%	0	0	0	0	None	None
TaiwanLife Insurance Co.,Ltd.	13,517,000	1.38%	0	0	0	0	無	無
Fubon Life Insurance Co., Ltd.	11,700,000	1.19%	0	0	0	0	無	無

Note1: The Top 10 shareholders shall be listed completely; if the shareholder is a juridical person, its name and the name of its representative shall be listed respectively.

Note2: The percentage of shares is calculated respectively based on the rate of the shares held in the name of the shareholder, his/her spouse, minority children or others.

Note3: If the disclosed shareholders above include juridical persons and natural persons, their relationship shall be disclosed.

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IX. Percentage Number of Shares and Consolidate Percentage of the Company, Directors, Supervisor, Managers and the Businesses that are Controlled by the Company Directly or Indirectly on the Invested Company

December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00	December 31, 2014 Unit: Shares;% Reinvested entities (Note) Investment by the Company Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises Total investment Number of Shares % Number of Shares % Number of Shares % Taiwan Yes Deep Ocean Water Co.,Ltd. 95,000,000 100.00 0 0 95,000,000 100.00 TFC Biotech Co.,Ltd 10,000,000 100.00 0 0 10,000,000 100.00 Taichuang Assets Management and Development Co.,Ltd. 5,500,000 100.00 0 0 5,500,000 100.00 Al-Jubail Fertilizer Company 6,715 50.00 0 0 6,715 50.00 Bion Tech Inc. 4,167,000 22.42 0 0 4,167,000 22.42 TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD. 10,966 100.00 0 0 10,966 100.00
Reinvested entities (Note)	Investment by the Company		Investments bydirectors, supervisors,managerial officers and directly or indirectlycontrolled enterprises		Total investment
	Number of Shares	%	Number of Shares	%	Number of Shares	%
Taiwan Yes Deep Ocean Water Co.,Ltd.	95,000,000	100.00	0	0	95,000,000	100.00
TFC Biotech Co.,Ltd	10,000,000	100.00	0	0	10,000,000	100.00
Taichuang Assets Management and Development Co.,Ltd.	5,500,000	100.00	0	0	5,500,000	100.00
Al-Jubail Fertilizer Company	6,715	50.00	0	0	6,715	50.00
Bion Tech Inc.	4,167,000	22.42	0	0	4,167,000	22.42
TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD.	10,966	100.00	0	0	10,966	100.00

Note : Those investments are used in equity method.

Capital Overview

Part Four: Capital Overview

I. Capital and Shares

(I) Source of Capital Stock

Date	Issue price	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital	Remark	Remark	Remark
		Shares (k)	Amount (NT$1K)	Shares (k)			Shares (k)	Amount (NT$1K)
August 2000	NT$10	980,000	9,800,000	980,000	9,800,000	NT$2.8 billion capital reserves converted to increase capital (Note)	None	None

Note: Refer to the Letter of Authorization (2000) Tai-Tsai-Zheng (1) 60387 by Securities & Futures Institute on July 12th, 2000.

Category	Authorizedcapital	Authorizedcapital		Remark
	Issued shares(k shares)	Un-issued shares(k shares)	Total
Common stock	980,000	0	980,000	Listed stocks

Information for shelf registration: N.A.

(II) Structure of Shareholders

April 26,2015	April 26,2015	April 26,2015	April 26,2015	April 26,2015	April 26,2015	April 26,2015
Structure Amount	Government bodies	Financial institutions	Other juridical persons	Individuals	Foreign Institutions &Foreigners	Total
Members	7	24	186	63,235	439	63,891
Shares held	277,031,490	160,367,495	23,612,610	306,093,107	212,895,298	980,000,000
Percentage(%)	28.27%	16.36%	2.41%	31.24%	21.72%	100.00%

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(III) Shareholding Distribution Status

1.Common stocks

(Par Value in NT$10)

April 26, 2015

			April 26, 2015
Range of shares held	Number of shareholders	Total shares held	Percentage (%)
1 - 999	14,981	1,128,484	0.12%
1,000 - 5,000	37,624	80,735,103	8.24%
5,001 - 10,000	5,823	47,680,078	4.87%
10,001 - 15,000	1,643	21,704,664	2.22%
15,001 - 20,000	1,230	23,161,602	2.36%
20,001 - 30,000	947	24,913,686	2.54%
30,001 - 50,000	682	28,134,655	2.87%
50,001 - 100,000	471	34,688,887	3.54%
100,001 - 200,000	238	33,838,981	3.45%
200,001 - 400,000	114	31,176,208	3.18%
400,001 - 600,000	35	17,579,082	1.79%
600,001 - 800,000	16	11,241,644	1.15%
800,001 - 1,000,000	13	11,694,611	1.19%
Above 1,000,001	74	612,322,315	62.48%
Total	63,891	980,000,000	100.00%

2.Preferred stocks: None.

(IV) List of Major Shareholders

April 26[th] , 2015

		April 26th, 2015
Shareholding Major Shareholders	Shares	Percentage (%)
COA of Executive Yuan	235,886,376	24.07%
Nan Shan Life Insurance Co.,Ltd.	36,159,000	3.69%
Chunghwa Post Co.,Ltd.	24,422,000	2.49%
China Life Insurance(Group)Company	23,954,000	2.44%
Fidelity Investment Trust Funds Emerging Market Series in the custodyof BOT	19,334,300	1.97%
Shin KongLife Insurance Co.,Ltd.	16,992,000	1.73%
Labor Insurance Fund	15,411,000	1.57%
Charter Standard Bank trusted Vanguard EmergingMar kets Stock Index Fund	13,537,100	1.38%
Taiwan Life Insurance Co.,Ltd.	13,517,000	1.38%
Fubon Life Insurance Co.,Ltd.	11,700,000	1.19%

Capital Overview

(V) Market Price, Net Value, Earnings, Dividends Per Share of the Latest Fiscal Years, and Related Information

Related Information	Related Information	Related Information
Year Items			2014	2013	The year ended March 31st, 2015 (Note 5)
Market price per share (Note 1)	Max.		67.8	78.4	56.1
	Min.		49.3	66.0	52.0
	Average		58.58	71.81	54.28
Net value per share	Before distribution		53.46	51.81	53.40
	After distribution		Not distributed	49.81	Not distributed
Earnings per share	Weighted average shares(1k)		980,000	980,000	980,000
	Earningsper share		3.13	2.59	0.05
Dividends per share	Cash dividend		Not distributed	2	Not distributed
	Free placement	Surplus distribution	－	－	－
		Distribution by capital reserve	－	－	－
	Accumulated undistributed dividends		－	－	－
Return on i	Price-earnings ratio(Note 2)		18.61	27.62	－
	Price-dividend ratio(Note 3)		－	35.77	－
nvestment	Cash dividendyield rate(Note 4)		－	2.80	－

Note 1: The highest and the lowest market value per share. The average market value was annually calculated according to the stock index and the turnover.

Note 2:Price-earnings (P/E) ratio = Average closing price per share that year/ Earnings per share.

Note 3:Price-dividend (P/D) ratio = Average closing price per share / Cash dividends per share.

Note 4:Cash dividend yield rate = Cash dividend per share / Average closing price per share that year.

Note 5: Market price per share in 2015 is the information up to March 31st, 2015, and net value per share and earnings per share are information on consolidated financial statements for the first quarter audited by certified public accountants.

(VI) Company’s Dividend Policy and Implementation

Dividend Policy of the Company
(1) Dividend Policy of the Company is set forth in the articles of association of the Company:

Article 27 :

Any earning after final accounting by this Company each year shall be made good for deficit for previous years after payment of taxes by law, and if there are still earnings, there shall be provision for 10 percent of statutory surplus reserve, and there shall also be provision for or transfer of special surplus reserve by law, and then the balance and total retained earnings for the previous year shall serve as the distributable earnings, but they shall be retained by discretion as business requires or there shall be provision for special surplus reserve by discretion before they will be distributed at the percentage below:

1.Remuneration for Directors and Supervisors at within 2%

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2.Employees bonus at 3%
3.Shareholders' bonus

For the above distribution, the board Board of directors Directors will draft the specific distribution plan and file the same with the general meeting of shareholders for resolution and handling.

The dividend and bonus to be distributed aforesaid, whether all or part, shall be made by the board Board of directors Directors in the manner of issuing new stocks according to the Company Act.

The dividends to the shareholders of the Company shall consider the characteristics of diversity and prosperity fluctuation of the businesses of the Company and consider the demand of the life cycle of the products or services on the funds in the future as well as the business development and shareholders’ right and interest. Unless otherwise major investment plans, major financial situation changes, major operation changes and production capacity enlargement or other major capital expenses, etc., which need large fund exist that year, the ratio of cash dividends of the Company for the year shall not be less than 10% of the total dividends of the year and shall be filed with the general meeting of shareholders for approval.

(2) The distribution of bonus for the shareholders of the Company will be based on the following factors; that is, the financial condition of the Company in future, and the need for a stable dividend condition as well as for the transformation of the Company.

In principle, at least 50% of earnings can be distributed after statutory surplus reserve and special surplus reserve by law are deducted.

Dividend distribution to be proposed at this meeting of shareholders:

According to the income distribution plan 2014 of the Company to be proposed by the board Board of directorsDirectors, the cash dividend to be distributed is NT$2.2 per share and totally NT$2,156,000,000 will be distributed.

Estimation of substantial change in the dividend policy of the Company : None

(VII) Effect of the uncompensated rationed shares deliberated at this meeting of shareholders on the Company’s business performance and earnings per share: N.A.

(VIII) Dividends for Employees and Remuneration for Directors and Supervisors

Percentage and scope of employee dividends and Director and Supervisor remuneration set forth in the articles of association of the Company:

In accordance with Article 27 of articles of association of the Company:

Capital Overview

distributed at the percentage below:

1.Remuneration for Directors and Supervisors at within 2%
2.Employees bonus at 3%
3.Shareholders' bonus

For the above distribution, the board Board of directors Directors will draft the specific distribution plan and file the same with the general meeting of shareholders for resolution and handling.

The dividend and bonus to be distributed aforesaid, whether all or part, shall be made by the board Board of directors Directors in the manner of issuing new stocks according to the Company Act.

The basis for the estimate and recognition of the employee bonus and Director and Supervisor remuneration, the basis for the calculation of the placed and issued shares for dividends and the accounting handlingin case of difference between actual distribution amount and estimated amount for this period:

The estimated employees’ dividends for the current period accounting for NT$68,084K and the amount of remuneration for Directors and Supervisors accounting for NT$45,390K are estimated on the basis of Article 27 of the Articles of Association of the Company and NT$2.2 as cash dividends per share proposed to be distributed without distribution of share dividends. If actual amount of allotment is different from the estimated amounts, such will be deemed as changes in accounting estimates, which will be recognized as the profit and loss for 2015.

Information about the employee bonus and Director and Supervisor remuneration to be distributed by the Board of Directors of this year:

The proposal for the income distribution of 2014 of the Company was passed with the resolution of the Board of Directors on March 27th, 2015 and the employee bonus and Director and Supervisor remuneration to be distributed and other related information are as follows:

(1)The proposed amount of allotment adopted in the Board’s meeting (as shown in the table below) is calculated on the basis of Article 27 of the Articles of Association of the Company and NT$2.2 as cash dividend per share. No share bonus will be allotted. For any difference caused by changes in accounting estimates, it will be adjusted in 2015.

Unit: NT$K

	Unit:NT$K
Item	Proposed distribution amount passed by theBoard of Directors
Cash dividends to employees	68,084
Stock dividends to employees	None
Director and Supervisor remuneration	45,390

(2)It is required to deliberate the amounts of employees’ dividends out of shares and the percentage in the net income after tax and total amounts of employees’ dividends in the individual financial reports：N.A.
(3)The shares converted from the proposed employee bonus to be distributed and rate to the

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increased capital converted from profit: N.A.

(4)The estimated earnings per share after the distribution of the employee bonus and Director and Supervisor remuneration to be distributed:

Item	NT$
Earningsper share	3.13
Estimated earningsper share	3.13

Conditions for actual distribution and payment of employees’ dividends and remuneration for Directors and Supervisors for the previous year (including number of allotted shares, amounts and prices of shares). If there is any difference in the recognized employees’ dividends and remuneration for Directors and Supervisors , it is required to specify number of difference, reasons and treatment conditions：

The actually distributed employees’ dividends and remuneration for Directors and Supervisors are the same as the proposed conditions of allotment as adopted by the former meeting of directors.

Unit: NT$K

		Unit: NT$K
Item	Estimated amount tobe distributed by the Boardof Directors	Actually distributed amount
Employee dividend	61,895	61,895
Director and Supervisor remuneration	41,263	41,263

(IX) Buyback of the Shares of the Company

For FY2014 and FY2015 as at the publication date hereof, no buyback of the shares of the Company.

II. Corporate Bonds: None.

III. Preferred Stocks: None.

IV. Overseas Depositary Receipts: None

V. Employee Stock Options: None.

VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

VII. Financing Plans and Implementation: N.A.

Operation Highlights

Part Five: Operation Highlights

I. Business Activities

(I) Business Scope

◆Description of the Business of the Company:
C801010 Basic chemical industry;
C801020 Petrochemical raw material manufacture;
C801110 Fertilizer manufacture;
C801990 Manufacture of other chemical materials;
C802100 Manufacture of cosmetics;
C802170 Manufacture of toxic chemical materials;
C802990 Manufacture of other chemical products;
CC01060 Manufacture of cabled communication machinery and equipment;
CC01080 Manufacture of electronic parts and components;
CE01030 Manufacture of optical instruments;
F102180 Wholesale of alcohol;
F107050 Wholesale of fertilizers;
F107060 Wholesale of toxic chemical materials;
F107080 Wholesale of environmental hygiene medicines;
F107200 Wholesale of chemical raw materials;
F107990 Wholesale of other chemical products;
F108040 Wholesale of cosmetics;
F113070 Wholesale of telecom equipment;
F119010 Wholesale of electronic materials;
F203030 Retail of alcohol;
F207050 Retail of fertilizers;
F207060 Retail of toxic chemical substances;
F207080 Retail of environmental hygiene medicines;
F207200 Retail of chemical raw materials;
F207990 Retail of other chemical products;
F208040 Retail of cosmetics;
F212011 Gas station industry;
F212990 Retail of other petroleum products and fuels;
F214030 Retail of car parts and fittings;
F301010 Department store industry;

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F301020 Supermarket industry;
F401010 International trading;
F501060 Restaurant industry;
G202010 Car park operation;
G406061 Commercial port zone ship goods loading and unloading contracting;
G801010 Storage industry;
H701010 Residence and building development and leasing;
H701020 Industrial workshop development and leasing;
H701040 Special professional zone development;
H701050 Investment in construction of public facilities;
H703010 Workshop leasing;
H703020 Warehouse leasing;
H703030 Office building leasing;
I301010 Information software services;
I301020 Data processing services;
I301030 Electronic information supply services;
I401010 General advertising services;
J101030 Waste cleaning;
J101040 Waste disposing;
J101060 Waste water treatment;
JA01990 Other car services;
ZZ99999 The businesses not forbidden or restricted by operation laws and regulations in addition to the permitted businesses.

◆ Major products of the Company

Fertilizers:

Ammonium Sulfate, Calcium Superphosphate, Compound Fertilizer, Urea, Potassium Chloride, Organic Material Fertilizer and Biopower Stimulants.

Chemical products:

Urea for Industrial, Anhydrous Ammonia, Nitric Acid, Melamine, Sulfamic Acid, Sulfuric Acid and Oleum.

Electric grade chemicals:

Photoresist, Stripper, Ablution, Erodent, Organic Solution and Simple substance acid and alkali.

Biotech products:Functional Water, Natural Sea Salt, Ingredients of Functional Food and Cleaning Products.

Operation Highlights

(II) Industry overview

1. Macro-economic environment

Global economy: according to the predicting result of international economy by global major economic research institutes, the performance of 2015 global economy is better than that in 2014, which represents a complicated situation under the sustainable recovery of global economy. The U.S.A still enjoys a powerful economic recovery; the Eurozone is disturbed by the issues of liabilities, currency and labor market; China converts normal high-speed growth to the new normal medium-to-high speed growth following the policy guidance; Japan still suffers from sluggish domestic demand, which contribute to a diverging economic performance of major economic entities in 2015. What’s more, the continuous drop of oil price also brings much uncertainty to the global economy.

Due to the drop of oil price and the international situations, the domestic economy in 2015 is expected to be better than in 2014, the domestic enterprises have optimistic opinion to the current economy. According to predicting on economy growth of Taiwan in 2015 by the Directorate General of Budget, Accounting and Statistics, Executive Yuan (DGBAS), the growth is increased to 3.78% from 3.35% in the fourth quarter of 2014, a growth of 0.43%. Based on the recovery of global economy and continuous drop of oil price, there is good performance in consumption and the predicated growth rates in private consumption in 2015 can reach 2.71%, an increase of 0.24% compared with that in November 2014. The investment in major semiconductor manufacturers are greatly increased to help promote the growth of private investment, which can be 5.90% in 2015, an expected growth of 0.1% than that in November 2014. Restricted by the government finance, however, the expected growth rate of fixed assets in 2015 will be 3.48%, an expected drop of 0.44% than that in November 2014.

In conclusion, the global economy in 2015 is still in its way of recovery but the paces are slow and both international and domestic economy will be affected by uncertain factors. The positive factors include continuous improvement of U.S.A economy, which is good for maintaining growth of global economy and export of Taiwan, as well as drop of oil price, which can help realize import reduction and consumption increase of Taiwan. The negative factors include: the impact on financial market caused by the time and level to raise interest rate by the Fed has to be observed; the economy in Eurozone is weak and covered by the fear of deflation; the effects on economic essence need to be verified even the European Central Bank has proposed quantitative easing; the high-speed development of economy of China Mainland is gone, which also has certain impacts on Taiwan trade. Finally, the international oil price suffers from short-term slump, which intensifies the debt crisis of oil exporting countries and emerging market, political gridlock of Greece, confrontation between Russia and Western countries and political risks of tense situation of the Middle East, all of which will keep affecting global economy in 2015.

According to the annual statistics of Council of Agriculture, the total amount of domestically used chemical fertilizer has the trend of gradual reduction year by year. Ever since 2009, the government has stepped to the agriculture of excellence, health, and happiness. Based on the improvement of living standard and pursuit for more healthy and safe foods, the agricultural

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acreage of domestic organic agriculture and market size of organic foods are continuously increased, the world has a trend towards green and environmentally friendly economy and the global energy supply market has obvious changes, which become severe challenges to energy-intensive industries.

The company will keep improving the current competitive advantages, have robust control over the operation risks, strengthen operation performance, actively promote the healthy career and invest on production and marketing of products from organic agriculture, care and maintenance, as well as leisure and wellness, so as to promote the transformation and improve the overall competitiveness of enterprise. Look ahead in 2015, the company is expected to have stable and excellent operation performance in the following year along with the slow recovery of international and domestic economy.

Current situation and development of industry
(1) Fertilizer industry
- ①As a mature industry, the fertilizer industry is closely related to the agricultural development and government policies. The industrial development, importing of agricultural products after entering WTO and fallow policy of agricultural lands in recent years are adverse to the development of development of agriculture. The total demand for fertilizers is gradually decreased along with the decrease of domestic agricultural acreage; what’s more, the market becomes more fierce due to the over capacity of domestic fertilizers and free import/export
- ②Almost all fertilizer materials have to be imported, which makes the product cost greatly increased due to the sharp rise of fertilizer cost; to reduce the burden of farmers, the government has provided end price subsidies ever since May 2008 and established “fertilize price review team” to monthly stipulate and adjust base price of domestic fertilizers according to the market and valuation formula of fertilizer raw materials. The price of domestic fertilizers has been restrained by government for long time.
(2) Chemical products

The Anhydrous Ammonia, urea and Melamine factories of our company were separately stopped in 1999 and 2011 due to absence of natural gas resources. The ammonia, urea and Melamine required in domestic market are fully exported, which makes our company become a supplier from manufacturer; we are amongst the suppliers of ammonia, urea and Melamine to provide these materials to domestic market with good stability and reasonable price. The export of Sulfamic Acid and nitric acid in domestic market has to be expanded due to the saturation in domestic market. The competition of aforementioned products is becoming fiercer due to the external shifting of traditional industries, reduced demands for aforementioned chemical products and supply above demand.

(3) Electronic grade chemicals
①The electronic grade chemicals refer to the chemical products used in manufacture procedure of electronic industry or factory affair end, ranging from simple substance organic solvent, acid or alkaline solution or formulas with different proportions. The products are mainly used in manufacture process including yellow light developing,

Operation Highlights

stripping, etching, grinding and cleaning of semi-conductors, panels, LED and solar energy.

②By the end of 2013, the TSMC has clearly declared to build the 18″ wafer plant in Chunan except for the Taichung plant. Both AUO and Innolux have started domestic evaluation of the 10th generation glass substrates. The LED and solar energy industry have increased from the bottom in 2013. Generally, the demand of electric grade chemicals will have positive growth along with the innovation application and continuous expansion of capacity in electric industry, which means the market of electric chemicals still has the development space.
③The electric chemicals will develop with low cost, low quality, low profit and high specification due to the fast updating of electric products, technology improvement in manufacture process of electric industry and strict control on cost. Only by adopting customize formulas and improving R&D capability, can profits be obtained in niche.

(4) Deep ocean water (DOW)

DOW refers to the deep ocean water with depth above 200m and free from light ray, which offers it with low temperature, rich mineral substance, cleanliness and maturity and makes it the emerging water resources which can be used by multiple objectives.

①As the precious natural resources, the DOW can be produced by Japan, Hawaii, Korea and Taiwan only and the application scope is wide due to its difference. The DOW produced in Taiwan are collected from the east coast of Hualien with depth of 662m, extracted by high technology and reserved with 80 kinds of “deep-sea minerals and microelements” which can be directly absorbed by human body after eating, making it the “god formula”.
②Taiwan has changed the strategy by focusing on high additive value “health biotech” raw materials with the coming ageing society structure, rising of healthy consciousness and importance of minerals in health food industry. The raw materials of DOW “liquid” can be added in drinking water and beverage, while the “powder” products can be produced into lozenge, capsule and powder bags as the competitive health foods of “preventive medicine”.
③What’s more, the base located at eastern coastal of Hualien where DOW is extracted can be used for establishing “comprehensive health leisure park” in combination with sightseeing of eastern coastal, health foods and experience of DOW, so as to satisfy the visitors who love new knowledge, natural landscapes and leisure.
(5) Land development

 Housing development industry

By the end of 2014, the trading volume of housing in Taiwan was reduced by 20,000, a drop of 23% on year-on-year basis, which makes it the lowest trading volume since 1999. The loan interest rates of five major banks have increased to 1.956% due to suppression on housing speculation and decreasing credit of bank, which enhances the access criteria of real estate investment. The residential houses above NTD 50 million are the mostly affected and there’s obvious reduction of trading volume, but the current unit price remains unchanged. The new laws about housing tax may increase house tax and have further impacts on current trading and price of current housing market and further affect the constructor’s schemes.

The disposable income of families in Hsinchu and Hsinchu county separately rank the

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2nd and 3rd of Taiwan following Taipei City, but their housing prices are lower than Taipei City, New Taipei City and Taoyuan City in northern counties; therefore, the price and income ratio is only 7.3 times, which is far more lower than main northern counties. According to the sales data of housing in previous years of Hsinchu, the trading volume has been sharply reduced to NTD 15.1 billion in the first three quarters in 2014 from NTD 54.67 billion in 2012; the average sales rate has also reduced to 21.6% in the first three quarters of 2014 from NTD 40.4% in 2012 (according to data of Business Weekly. It is obvious that the suppression on housing speculation by government in April, 2014 has affected the real estate market in Hsinchu. The leading products in current housing market are houses below 50m2 and the total price is ranging between NTD 7-14million.

 Commercial real-estate development industry

There are above 51 department stores in Taipei City, most of which are located in Eastern District. The newly established CITYLINK Sung Shan Branch and Nangang Branch, as well as the planned Taipei Dome, CITYLINK Neihu Branch, RADIUM Nangang Airport and Taipei Bus Station (Gate of Taipei), will bring different large shopping malls and therefore increase the pressure to the highly saturated market. Affected by the online shopping and non-store retailing, the consumption type of Taiwan retailing in recent years has been changed and annual growth rate in recent 2 years was below 4% (the average increase rate in past 10 years was about 6%).

According to Q3 Taiwan real estate report in 2014 by Colliers International, the CTBC Nangang Headquarters, which was finished and used by the end of 2014, was mainly internally used and has less impact on market. The U-TOWN building, which is planned on New Taipei Metro Line 5 in 2014, has a total area up to 660,000m2 and distance of 2-3km to Nangang Economic & Trade Park, will be finished and used in 2015 and 2016. Its rent advantages will have great influences on this area. What’s more, the Daxizhi Economic and Trade Zone is separated with Nangang Economic Park by a river only and has large development hinterland, making it a potential rival.

With the freezing of office market by the end of 2014 and increase of vacancy rate, the estimated rent in 2015 may have slight reduction. The vacancy rate is: 8.33% in Minsheng North Road, 5.37% for Renai South Road, 8.11% for Xinyi Planning District, 15.51% for Nanjing Songjiang District, 5.21% for Sec. 4/5 Nanjing East Road, 3.12% for Western District and 2.86% for Renai & Xinsheng Roads. The average monthly rent per ping of Top Level, Level A, AB, and B is NTD 2,867, 2,167, 1,747 and 1,491 separately, all of which are unchanged or increased.

Operation Highlights

Relationship diagram of upstream, midstream and downstream of domestic fertilizer and chemical industry

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

Upstream Midstream Downstream
(Agricultural
Liquid Nitrate phosphate user)
Nitric acid
ammonia compound fertilizer Council of
Agriculture
Fertilizer seller
Urea
Farmer
Potassium Zinc phosphate
compound fertilizer
chloride
(Industrial user)
Phosphate Calcium Ammonium sulfate Plywood industry
superphosphat
Fertilizer
e
industry
Electronics
industry
Melting sulfur Sulfuric acid
Food industry
Power
Sulfamic Acid generating
industry
Environment
protection
industry
Chemical
Melamine industry
Steel industry
----- End of picture text -----

Development tendency and competition of products Fertilizer products:

The manpower is gradually replaced by mechanical farming due to the lack of rural labor force and increase of salaries, which gradually increases the demand of compound fertilizer but reduces the demand of simple substance fertilizer. All participants in fertilizer industry have to strive for domestic compound fertilizer market, making the compound fertilizer a product of the fiercest competition. The key development projects in recent years include controlled-release fertilizer, bio-fertilizer, organic compound fertilizer and

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functional fertilizer. The research and development focus is the new fertilizer which can improve crops quality and fertilizer absorption efficiency of crops.

(III) Technology and R&D overview

R&D expenditure

R&D expenditure
Year Project	2013	2014
R&D expenditure(in NTD 1,000)	46,042	45,149
Proportion in business volume(%)	0.29%	0.26%

Achievements in recent 2 years

The company strengthens cooperation with foreign research institutions, introduces new technology and shortens the R&D period by following the innovative strategies and transformation of scientific technology to enter the high-tech market. We will keep improving our microbiologic fermentation technology, establish enzyme hydrolysis extraction technology, DOW highly economic aquaculture technology, inorganic and organic fertilizer formula and manufacture process technology.

(1) Development of biotech fertilizer
◆Application of agricultural microbial strain - development of biotech fertilizer

A microorganism and organic fertilizer bacteria planting and operating platform is established in the company to strength the core technology of microbial fermentation, evaluate and introduce the decomposing bacteria and deodorizing bacteria of organic matter and soil disease antagonistic bacteria so as to select the appropriate combination of compost bacteria, establish propagation and culturing technology of functional strains and use it in related products including microbial organic fertilizer. The Miaoli Plant of the company has established a factory of biotech organic fertilizer in 2014 with annual output of 3000mt. The applicable raw materials are surveyed considering the cost fluctuation of raw materials in different seasons and the optimal parameters in manufacture process can be determined according to the formula and bacteria, so as to develop the organic fertilizer products with additional functions.

◆Development of phosphorus-solubilizing bacteria

With the rise of safe and organic agriculture, the concept of using both microbial fertilizer and biopesticide in prevention of crops pest becomes mature. Ever since 2009, the company has carried out 3-year “development of biopesticide and biological fertilizer products of liquefied starch bacillus” with “Taiwan Agricultural Chemicals and Toxic Substances Research Institute (TACTRI)” and then carried out may tests for manufacture process to develop the microbial fertilizer which can prevent diseases, restrain pathogen and improve output of crops. As a patented technology transferred from “TACTRI”, the bacillus amyloliquefaciens Ba-BPD1 has obtained the registration certificate of 8-03 phosphorus-solubilizing bacteria (FZ (S)ZD No. 0465015) and registered as “dynamic phosphorus fertilizer”. In order to verify the effects of products with more test data, the field test of crops is expanded in 2014 and the result shows the product can promote the growth and yield of leaf

Operation Highlights

vegetables (Chinese cabbage, cole and lettuce), melons (foreign melon, melon and cucumber) and strawberries and also improve the taste of foreign melon.

◆Field validation of organic materials and establishment of cultivation technique

The company attaches great importance to the deep ploughing and rise of organic agriculture of Taiwan and actively develops the organic materials and fertilizers to provide high-quality organic materials to farmers. In 2014, the company established an organic demonstration farmland to carry out field test of greenhouse of organic materials so as to verify product efficacy and improve competiveness of products. The seasonal vegetables and fruits are cultivated using recommended Nongyou dynamic nutrients of organic agriculture commercialization materials in coordination with biotech organic fertilizers. The plant diseases and insect pests are also controlled with organic cultivation (no chemical fertilizer and pesticide used) in coordination with biological control to establish organic cultivation technique.

(2) R&D of micronutrients fertilizer

The comprehensive microelement products were developed in 2014 based on the formula of deep sea mineral substance and microcrystal (mineral treasure) added with some microelement or bacterium solution to satisfy the demands of fertilizers in growing season and fruit setting of highly economic crops and cultivated crops and improvement of sweetness, realize disease prevention and treatment, reduce the physiological barriers of crops and supplement microelements and also develop the products with comprehensive microelements. The new product, which contains magnesium elements, is used in the fertilization effect test of lettuce, gherkin and tea to improve the chlorophyll index of tea, promote the growth of lettuce, yield and quality of gherkin, one-hundred-bud weight and number of buds of tea and improve the flavor of tea. The combination of routine farming and foliage dressing is recommended for farmers.

(3) R&D of biotech aquaculture technology
◆Raise and intermediate incubation test of highly economic fish

The fish such as oplegnathus punctatus and striped beakfish were introduced in 2014 to develop aquaculture industrialization and sightseeing of “flower” DOW park, collect and develop the cultivation technique of high-price fish and try self-breeding of fish fry. The cultivation technique of high-price fish such as white shrimp, platax teira and perch is successfully realized based on DOW.

◆Water cultivation of macrophytic algae in DOW

The functions and processing methods of Taiwan macrophytic algae with edible value and rich nutrient source, such as ulva, sarcodia montagneana and red alga, which are competitive in taste and output under cultivation of DOW, are discussed and researched according to the characteristics of DSW low temperature, cleanness and rich nutrients, so as to confirm the optimal production mode. The two-stage cultivation method is adopted to improve the utilization rate of DOW and realize temperature returning of DOW. In 2014, the self-produced macrophytic algae are used as food materials for DOW special catering in Hualien Holiday Park and the developed fruits include “deep sea taste pancake”, “deep sea taste drink” and “algal soap”.

◆Application of microbial preparation in aquaculture technology development
Based on the fermentation of multiple fermentation materials added with

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microorganism, the company has developed “No. 3 Nongyou brand biotech aquaculture nutrient” and “No. 1 dynamic fish treasure” with 17 types of amino acids, multiple microelements and phosphate solubilizing effects and use them in the field test of cultivation of Taiwan tilapia, eel, Thailand shrimp, clam, meretrix lusoria, white shrimp, perch and crabs, all of which have good stability, improved bottom materials and reduced bacterial diseases. In 2014, the No. 1 Nongyou brand biotech organic fertilizer is used for field test, which has successfully established the cultivation technique of crabs. Our company has also launched an announcement campaign of crabs together with Miaoli County Government to promote this technique and sever the aquaculture industry.

(4) R&D of scale-extracted collagen peptide application technology

Ever since the ISO22000 certification of “collagen workshop” is obtained in 2005, the company has developed the “scale collagen peptide” with small molecular weight and easy absorption using fresh fish scales as raw materials. This product has been successively awarded as “Symbol of National Quality - emerging biotech group of biological technology”, which proves the good quality of “raw materials of scale peptide” and it also becomes the success case of conversion from industrialization of research findings in emerging biotech industry. The company entrusts Taiwan SGS and STC (Dongguan) Company Limited (China Mainland) for inspection and the content of microorganism, heavy metal and antibiotic conform to the standard of raw materials of cosmetics and food. They are widely used in the development of cosmetics and healthy food. The company will keep on refining process, grasp the analysis technique of enzyme activity to reduce the cost, improve output and provide competitive price and quality.

Health food certification on application of collagen peptide raw materials in improving osteoporosis

Other health care compositions of collagen peptide of the company are produced by GMP or HACCP certified manufacturers to develop collagen bone ingot of “TFC BIOTECH”, which can provide health care to consumers. In 2013, the company entrusted Taipei Medical University to carry out long-term test on rat, which indicated that the sample can help improve the bone hardness and intensity of rat and the product is now applied for the certification of healthy food of Department of Health.

◆Collagen peptide passes the certification of Muslim products

Located in the collagen workshop of Miaoli Plant, the company takes scale of Taiwan tilapia and chanos as raw materials and carries out extraction of collagen peptide via core technology of enzyme hydrolysis with average molecular weight of 3,438±438 Da. The collagen peptide products produced via this process are applied for Islam HALAL food certification of Taiwan Halal Integrity Development Association and have passed the certification on March 26, 2014, so as to expand the consumption market.

(IV) Development plan of long-term and short-term business

Fertilizer industry

Short-term development:

(1) To stabilize the existing industry, strength after-sales service, continuously improve fertilizer quality so as to satisfy quality requirements of customers.

Operation Highlights

(2) To separate the market, develop and introduce niche products and keep promoting fertilizers with high additive values so as to increase sales income.
(3) To improve packaging quality, strengthen advocacy of new fertilizers, establish test, demonstration and explanation sessions in highly economic crops area of entire province in order to increase the additive value of products.
(4) To sell the remaining fertilizers overseas on the basis that there’s profit so as to improve capacity utilization.
(5) The company will move all production plants to Taichung Plant for concentrated production according to urban planning policy of government so as to improve operating performance.

Medium and long-term development:

(1) To continuously develop high-technology biotech organic fertilizers in coordination with development of organic agriculture.
(2) To refine the agriculture development in order to promote high-component and high-quality fertilizers.
Chemical industry

Short-term development:

(1) Anhydrous Ammonia: the downstream demands for supply source shall be stabilized based on the advantages of storage tank.
(2) Industry urea: the qualified suppliers shall be searched to provide high-quality low-price products and satisfy the downstream demands.
(3) Nitric acid: the output of nitric acid is increased after operation of Taichung Plant, which can help expand domestic and overseas market.
(4) Melamine: the delivery-to-shop service shall be promoted to increase the market share with good quality and service.
(5) Sulfamic Acid: the quality and service shall be improved to stabilize supply and delivery time and increase the market share in Europe and American market.
(6) Sulfuric acid and Oleum: the marketing shall be promoted based on competitive price and acid recovery capability in coordination with the remaining capacity of fertilizer.

Long-term development:

(1) Anhydrous Ammonia: it shall be moved to Port of Taichung in coordination with warehousing and complete supply chain is established to satisfy customer’s requirements.
(2) Nitric acid: it shall be moved to Port of Taichung in coordination with warehousing to improve product quality, quantity and concentration, so as to expand the market.
(3) Sulfuric acid and Oleum: the plant is planned to move to Miaoli Plant in future to exert the integrated effects of upstream and downstream plant, increase output, reduce production cost and improve competitiveness to expand the market.
(4) Melamine and industry urea: they are moved to Miaoli Plant in coordination with warehousing and packaging to improve delivery efficiency, serve the customers,

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stabilize supply source and provide reasonable price so as to expand the domestic market share.

Electric grade chemicals:

Short-term development: the existing distillation equipment of Hsinchu Plant is moved to Miaoli Plant to reactivate the production equipment and develop the solvent purification. The existing equipment is used to develop new product items, improve the possibility of equipment use and increase the operation ratio of equipment.

Long-term development: the existing production equipment of Miaoli Plant shall be integrated to develop the niche products such as ammonium water and acid and alkali. The plant shall be established or production shall be entrusted to build private label, strength R&D capability, produce the niche products and strength the profitability.

4. DOW

It is developed in three stages. Stage 1 (2005-2007): water intaking of DOW and preparation of water treatment facilities, as well as packaging and drinking water production facilities, with a total investment up to NTD 1.065 billion. Stage 2 (2006-2008): establishment of DOW application industry park, introducing of cultivators in aquaculture and algae and utilization of DOW in niche aquatic products and the first two stages are completed as scheduled. Stage 3 (2009-2018): development of experience park and resort hotel in DOW park, which is based on the theme of sightseeing and leisure of DOW. The existing Japanese type historical buildings in the park will be utilized as DOW park and the culture and innovation shops will be used as business items to promote the experience and tourism of DOW; it is expected to be opened in May 2015. The business investment plan including resort hotel, SPA, Villa resort village and international l tourism hotels will drive the local economy and help develop the application of DOW with high additive value.

Land development

Short-term development

(1) R5 residential development plan of Nangang Economic & Trade Park: the license was obtained on December 4, 2014 and the houses are delivered in batches.
(2) C2 development plan of Nangang Economic & Trade Park: the HCCH and Japan TANGE were entrusted for designing C2 in the 4th quarter of 2011. The Grand Hi Lai Hotel and Casar Park Hotel won the bindding of Stage 1 in 2013 and the construction license is being applied. The lease of C2 office was completed in the 1st quarter of 2015.
(3) Development plan of D7-A in Hsinchu Science & Business Park: the construction of office building was started in the 1st quarter of 2014.
(4) Stage 1 urban land planning of Hsinchu: the replanning including cadastre arrangement and land registration are conducted in the 1st quarter of 2015 and it is expected to be finished in 2015.
(5) Development plan of ocena resort park: the Sea Mineral Discovery Pavilion was opened in 2013 and the experience park is planned to be started in 2015.

Operation Highlights

Long-term development

(1) Development plan of Dongming Road in Jilong City: the change of urban planning is conducted and the industry area will become commercial and residential area as planned; the change of urban planning is currently reviewed.
(2) Land development plan of 7C in special trade area of Kaohsiung: the Kaohsiung Plant of the company was closed in 2014 and the related procedures are being handled. The replanning, development and design of urban plan will be conducted accoridn to announcement on June 5, 2013 by Kaohsiung Government, as well as major an detaield plan of multifunctional trade park.
(3) R13-1 residential development plan in Nangang Economic & Trade Park: the congregate housing is planned to be built and sold. FTC will be entrusted to renew the urban planning and carry out land development. The business plan and right transformation plan were finished in the 4th quarter of 2014 and the renewal of urban planning is being handled.
(4) Replanning of Stage 2 urban land of Hsinchu: the replanning of Stage 2 project is completed and the compensation for demolition and survey are being conducted.
(5) Mei-Luan District of Hualien: the investment on urban resort hotel was approved by the Board of Directors.

II. Overview of market and production & sales

(I) Market analysis

Sales area
(1) Fertilizer product: Taiwan, Penghu, Kinmen, and Matsu
(2) Chemical products:

Chemical products:
Product name	Sales area
Urea for Industrial	Taiwan area
Anhydrous Ammonia	Taiwan area
Nitric acid	Taiwan area, Southeast Asia
Melamine	Taiwan area
Sulfamic Acid	Europe, USA
Sulfuric acid and Oleum	Taiwan area

(3) Electric grade chemicals: Taiwan area

(4) Land development: no marketing and sales cases of land development in 2014.
Market share, future supply and demand and growth
(1) Fertilizer products
- 1) All fertilizers, except for urea and potassium chloride which are fully exported, can be imported by fertilizer manufacturers for processing and supply. The company has the rich experience, largest output and most complete production equipment of fertilizer in Taiwan with the quality of all products is better than others, making our products more competitive and enjoys a market share of about 70%.
(2) Chemical products

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1) Industry urea: the production of industry urea becomes harder and challenging since the production of urea is stopped, the former major customers start self-importing or resell and thus becoming the rivals, the downstream industries were transferred outward in recent years, reduced domestic market and replacement by agricultural urea. The market share of urea of the company is about 40%.
2) Anhydrous Ammonia: the company, CPDC and Formosa are the three major Anhydrous Ammonia importers of Taiwan, but CPDC has self-prepared storage tanks and Formosa is located at MaiLiao Industry Port and fails to sell Anhydrous Ammonia in domestic market, which makes the company the only supplier of Anhydrous Ammonia in Taiwan and has a stable sales market. As the largest business is downstream sales, the electronics industry may have a development space if the global economy has stable development. However, some of the downstream industries are challenged by the competition of China Mainland, which may lead to unstable output or even outward movement of industries.
3) Nitric acid: 65% of nitric acid produced by the company is compound fertilizer. The company may have a sales volume of about 65,000mt except for the 10,000mt nitric acid required by production and recently, we face fierce competitions in importing and domestic industries and we also have difficulty in promoting the nitric acid since the concentration of 65% is not well accepted by the market.
4) Melamine: the price war of melamine in domestic market has already started and our market share is reduced to about 40% since the production of melamine is stopped, the former major customers start self importing or resell and thus becoming the rivals, the downstream industries were transferred outward in recent years and the reduced domestic market.
5) Sulfamic Acid: the major export market is Europe and America with annual sales volume of about 12,000mt. The output of global Sulfamic Acid is about 190,000mt, but the demand is only 150,000mt, which makes the supply exceed demand. The profit is further reduced by the competition of manufacturers in Taiwan, China Mainland and Indonesia.
6) Sulfuric acid and Oleum: the products supplied by the company face the competitions from other domestic manufacturers and the market competition is fierce.
(3) Electric grade chemicals
1) So far, the company has low market share in electric grade chemicals and most of terminal clients prefer Total solution when selecting chemicals suppliers. Our advantages in this field are gone when HPC, our partner, has lost the largest customer Quanta (merged by AUO in 2005) and left the Taiwan market. The supply chain of domestic related chemical is stable and there’s much difficulty in direct supply to terminal customers and developing the market since the product items of our company are limited and only ammonia water plant is under construction, which fails to satisfy the integrated supply required by customers.
2) As a future tactic, the company shall focus on the products related to ammonia, acid and alkali as core industry and pay attention to self-production, grasp the advantages of raw materials to strength competitiveness and become the supplier of upstream, integrate the existing resources, improve the operation ratio of equipment, reduce production cost and also enhance the R&D capability to develop good formulas so as to win the competition of market and obtain profits.

Operation Highlights

(4) Land development:

Land development:
Project	Listed sales value in 2014
Land development scheme for Block R5 in Nangang Economic & Trade Park, Taipei City	NT$4,023,449,112

Expected sales value

In 2015, it is predicated to sell 723,000 mt fertilizers, 153,000 mt chemical products, 1,260 KL chemicals and resell 217,000 mt urea of Al-Jubail Fertilizer.

Niche for competition:
(1) Fertilizers
- 1) As the largest fertilizer manufacturer and supplier, it has a long history and owns the leading brand in market.
- 2) The quality is reliable, which has passed CNS Mark and ISO 9001 certification, and the products are trusted by farmers.
- 3) The products are various and own the unique equipment for producing nitro phosphates compound fertilizers, the quality and effect of which are superior to those in the same industry all over Taiwan.
- 4) With completed, various products, it can meet clients’ demand for one stop shopping by self-producing or importing.
- 5) The after-sales service spreads this province and competed, real time after-sales service is provided by setting business offices in north, middle, south district and providing service specialists in each county.
- 6) The business conditions are mastered exactly and purchase conditions for raw materials are superior to those in same industry.
- 7) The teams for R&D, advertising progressively can provide high-tech products creatively, continuously and deal with tests for fertilizer efficiency and explanation session for new products all over this province so that the capacity of product development, advertising is superior to that in same industry.
(2) Chemical products
- 1) Nitric acid: 65% of our nitric acid has large production capacity and low costs, the domestic market channel of which is stable.
- 2) Anhydrous Ammonia: With specialized storage tank, our company is the unique domestic supplier.
- 3) Sulfamic Acid: With certain popularities and stable market share, the Company has operated chancels of European and American markets for a long time.
- 4) Melamine: With stable supply and good quality, the Company owns basic domestic clients.
- 5)Industrial urea: As the sole manufacturer previously, the Company has established good brand reputation and keeps favorable interactive relationship with upstream clients and downstream clients. At present, the imported products can supply domestic markets with sufficient supply of goods, which can meet clients’ demand for goods without stock-out.

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  - 6) Sulfuric acid and Oleum: The supply of goods in our company is stable and the quality is reliable.

(3) Electric grade chemicals
- 1) Based on core of the Company and relevant products in this industry (such as ammonia, 3-acid 1-alkali, etc.), the Company can reinforce competitive force by using, mastering niche of raw materials and reducing costs of production.
- 2) Reinforce R&D capacity and increase profitability by keeping production profitability superior to formula items.
Favorable, unfavorable facts and countermeasures for development:
(1) Fertilizers
- 1) Favorable factors:
  - A. The domestic fertilizer market was freed from January 2003 and all owners compete for competitive conditions. The Company is more excellent that those in same industry at the aspect of quality, costs of production, marketing channels, advertising and after-sales service.
  - B. With improvement of knowledge, the farmers require creation and change, especially in great demand of new fertilizers with special functions and the advanced R&D teams in our company can promote new products in order to meet farmers’ demand appropriately.
  - C. By setting “fertilize price review team”, Council of Agriculture evaluates domestic ex-factory price of chemical fertilizers to get rid of the predicament that prices of domestic fertilizers are frozen for a long time and costs of raw materials cannot be reflected properly.
- 2) Unfavorable factors:
  - A. Since the domestic fertilizers are scarce and all raw materials depend on importation, the costs of production are quite high and easily affected by international price and fluctuation of ocean freight so that the costs of fertilizers cannot be reflected without allowance of government.
  - B. In order to keep the supply and demand of domestic chemical fertilizers, the government noticed that export sales of fertilizers should be approved by Council of Agriculture previously from May 2008 to restrict exportation of fertilizers.
  - C. The products of the Company are mainly chemical fertilizers. With the improvement of people’s living standard, the demand for organic agricultural products is increased year by year and the organic fertilizers will transcend chemical fertilizers.

3) Countermeasures:

A. Adjust combination of products, improve sales profits, continuously improve quality of products, reduce costs of production and increase competitive power of products.
B. Develop basic, multifunctional and excellent products (such as including beneficial microbial fertilizer, organic compound fertilizer, etc.) to keep difference of products, improve added value and meet clients’ demand.
C. Promote excellent organic fertilizers to meet strong demand of consumers for organic agricultural products.

Operation Highlights

  - D. Improve service for clients, including demonstrational popularization, field trial, result review and emulation, initiation and education for fertilizers, rapid treatment for clients’ complaints, explanation session for new products, sample presentation for trial, plant visit, etc.

(2) Chemical products:
1) Industrial urea:
- A. Favorable factors:
  - a. As the unique domestic manufacturer, the Company has established good brand reputation and leading position.
  - b. The supply of goods is sufficient, which can meet clients’ demand and get rid of anxiety for stock-out.
- B. Unfavorable factors:
  - a. Since the Company stopped producing urea and the government approved free importation, some bigger clients of the Company started to import freely for self-use and sales and competed for urea market. Besides, they owns equipments for self-storage and packages to reduce costs, which is quite unfavorable to the Company.
  - b. Many manufacturers in Taiwan moved to China Mainland so that the demand for industrial urea was reduced.
  - c. Since the urea is approved to import freely, the quality and price compete strongly or “agricultural” urea may be used for replacing “industrial” urea, the market order is affected.
- C. Countermeasures:
  - a. master international urea market for cheap, excellent and sufficient goods.
  - b. Regulate favorable price, compete for clients or provide differentiated service by delivering goods to stores.
  - c. Compete for large, medium or small manufacturers which use raw materials.
2) Anhydrous Ammonia:
- A. Favorable factors:
  - a. Though Anhydrous Ammonia is allowed to import freely, yet specialized wharf, large capacity storage tank and unloading, storage equipments are needed specially for importing Anhydrous Ammonia. At present, only the Company and Formosa Plastics Sixth Naphtha Cracking Plant own the equipments and the downstream users purchase from the Company, for Mailiao wharf is considered as industrial wharf of Anhydrous Ammonia.
  - b. Since Anhydrous Ammonia belongs to high dangerous chemicals and experienced professionals are required for unloading, storage working, only the Company and Formosa Plastics have relevant technologies at present.
- B. Unfavorable factors:
  - a. Since the Miaoli Plant of our Company stops production, Anhydrous Ammonia required domestically largely depends on export and the selling price is affected by international price. The cost structure controlled by our Company is reduced relatively and the selling price is not stable.

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  - b. Provided that the Anhydrous Ammonia that imported by Formosa Plastics can be used for selling or the storage tank of Sinopec is constructed, the competitive power of the Company for selling Anhydrous Ammonia is weaken.

C. Countermeasures:
- a. Master business condition exactly and purchase low price, spot Anhydrous Ammonia appropriately.
- b. Consider the competitive power of downstream clients, make price flexibly and appropriately in order to stimulate demand.
3) Nitric acid:
A. Favorable factors:
- a.The Company can deal with self-importation of Anhydrous Ammonia which can be used for producing nitric acid as raw materials. Besides, the unloading, storage equipments for importing Anhydrous Ammonia are set in plants in Taichung County and the Company keeps leading position for mastering costs of raw materials so the costs of production is low and competitive power is high.
- b. The equipments for production in Taichung County are new, of which the yield is large and the costs of production can be reduced.
B. Unfavorable factors: the plant of our company in Taichung County can manufacture 65% of nitric acid and never produce 68 ~ 98% of concentrated nitric acid. At present, it cannot provide diversified service.
C. Countermeasures: Promoting clients to accept 65% of nitric acid and efficient induced-conversion gradually. For selling price at the beginning of export sales, the creation for contribution margin is considered as strategic guiding, which should be adjusted based on change of market.

4) Melamine:

A. Favorable factors:

a. As the unique domestic manufacturer previously, the Company owns basic clients and good market reputation.
b. Import good-quality, stable products so the acceptability of clients is high.
c. Import largely and build safe retail inventory so that clients can pick up goods smoothly, without anxiety for stock-out.
B. Unfavorable factors: After the Company stops producing melamine, some large clients start to import initiatively in order to disperse risks, which can impact domestic market of melamine for the Company.
C. Countermeasures: Ensure quality of products, master quotations in international market and import price and adjust selling price flexibly to keep competitive advantages.

5) Sulfamic Acid:

A. Favorable factors:

a The quality is stable and the Company can cooperate with ammonium sulfate plants in order to make the best use of recycled and avoid environmental protection problems.

Operation Highlights

     - b. Since operating main channels of European and American markets for quite a long time, the Company has certain reputations and stable market shares.

  - B. Unfavorable factors:

     - a. Our Sulfamic Acid products are sold totally, the selling price of which is affected by internationally market deeply.

     - b. Since Indonesia and China Mainland have put into production and cause supply is greater than demand, all manufacturers compete for prices in out-sales market in order to keep market shares.

     - c. The isomorphism type of Sulfamic Acid products is quite high and technologies of production are low. Besides, they can be replaced by developing countries with sufficient raw materials easily.

  - C. Countermeasures:

     - a. Ensure stable quality and safety, quickness during transportation.

     - b. Make quotation differently based on different competitive conditions of out-sales market.

6) Sulfuric acid:
- A. Favorable factors: The self-storage and imported smelt sulfuric acid own equipment advantages for sales, which can adjust retail inventory and gain profits
- B. Unfavorable factors:
  - a. Since the opponents are of great quantity, the isomorphism type is high and recycled acid can flow easily.
  - b. The storage tank is set in Taichung County and far away from sulfuric acid market so the competitive power may be lost.
- C. Countermeasures:
  - a. Keep the costs of purchased materials stable in order to pursuit appropriate profits.
  - b. Keep current channels smooth and clients’ honesty and ensure market shares.
7) Oleum:
- A. Favorable factors: On account of producing calcium superphosphate, the Company has capacity to assist clients to recycle byproduct acid and clients’ dependency is quite high.
- B. Unfavorable factors: Since the downstream clients are simplex, sales conditions are affected by industrial environment and starting time greatly. With addition of lacking self-production capacity, the profits are compressed.
- C. Countermeasures: Accelerate to demolish or construct calcium superphosphate plants in Taichung County and improve capacity of recycling acid.
(3) Electric grade chemicals:
A. Favorable factors:
- a. The industries relevant to photo-electricity are still considered as domestic important industries and all plants extend new production lines positively in recent years. Since the scales of production lines for new IC, TFT-LCD and solar panel plants are larger and larger, the demand for chemicals is increased greatly and futurity of market is quite high.

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b. The production and quality control technologies of our electronic products are from HPC, which is the brand accepted in domestic TFT-LCD industry. The transferred technologies can improve local supply system of our electric grade chemicals and reinforce competitive capacity.
c. For our electric grade chemicals in future, Miaoli Plant will be the center for production and supply, which is the center of Taoyuan County, Hsinchu County, Miaoli County and Taichung County in concentrated area of domestic electronic industries and can provide Just in Time Service needed by this industry urgently.
d. With our core industry, 3-acid 1-alkali, the cheap raw materials can be gained in order to reduce costs and get competitive advantages of products in the first stage.
e. As a large domestic acid user, the Company can recycle electronic spent acid solution from clients (mainly ammonium hydroxide, phosphoric acid, nitric acid, sulfuric acid, etc.) to transform them into industrial products and to solve clients’ anxieties for treatment of spent solution.

B. Unfavorable factors:

  - a. As the Company enters into this industry quite late, the market is occupied by favorable brands, the supply chain in market is quite stable and the certification for quality of materials in photo-electricity industries, it is quite hard to develop market.

  - b. Since the business cycle of electronic industries is quite short, manufacturers reduce costs or raw materials and chemicals and control price of electric grade chemicals, which can affect space of profits.

  - c. In order to occupy product share rapidly, some new suppliers consider reducing price as principal axis of strategies and clients used to choosing supply chain by prices. Thus, the prices are slumped.

  - d. Since the department fails to enlarge scale for many years, the production lines for other products do not exist (except for reproduced products of stripper) and cannot meet clients’ Total Solution Supply. Thus, it is difficult to receive orders.

  - e. C. Our R&D capacity of relevant application is under improvement, which is not able to provide niche products and affects profits.

C. Countermeasures:
- a. Provide low costs products by setting plants or entrusting other plants as quickly as possible.
- b. Build self-production line positively and seek for foreign supply of goods in order to move operation mode at the direction of upstream products.
- c. Reinforce R&D capacity, technical service capacity of sales team and improve brand reputation, clients’ trust.
- d. Reinforce the response capacity of manufacturers for production mode of a few diversified products in order to improve chances to receive orders.
(4) Land development:
A. Favorable factors:
- a. Hsinchu residential market:
- (a) The housing price in Hsinchu is related with development of Hsinchu Science Park, the employed population of Hsinchu science industry is main stable

Operation Highlights

source of housing purchasers in Hsinchu.

(b) The supply for land in all reconsolidated area is excessive and competitive, the annual detrusion amount of which is NTD 50 billion - 70 billion. The reconstruction speed for large area residence is quite slow, the prices of which are quite stagnated.
b. Leasing market of commercial real estate in Taipei City:
(a) Located in Nangang Economic & Trade Park, the Company closes to Nangang Exhibition and the construction of all transportations is completed and networks of transportation are convenient. In addition, the occupying rate of Stage I, Stage II and Stage III of Nangang Software Industrial Park is almost rented completely; Zhongxin Nangang Headquarters Building is completed; Nangang Exhibition II will be completed continuously; the industrial cluster is formed and becomes mature.
(b) On account of business affection for recent years, some group enterprises move from Grade A commercial office building to cheap areas, such as Neike or Nangang Economic & Trade Park. The demand for our real estate in Nangang still has potentials.
c. Leasing market of commercial real estate in Hsinchu:
(a) Hsinchu Science Park introduces a great quantity of scientific occupied population for Hsinchu, of which the kinetic energy for growth of scientific industry is stable and promotes upstream, downstream manufacturers and service industries to enter and garrison. Thus, Hsinchu office market is in demand basically.
(b) Our Hsinchu Science & Commerce Park is adjacent to Wulu Interchange of Zhongshangao Road and center of Hsinchu City, the transportation of which is convenient and the plots of which are completed. The acceptance of integrated mould planning and market of plant building close to Hsinchu Science Park is high.
B. Unfavorable factors:
a. Hsinchu residential market:
(a) The tax for real price of combination of building and land promoted by the government and relevant matting for controlling loan of villa has controlled housing price obviously. According to reactions of sales market in Hsinchu residence, the mean selling time tends to be prolonged.
(b) The supply for Hsinchu residence is raised gradually based on built, approved and distributed quantity and observation for land stock, which may cause that the quantity of remaining house (new) is quite large. The pressure of remaining house will affect speed of sales and go against promotion of housing price.
b. Leasing market of commercial residential estate in Taipei City:
(a) Since new buildings are completed in the third, fourth quarter, the vacancy rate of commercial real estate in leasing market is increased to 8.26% in the fourth quarter this year from 7.43% in the fourth quarter in 2014. Affected by domestic business, the annual rents are not raised greatly and on the contrary, they keep level similarly to that of last year.

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(b) The large enterprise that plan to move are mainly those using old buildings in good section of Taipei, which prefer to staying areas nearby. Meanwhile the BOT scheme is used for state-owned or communal good sections or the office buildings with set surface rights are completed gradually, which can attract these clients and affect chances for attracting investment for office building of border area in Taipei or newly developed area.
c. Leasing market of commercial real estate in Hsinchu:
(a) The occupied market in Hsinchu is focused on Hsinchu Science Park, the capacity of which cannot grow continuously. In addition, the efficiency of “Expo Taiwan Pavilion Industrial Creative Park” fails to reach the predicated after opening so the demand for office buildings in Hsinchu Science & Commerce Park is slowed down.
(b) Tai Yuen Hi-Tech Industrial Park near Hsinchu Science & Commerce Park has formed IC design industrial group, which can release 140,00m2 gross floor area and many office buildings near national Wulu Road are completed. All of them are powerful potential opponents of development for Hsinchu commercial office buildings in Hsinchu.
C. Countermeasures:
a. Hsinchu residential market:
(a) In order to deal with sealing difficulties for many remaining houses under the premise that supply is greater than demand in market, residential products face up to further design by self-living or changing apartments for living. Besides, the quality of residential areas should be planned and molded.
(b) Prefer conservative schemes, lock main clients to middle class first purchasers in Hsinchu Science Park and the exchangers in center of this city and promote scheme successfully with neutral price and product location.
b. Leasing market of commercial real estate in Taipei
(a) Choosing integrated planned, designed and wholly renting mode.
(b) The project personnel should organize distribution and construction, introduce professional consultant team and customize cooperation submission for owners in order to master using renters in advance and reduce renting window period.
c. Leasing market of commercial real estate in Hsinchu:
(a) The market of office building in Hsinchu is affected by Hsinchu Science Park seriously. According to science industry and demand for industrial updating of industries promoted by the government, the complete office functions should be provided and life convenience or other completed designs should be considered by comparing advantages of creation and advance with times in order to create office building area of high rents and low vacancy rate.
(b) Make development by stages and adjust development strategies for markets based on industrial development.

Operation Highlights

(II) Important use and manufacture process of main products

Usage of main products
(1) Fertilizers

Fertilizers
Name of fertilizers	Nitrogen- phosphoric anhydride- potassium oxide	Usage
Ammonium sulfate	21-0-0	Base fertilizers and top dressing of allplants
Urea	46-0-0	Base fertilizers and top dressing of allplants
Potassium chloride	0-0-60	Base fertilizers and top dressing of allplants
Calcium superphosphate	0-18-0	Base fertilizers
Compound fertilizer	Multiple formula	Base fertilizers and top dressing of allplants
Organic fertilizer	Multiple formula	Base fertilizers

(2) Chemical products

Name of products	Specification	Usage
Urea for Industrial	Including 46% of nitrogen	Resin, melamine, dyeing and finishing, composites plate, dyeing and finishing, green algae, chemicals, environmental protection.
Anhydrous Ammonia	99.50 % purity	Monosodium glutamate, refrigeration, electronics, steel, chemicals, etc.
Nitric acid	65~68 % concentration	Mental treatment, electroplate, pigment, chemicals, common industrial usage, etc.
Melamine	99.8 % purity	Resign, molding powder, composites plate, dyeing, finishing, etc.
Sulfamic Acid	99.5 % purity	Flame retardant, softener, metal detergent, pigment, saccharin, food additives,analytical reagent,etc.
Sulfuric acid	98 % purity	Mental treatment, electroplate, chemicals, reagent, detergent and common industrial usage.
Oleum	Including 25% SO3	Common industrial usage

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(3) Electric grade chemicals

Name ofproducts	Specification	Usage
Stripper	Electronicgrade	Photoresist
Ablution	Electronicgrade	Clean the faceplate afterphotoresist is stripped.
Etchants	Electronicgrade	Wires of faceplate are etched.
Organic Solution	Electronic grade	Clean and re-clean all sections of processing faceplates

(4) Land development

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

Product Important usage Manufacturing process
Research/ product orientation
Residence Used for residence
Planning and design
Construction
Sales/investment attraction
Commercial real
Used for commerce
estate
service
After-sales construction
Management for
----- End of picture text -----

Manufacturing process of main products
(1) Association graph of Anhydrous Ammonia and downstream products

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

Materials Based Chemical material Chemical fertilizers Chemical Engineering Products
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----- Start of picture text -----

Melamine
Urea
Sulfamic
Ammonium
sulphate
Anhydrous Ammonia
All Compound Fertilizer
Organic compound Fertilizer
Nitric Acid
----- End of picture text -----

Operation Highlights

(2) Association graph for raw materials of compound fertilizers

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

Rock Phosphate Molten Sulfur
Calcium
Superphospha Sulfuric Acid
Nitric Acid Nitrophosphate Potassium chloride ／ Potassium
Sulfate
compound
fertilizer
Anhydrous Ammonia
Ammophosphate
Urea
Compound Phosphoric acid
Ammonium Dihydrogen
Phosphate
Organic fertilizer
Organic matter
/Organic compound fertilizer
----- End of picture text -----

(3)Manufacturing process of electric grade chemicals

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

Raw materials Electronic Products
Distillation, blending
MEA
and filtration
Stripping liquid
DMSO
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(III) Supply conditions of main raw materials

Urea:

It is mainly purchased outside, most of which is from China Mainland. Besides, the Company gains urea from transferred-investment company- Al-Jubail Fertilizer Company by buy-back.

Anhydrous Ammonia:

It is mainly purchased from Sabic Asia Pacific Pte. Ltd by long-term agreements.

Sulfuric acid:

It is mainly purchased from Japan through long term agreement, the supply of which is stable.

Phosphorite:

It is mainly purchased from Jordan, Israel and Morocco while the minority is purchased from China Mainland.

Potassium chloride:

Most of it is imported from Canada, Jordan, Israel and Russia.

Melt sulfur:

It is purchased by ordering contracts with CPC Corporation and Formosa Petrochemical Corporation.

(IV) In the following table, the names of clients whose purchase (selling) amount is 10% or more than 10% of total amount in either year of last two years, list of main purchase or selling clients and purchase (selling) amount, proportion are listed. Besides, the reason for increase or decrease is illustrated.

1. List of main stock manufacturers:

	1. List of main stock manufacturers:	1. List of main stock manufacturers:	1. List of main stock manufacturers:	1. List of main stock manufacturers:
	2013				2014				As of the first quarter in 2015
Item	Name	Amount (NTD 1,000)	Proportion of net purchases for the whole year (%)	Relationship with distributor	Name	Amount (NTD 1,000)	Proportion of net purchases for the whole year (%)	Relationship with distributor	Name	Amount (NTD 1,000)	Proportion of net purchases for the whole year (%)	Relationship with distributor
1	Sabic Asia Co. Ltd.	3,493,981	33%	Supplier of Anhydrous Ammonia	Sabic Asia Co. Ltd.	3,436,520	24%	Supplier of Anhydrous Ammonia	Sabic Asia Co. Ltd.	1,072,517	31%	Supplier of Anhydrous Ammonia
2.	Al-Jubail Fertilizer Company	2,419,629	23%	The Company invests more than 50% of transferred-investment enterprises and delivers urea according to agreements.	Al-Jubail Fertilizer Company	2,680,906	18%	The Company invests more than 50% of transferred-invest ment enterprises and delivers urea according to agreements.	Al-Jubail Fertilizer Company	520,490	15%	The Company invests more than 50% of transferred-investm ent enterprises and delivers urea according to agreements.
	Miscellaneous	4,601,624	44%	--	Others	8,480,216	58%	--	Others	1,906,487	54%	--
	Net purchases	10,515,234	100%	--	Net purchase amount	14,597,642	100%	--	Net purchase amount	3,499,494	100%	--

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List of main selling clients:
(1) Fertilizer

Fertilizer	Fertilizer	Fertilizer	Fertilizer
MonetaryUnit : NT$ thousand
2013	Name of client	Amount (NT$)	Proportion for this year (%)
01 ~ 12 of 2013	Yunlin Farmers' Association	780,450	10.1％

2014	Name of client	Amount (NT$)	Proportion for this year (%)
01 ~ 12 of 2014	Yunlin Farmers' Association	620,905	9.49%

(V) List of yield for last two years

Unit : mt / NT$ thousand

				Unit : mt / NT$thousand	Unit : mt / NT$thousand	Unit : mt / NT$thousand
Yield Year Main commodities	2014			2013
	Capacity	Yield	Output value	Capacity	Yield	Output value
Ammonium sulfate	150,000	118,404	721,637	150,000	121,089	764,139
Calcium superphosphate	230,800	85,649	380,962	230,800	118,319	629,277
Compound fertilizer	528,000	489,789	5,128,952	528,000	471,997	5,641,955
Sulfamic Acid	13,000	8,288	175,634	13,000	10,649	249,545
Nitric acid	150,000	138,996	1,414,087	150,000	103,306	1,170,561
Sulfuric acid	120,000	46,083	57,755	120,000	51,587	93,526
Oleum		30,402	90,793		45,875	138,235
Total	1,201,800	917,611	7,969,820	1,201,800	922,822	8,687,238

Operation Highlights

(VI) List of sales volume for last two years

Unit : mt / NT$ thousand

					Unit : mt / NT$ thousand	Unit : mt / NT$ thousand	Unit : mt / NT$ thousand	Unit : mt / NT$ thousand
Year Sales Volume Leading products	2014				2013
	Domestic sale		Export		Domestic sale		Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
ammonia sulphate	100,113	610,161	–	–	113,588	716,801	–	–
Single Superphosphate	41,381	184,059	48	363	50,711	269,703	–	–
Compound fertilizer	483,597	5,064,043	20	275	481,314	5,747,831	314	9,243
Agricultural urea	44,201	457,860	–	–	51,250	628,056	–	–
Patassium chloride	17,862	203,289	–	–	21,534	328,089	–	–
Resell Urea from Al- Jubail	–	–	264,864	2,639,874	–	–	226,503	2,397,597
Melamine	2,906	122,359	–	–	3,616	162,480	–	–
Sulfamic acid	138	3,314	13,012	275,343	156	3,790	11,136	260,823
Nitric acid	29,927	304,464	3,735	29,952	30,179	341,962	–	–
Industrial urea	3,351	42,005	–	–	3,375	48,881	–	–
Anhydrous Ammonia	94,175	2,053,271	–	–	87,541	2,010,832	–	–
Renewable Phosphoric acid	4,189	97,393	–	–	3,574	81,741	–	–
Sulfuric acid	4,457	5,586	–	–	8,985	16,289	–	–
Fuming sulfuric acid	11,200	33,449	–	–	15,411	46,437	–	–
Otherproducts	66,779	40,132	–	–	85,881	47,773	–	–
Other operating income	–	1,159,049	–	–	–	999,159	–	–
Electronic grade chemical products	7,615	160,582	–	–	6,625	151,491	–	–
Housing	–	4,023,449	–	–	–	1,749,568	–	–
Total		14,564,465		2,945,807		13,350,883		2,667,663

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III. Employees

(I) Data of employees for last two years till latest annual press

Employees Data of employees for last two years till latest annual press	Employees Data of employees for last two years till latest annual press	Employees Data of employees for last two years till latest annual press	Employees Data of employees for last two years till latest annual press	Employees Data of employees for last two years till latest annual press
March 31, 2015
Year		2013	2014	As of March 31,2015
Number of employees		937	943	777
Average age		44.15	46.60	44.43
Average working years		9.81	10.78	8.9
Education	Ph.D	0.51	0.49	0.75
	Master	13.73	13.66	21.08
	Bachelor	48.04	46.55	51.42
	High School	35.85	36.05	25.86
	Below High School	1.87	1.63	0.90

Note: The data for the latest year when annual press is printed should be filled.

(II) Productivity of employees

Productivity of employees
Year	2013	2014	As of March 31,2015
Revenue	16,018,546	17,510,273	2,124,781
Revenueperperson	17,096	18,569	2,735
Annual operating profit	788,172	1,659,950	-170,239
Annual operating profitperperson	841	1,760	-219

IV Distributed information of environmental protection

(I) Loss and punishment for environmental pollution

Year Item	2014	As of March 15, 2015
Polluted condition (category, degree)	1. The gas in ammonolysis reaction tank is lost and bulkload is distributed from ponderable conveyor, which violates air pollution and prevention act. 2. The suspended solid from waste water exceeds control standards and violates water pollution and prevention act. 3. The particulate pollutants from boilers exceed control standards and violates air pollution and prevention act 4. The gas ammonia may cause loss due to incomplete reaction, which is in violation of air pollution and prevention act.	None
Punished unit	Environmental Protection Bureau	None
Penalty	NT$490,000	None
Other losses	None	None

Operation Highlights

(II) Countermeasures and potential distribution in the future

Predicated capital distribution for environmental protection in next 2 years:

Year Item	2015	2016
Pre-purchased equipments for preventing pollution and contents of distribution	1.Control air pollution and improve equipments of waste water treatment; 2. Clean, treat and recycle wastes; 3.Plan and monitor environmental protection for new plants and Taichung plant during operation; and 4.Use equipments to prevent pollution in mainproductionplants.	1. Control air pollution and improve equipments of waste water treatment; 2. Clean, treat and recycle wastes; 3. Plan and monitor environmental protection for new plants and Taichung plant during operation; and 4. Use equipments to prevent pollution in mainproductionplants.
Predicated conditions after improvement	1.Improve and reduce discharge of pollutants, make sure that treatment for discharged water, air pollutants and wastes can meet regulations relevant to environmental protection in order to avoid contamination accidents. 2.Meet regulations of environmental affection instruction for investment plan of TaichungPlant	1. Improve and reduce discharge of pollutants, make sure that treatment for discharged water, air pollutants and wastes can meet regulations relevant to environmental protection and avoid contamination accidents. 2. Meet regulations of environmental affection instruction for investment plan of TaichungPlant
Amount	NT$150,000,000	NT$120,000,000

Influence after improvement:
(1) Improve and reduce discharge of pollutants, make sure that treatment for discharged water, air pollutants and wastes can meet regulations relevant to environmental protection in order to reduce influence on ecological environment.
(2) The new plants should meet regulations of specification for environmental instruction evaluation and prevent them from polluting environment.
(3) Avoid penalty for environmental pollution and the public’s protest for environmental protection.

V. Labor-capital relationship

(I) Important labor-capital agreements

Conditions of labor-capital agreements
(1) The General Administration Division of the Company and all plants should set labor-capital conference and hold conferences regularly in accordance with regulations of “enforcement methods for labor-capital conference”, which should be held by the chairman recommended by representative of labors and capitals. In conference, how to coordinate labor-capital relationship, promote cooperation between labors and capitals, promote labor conditions, plan labors’ welfares, improve working efficiency and promote measures for public securities and environmental protection are discussed, the conclusion of which should be executed as much as possible if feasible in order protect employees’

==> picture [394 x 66] intentionally omitted <==

rights and interests. Those cannot be handled should be dealt through communication for consensus and mutual comprehension.

(2) Consult with labor administrative officers and lawyers for relevant problems irregularly.
(3) Reinforce education for labors and promote concepts of labors and capitals to be consistent.
(4) Keep contract with enterprise unions of all plants and enterprise unions of fertilizer companies in Taiwan to discuss, research relevant matters.

2. Measures’ for employees’ welfares

(1) Establish “employee welfare committee”, deal with all welfare matters, such as restaurants, vehicles for transportation, libraries and handle community activities, excursion, birthday gifts, birthday card, welfare products for new year and festivals and scholarship for employees’ children.
(2) Allocate welfare payments based on operation income and sales for leftovers in accordance with relevant regulations.
(3) Set infirmaries to deal with labors’ medical matters and inspect labors’ health.
(4) Set all kinds of ball parks for labors and hold all kinds of ball competitions.
(5) Send retired labors souvenirs.
(6) Congratulate marriage or hold memorial ceremonies for the dead.
(7) Distribute pension, compensation for death and funeral expenses based on pension method of the Company and reasons of death in case that employees are dead.
(8) Deal with labor insurance, national health insurance, group accident insurance and hospitalization medical insurance.
(9) Distribute awards for New Year and festivals and distribute year-end award and bonus for employees based on annual operation profits and surplus control rate of the Company.

3. Retirement system

(1) The Company has set “retirements, pension and lay-off method of fertilizer companies in Taiwan for labors” in accordance with regulations of labor standard law and provisions of retirement allowance for labors.
(2) The retirement allowance of employees should be calculated in accordance with “retirements, pension and lay-off method of fertilizer companies in Taiwan for labors”, regulations of labor standard law and provisions of retirement allowance for labors.
(3) The provisions for labors’ retirement were implemented on July 1, 2005, based on which relevant matters should be dealt.

(II) Employees’ actions or moral principles

The Company has prepared “working principles for FTC worker” in accordance with regulations of labor standard law and publishes it on website of the Company for employees to read except noticing employees by mailing. Besides, “moral principle for FTC directors, supervisors and first-class administrators” has been established, promoted in report of shareholders’ meeting in 2009 and reported in website of the Company, which should be followed by directors, supervisors and first-class administrators (including the general manager, executive vice

Operation Highlights

president, vice general manager, first supervisors and vice supervisors of all units) for actions and morality when dealing with operation activities of the Company. Thus, interested parties of the Company can know about moral principles of the Company.

(III) Employees’ further education and training

Year	2013	2014	As of March 31,2015
Number of classes for training	308	285	10
Person-time for training	1,836	1,920	312
Man-hour for training	14,570	15,785	1,065
Per capita traininghours	25.62	27.79	1.875
Costs for training (Yuan)	2,215,699	3,193,791	62,000
Per capita costs for training (Yuan)	2,766	3,992	155

(IV) Labor-capital dispute and loss: None.

VI. Important contracts

(I) Supply and marketing contract

The Party	Beginning and end of contract	Main contents
Farmers’ associations in cities or counties	01/01 ~ 12/31 of 2014	Sales contract for fertilizers
Marubeni Corp.	01/01/2014 ~ 12/31/2016	Supply contract for sulfuric acid
Sabic Asia Pacific Pte.Ltd.	01/01 ~ 12/31 of 2015	Supply contract foe Anhydrous Ammonia
Jordan Phosphate Mines Company	01/01 ~ 12/31 of 2015	Supply contract for phosphorite

(II) Cooperative contract

The Party	Beginning and end of contract	Main contents	Restriction
Saudi Basic Industry Corporation	02/08/1980 ~ 02/07/2033	Cooperating with and investing Al-Jubail Fertilizer Company; both parties hold 50% of stock rights.	The contract transfer is restricted that FTC should invest subsidiaries by100%.
Chin Chuan International Co., Ltd.	04/18/2011 ~ 04/18/2031	Cooperating with and investing Cayman Xuchang Chemical Science & Technology Co., Ltd, with FTC holding 51% of stock rights and Jinqun Company holding 49% of stock rights	The stock rights of Cayman Xuchang Chemical Science & Technology Co., Ltd. are transferred and two thirds agreement system is used by the board of directors at shareholders’ meeting.
National Chung Hsing University	10/01/2012 ~ 10/01/2019	The technologies of “preparations and manufacture method of streptomyces components for protecting plants” are authorized.	Derivative profit: 1.5% of total sales volume for products.

==> picture [394 x 66] intentionally omitted <==

The Party	Beginning and end of contract	Main contents	Restriction
Industrial Technology Research Institute	12/28/2012 ~ 12/28/2017	The technologies of “liquefied depolymerization of bionts in ion solution” are authorized
Institute for Biotechnology and Medicine Industry	04/01/2015 ~ 12/31/2015	The raw materials of “fish scale collagen peptid” has passed users’ license for national quality standard
Agricultural Chemicals and Toxic Substances Research Institute, Council of Agriculture, Executive Yuan	01/01/2013 ~ 01/01/2020	The technologies of “fermentation, mass production and application for microbial fertilizer and liquefied bacillus thermoamylovorans strain Ba-BPD1” are authorized	Derivative profit: 1% of total sales volume for products.
Agricultural Chemicals and Toxic Substances Research Institute, Council of Agriculture, Executive Yuan	01/01/2013 ~ 01/01/2020	The patent of “new liquefied bacillus thermoamylovorans strain Ba-BPD1 and application” is authorized.
Taipei Medical University (Prof. Wu Chieh-Hsin)	12/01/2014 ~ 11/30/2015	Production-study cooperative contract with FTC for promotion, research and consultation plan of technologies

(III) Project and other contracts

TheParty	Beginningand end ofcontract	Maincontents	Restriction
Chang Feng Engineering Consulting Co., Ltd.	05/31/2010 till the date when municipal plan is published and implemented by competent authority	Technical service of “land development and land use change on Dongming Road in Keelung City”
HO HSIUNG MACHINERY INDUSTRIAL CO., LTD.	09/04/2014 ~ 10/07/2015	Removal project of mechanical equipment for calcium superphosphate workshop	None
Cheng Da ConstructionCorp.	03/17/2015 ~ 09/17/2015	workshop, warehouse and other civil work forcalciumsuperphosphate	None
Apex Science & Engineering Corp	05/29/2014 ~ 11/21/2015	Manufacture and package project of I&C equipments for calcium superphosphate workshop	None
Yuan-Shan Science &Technology Inc.	04/01/2015 ~ 11/06/2015	Manufacture and package project of motors in calcium superphosphate workshop	None
Hung Ching Architects Office	12/31/2007 ~ Initial Registration of Ownership is completed	Construction, planning and design of residential scheme for Plot 66-1, 66-2, 68-2 and 68-3 in Nangang Economic & Trade Park
Silkart Co., Ltd.	Cooperation according to the schedule of constructor	Kitchen ware project of residential scheme for Plot 66-1, 66-2, 68-2 and 68-3 in Nangang Economic & Trade Park

Operation Highlights

TheParty	Beginningand end ofcontract	Maincontents	Restriction
Homely Enterprise Co., Ltd.	Cooperation according to the schedule of constructor	Bathroom project of residential scheme for Plot 66-1, 66-2, 68-2 and 68-3 in Nangang Economic & Trade Park
J. J. Pan and Partners, Architects and Planners	From February 26, 2011 to the time when all tasks are completed, without any matters under treatment of Party B	Dealing with technical service for “integrated planning for Block D7 in Hsinchu science and business area and construction, design and monitoring for Stage I of D7-A development unit”.
JDC, Taiwan Branch	From the date of signature (September 16, 2011) to the end of warranty period, when Party B completes the matters relevant to responsibilities of warranty period. The term of project is 965 calendar days from date of beginning in “notice to proceed” to the date when business license is gained.	Entrusting new projects of collective residential building in Block R5 of Nangang Economic & Trade Park in Taipei.
HCCH & Associates Architects Planners & Engineers	From the date of signature (October 31, 2011) to the date when business license is gained, the term of which is about oneyear.	Technical service of “integrated plan of C2C3C4 in Nangang Economic & Trade Park and construction, design and monitoring for C2 of Stage I”
FSC Architects	From November 22, 2013 to the date when all tasks stipulated in this contract are completed, without any matter under disposal of Party B.	Technical service for construction, planning and design of Agoda Ocean Resorts Hotel (international architect)	The pendant working relevant to contract performance shall be handled before December 31, 2017.
Ta Chuang Architects & Associates	From November 22, 2013 to the date when all tasks stipulated in this contract are completed, without any matter under disposal of Party B.	Technical service for construction, planning and design of FTC Agoda Ocean Resorts Hotel (domestic architect)	The pendant working relevant to construction license shall be handled before June 60,2017.

(IV) Long-term loan contract

Interested party	Starting and ending date of contract	Major content	Restricted terms and conditions
Taipei Fubon Commercial Bank	March 28 ~~th~~, 2013 ~ March 28 th,2016	Mid-term security loans (construction financing)
Combined credit bank groups consisting of 10 banks such as Mega Bank	From the first start to the date when 7 years expire	Mid-term security loans (Construction of Taichung Plant)

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(V) Contract for land development

The Party	Beginning and end of contract	Main contents	Restriction
7 persons including Chen Ku-Chi	Tentative four years upon signature of the contract on March 18, 2008, till completeness of new buildings and settlement of relevant costs	Owners of all Plot 66-1, Plot 68-2 in Nangang Economic & Trade Park of FTC and land property owners of Plot 66-2, 68-3 invest and discuss construction, sales of superior residential buildings.	The Party agrees matters relevant to land development, which should be guided, applied and built by FTC buildings with maximum total floor area.

Financial Summary

Part Six: Financial Summary

I. Brief financial statements and comprehensive profit and loss statements for the recent five years

(I) Information on brief financial statements and comprehensive profit and loss statements
Concise Balance Sheet

Unit: NT$K

							Unit: NT$K
Year Description		Financial information for recent five years					Financialinformation intheyearended March 31st, 2015 (Note 2)
		2014 Year	2013Year	2012 Year (Note 1)	Year	Year
Current assets		10,533,836	8,300,217	10,027,252			8,387,735
Real estate, plant and equipment		33,573,437	38,410,112	38,256,127			33,378,372
Intangible assets		484,830	496,880	52,443			480,969
Other assets		25,904,834	19,321,391	18,105,987			26,376,988
Total assets		70,496,937	66,528,600	66,441,809			68,624,064
Current liabilities	Before distribution	5,881,372	3,470,815	3,515,042			4,834,534
	After distribution	Not distributed	5,430,815	6,161,042			Not distributed
Non-current liabilities		12,222,950	12,283,413	12,152,308			11,456,264
Total liabilities	Before distribution	18,104,322	15,754,228	15,667,350			16,290,798
	After distribution	Not distributed	17,714,228	18,313,350			Not distributed
Owners’ equity due to parent company		52,392,615	50,774,372	50,774,459			52,333,266
Share capital		9,800,000	9,800,000	9,800,000			9,800,000
Capital reserve		2,234,334	2,234,334	2,232,791			2,234,334
Retained earnings	Before distribution	39,927,485	38,820,842	38,920,383			39,974,864
	After distribution	Not distributed	36,860,842	36,274,383			Not distributed
Other equity		430,796	(80,804)	(178,715)			324,068
Treasurystocks		－	－	－			－
Non-controlled equity		－	－	－			－
Total equity	Before distribution	52,392,615	50,774,372	50,774,459			52,333,266
	After distribution	Not distributed	48,814,372	48,128,459			Not distributed

Note 1: 2012 data are consolidated financial report converted according to IFRSs.

Note 2: The consolidated financial report in 2015 and ended in March 31 was examined by the accountant.

Note 3: The figures listed above are based on the resolution made by the shareholder meeting of the next year, but those in 2014 and 2015 are not resolved yet.

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2. Brief Comprehensive Profit and Loss Statement

Unit: NT$K

						Unit: NT$K
Year Item	(Financial information for recent five years)					Financialinformation for the yearended March 31 st, 2015 (Note 2)
	2014 Year	2013Year	2012 Year (Note 1)	Year	Year
Operating income	17,510,273	16,018,546	18,801,967			3,838,849
Operating gross profits	2,912,631	2,247,197	3,281,539			339,355
Operating profit and loss	1,659,950	788,172	2,011,434			8,924
Non-operating income and expenses	1,187,303	1,843,570	2,650,524			7,660
Net profits before tax	2,847,253	2,631,742	4,661,958			16,584
Continued operation units Net profits for the period	3,068,346	2,538,071	4,226,412			47,379
Loss out of business suspension units	－	－	－			－
Net profits (loss) for current period	3,068,346	2,538,071	4,226,412			47,379
Other comprehensive profit and loss for current period (Net values after tax)	509,897	106,299	(270,128)			(106,728)
Total comprehensive profit and loss for current period	3,578,243	2,644,370	3,956,284			(59,349)
Net profits attributable to Owner of parent company	3,068,346	2,538,071	4,226,412			47,379
Net profits attributable to non-controlling rights and interests	－	－	－			－
Total integrated profit and loss attributable to owners of parent company	3,578,243	2,644,370	3,956,284			(59,349)
Total integrated profit and loss attributable to non- controlling rights and interests	－	－	－			－
Earnings per share	3.13	2.59	4.31			0.05

Note 1: 2012 data are individual financial report converted according to IFRSs. Note 2: The consolidated financial report in 2015 and ended in March 31 was examined by the accountant.

Financial Summary

3. Concise Balance Sheet (Individual)Unit: NT$K

Unit: NT$K

							Unit: NT$
Year Description		Financial information for recent fiveyears					Financialinformation inthe yearended March 31 st, 2015 (Note 2)
		2014 Year	2013Year	2012 Year (Note 1)	Year	Year
Current assets		10,293,965	8,034,798	9,888,377			─
Real estate, plant and equipment		33,231,463	38,088,566	38,221,604			─
Intangible assets		40,945	52,956	52,327			─
Other assets		26,873,209	20,119,565	18,257,836			─
Total assets		70,439,582	66,295,885	66,420,144			─
Current liabilities	Before distribution	5,826,145	3,238,116	3,493,959			─
	After distribution	Not distributed	5,198,116	6,139,959			─
Non-current liabilities		12,220,822	12,283,397	12,151,726			─
Total liabilities	Before distribution	18,046,967	15,521,513	15,645,685			─
	After distribution	Not distributed	17,481,513	18,291,685			─
Owners’ equity due to parent company		－	－	－			─
Share capital		9,800,000	9,800,000	9,800,000			─
Capital reserve		2,234,334	2,234,334	2,232,791			─
Retained earnings	Before distribution	39,927,485	38,820,842	38,920,383			─
	After distribution	Not distributed	36,860,842	36,274,383			─
Other equity		430,796	(80,804)	(178,715)			─
Treasurystocks		－	－	－			─
Non-controlled equity		－	－	－			─
Total equity	Before distribution	52,392,615	50,774,372	50,774,459			─
	After distribution	Not distributed	48,814,372	48,128,459			─

Note 1: 2012 data are individual financial report converted according to IFRSs.

Note 2: The individual financial report in 2015and ended in March 31 was not examined by the accountant.

Note 3: The figures listed above are based on the resolution made by the shareholder meeting of the next year, but those in 2014 are not resolved yet.

100

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4. Concise Statement of Comprehensive Income (Individual)

Unit: NT$K

						Unit: NT$K
Year Item	(Financial information for recent fiveyears)					Financialinformation for the yearended March 31 st, 2015 (Note 2)
	2014Year	2013Year	2012 Year (Note 1)	Year	Year
Operatingincome	17,093,170	15,706,163	18,769,395			─
Operating grossprofits	2,808,453	2,169,267	3,265,181			─
Operating profit and loss	1,710,820	918,773	2,027,509			─
Non-operatingincome and expenses	1,149,072	1,772,179	2,634,929			─
Netprofits before tax	2,859,892	2,690,952	4,662,438			─
Continued operation units Netprofits for theperiod	3,068,346	2,538,071	4,226,412			─
Loss out of business suspension units	－	－	－			─
Netprofits(loss)for currentperiod	3,068,346	2,538,071	4,226,412			─
Other comprehensive profit and loss for current period (Net values after tax)	509,897	106,299	(270,128)			─
Total comprehensive profit and loss for currentperiod	3,578,243	2,644,370	3,956,284			─
Net profits attributable to Owner ofparent company	－	－	－			─
Net profits attributable to non- controllingrights and interests	－	－	－			─
Total integrated profit and loss attributable to owners of parent company	－	－	－			─
Total integrated profit and loss attributable to non-controlling rights and interests	－	－	－			─
Earningsper share	3.13	2.59	4.31			─

Note 1: 2012 data are individual financial report converted according to IFRSs. Note 2: The individual financial report in 2015 and ended in March 31 was not examined by the accountant.

101

Financial Summary

(II) Information on Brief Balance Sheet and Profit and Loss Statement – Financial Accounting Standards in Our Country

1.Individual Brief Balance Sheet – Financial Accounting Standards in Our Country

Unit: NT$K

		Unit: NT$K	Unit: NT$K	Unit: NT$K	Unit: NT$K	Unit: NT$K
Year Item		Financial information for recent fiveyears
		2012	2011	2010	2009	2008
Current assets		9,317,984	9,885,014	13,629,867	15,912,266	15,446,438
Funds and investment		15,003,465	15,590,263	14,354,853	13,303,247	16,730,387
Fixed assets(Note 2)		36,578,063	34,951,524	31,583,315	28,493,824	26,995,592
Intangible assets		105,793	57,769	53,456	38,097	38,517
Other assets		5,419,609	5,521,285	4,677,140	4,362,347	4,156,264
Total assets		66,424,914	66,005,855	64,298,631	62,109,781	63,367,198
current liabilities	Before distribution	2,107,523	1,727,784	2,037,410	1,306,757	2,767,208
	After distribution	4,753,523	3,981,784	4,193,410	2,678,757	4,531,208
Long-term liabilities		－	－	3,873	3,873	－
Provisions		6,440,757	6,440,823	6,474,078	6,478,985	6,481,528
Other liabilities		5,445,038	6,023,097	6,008,775	4,178,260	4,728,805
Total liabilities	Before distribution	13,993,318	14,191,704	14,524,136	11,967,875	13,977,541
	After distribution	16,639,318	16,445,704	16,680,136	13,339,875	15,741,541
Share capital		9,800,000	9,800,000	9,800,000	9,800,000	9,800,000
Capital reserve		2,232,791	2,232,791	2,232,791	2,232,791	2,232,791
Retained earnings	Before distribution	8,807,938	7,722,970	6,867,825	6,516,217	7,013,329
	After distribution	6,161,938	5,468,970	4,711,825	5,144,217	5,249,329
Unrealized profit and loss out of financial commodities		124,230	58,774	101,376	(84,751)	(1,465,232)
Total adjustment to translation		(398,772)	(95,827)	(391,198)	447,249	548,894
Unrealized revaluation value		31,919,848	32,114,341	31,163,701	31,235,647	31,259,875
Net loss of cost not recognized as retirement pension		(54,439)	(18,898)	－	(5,247)	－
Total shareholders’	Before distribution	52,431,596	51,814,151	49,774,495	50,141,906	49,389,657
equity	After distribution	47,785,596	49,560,151	47,618,495	48,769,906	47,625,657

Note 1: If asset re-evaluation is made for the current year, it is required to specify the date of handling and amounts of added value after re-evaluation.

Note 2: The abovementioned figures after distribution are recognized based on the resolutions of the meeting of shareholders for the next year, but those for 2012 have not been subject to the resolutions.

Note 3: Upon notice by competent authorities, if financial information shall be corrected or prepared once again, it is required to recognize the figures after such correction or re-preparation, and to specify the conditions and reasons.

102

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2.Individual Brief Profit and Loss Statement – Financial Accounting Standards in Our Country

Unit: NT$K

(Earnings per share Unit: NT$)

2.Individual Brief Profit	and Loss Statement – Financial Accounting Standards in Our Country Unit: NT$K (Earningsper share Unit: NT$)	and Loss Statement – Financial Accounting Standards in Our Country Unit: NT$K (Earningsper share Unit: NT$)	and Loss Statement – Financial Accounting Standards in Our Country Unit: NT$K (Earningsper share Unit: NT$)	and Loss Statement – Financial Accounting Standards in Our Country Unit: NT$K (Earningsper share Unit: NT$)	and Loss Statement – Financial Accounting Standards in Our Country Unit: NT$K (Earningsper share Unit: NT$)
Year Item	Financial information for recent five years
	2012	2011	2010	2009	2008
Operating income	17,795,361	16,970,822	14,428,778	17,150,285	17,019,764
Operating gross profits	2,416,725	1,735,369	1,983,006	2,832,520	1,301,805
Operating profit and loss	1,114,681	446,973	845,999	1,770,821	384,342
Non-operating income and profits	2,954,976	3,297,445	1,249,409	2,285,166	4,498,066
Non-operating expenses and loss	320,046	458,220	250,076	1,811,726	1,343,490
Profit and loss before tax of continued business departments	3,749,611	3,286,198	1,845,332	2,244,261	3,538,918
Profit and loss of continued business departments	3,338,968	3,011,145	1,723,608	1,266,888	2,191,718
Profit and loss out of business suspension departments	-	-	-	-	-
Extraordinary profit and loss	-	-	-	-	-
Total affected amount of changes in accounting principles	-	-	-	-	-
Profit and loss for current period	3,338,968	3,011,145	1,723,608	1,266,888	2,191,718
Earnings per share	3.41	3.07	1.76	1.29	2.24

Note 2: Upon notice by competent authorities, if financial information shall be corrected or prepared once again, it is required to recognize the figures after such correction or re-preparation, and to specify the conditions and reasons.

103

Financial Summary

3. Consolidated Brief Balance Sheet-- Financial Accounting Standards in Our Country

Unit: NT$K

						Unit: NT$K
Year Item		Financial information for recent fiveyears
		2012	2011	2010	2009	2008
Current assets		9,457,381	10,023,742	13,664,224	15,943,801	15,473,111
Funds and investment		14,847,366	15,418,290	14,285,860	13,235,955	16,664,496
Fixed assets(Note 2)		36,612,451	34,986,247	31,618,953	28,530,286	27,032,097
Intangible assets		105,909	57,769	53,456	38,097	38,517
Other assets		5,419,370	5,521,285	4,677,140	4,362,347	4,156,264
Total assets		66,442,837	66,007,333	64,299,633	62,110,486	63,364,485
current liabilities	Before distribution	2,128,606	1,728,753	2,037,997	1,371,389	2,765,186
	After distribution	4,774,606	3,982,753	4,193,997	2,743,389	4,259,186
Long-term liabilities		-	-	3,873	3,873	-
Provisions		6,440,757	6,440,823	6,474,078	6,478,985	6,481,528
Other liabilities		5,441,878	6,023,606	6,009,190	4,114,333	4,724,924
Total liabilities	Before distribution	14,011,241	14,193,182	14,525,138	11,968,580	13,974,828
	After distribution	16,657,241	16,447,182	16,681,138	13,340,580	15,738,828
Share capital		9,800,000	9,800,000	9,800,000	9,800,000	9,800,000
Capital reserv	e	2,232,791	2,232,791	2,232,791	2,232,791	2,232,791
Retained earnings	Before distribution	8,807,938	,722,970	6,867,825	6,516,217	7,013,329
	After distribution	6,161,938	5,468,970	4,711,825	5,144,217	5,249,329
Unrealized profit and loss out of financial commodities		124,230	58,774	101,376	(84,751)	(1,465,232)
Total adjustment to translation		(398,722)	(95,827)	(391,198)	447,249	548,894
Unrealized revaluation value		31,919,848	32,114,341	31,163,701	31,235,647	31,259,875
Net loss of cost not recognized as retirementpension		(54,439)	(18,898)	-	(5,247)	-
Total	Before distribution	52,431,596	51,814,151	49,774,495	50,141,906	49,389,657
shareholders’ equity	After distribution	49,785,596	49,560,151	47,618,495	48,769,906	47,625,657

Note 1: If asset re-evaluation is made for the current year, it is required to specify the date of handling and amounts of added value after re-evaluation.

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4.Consolidated Brief Profit and Loss Statement – Financial Accounting Standards in Our Country

Country
Year Item	Financial information for recent fiveyears
	2012	2011	2010	2009	2008
Operatingincome	17,795,361	16,970,822	14,428,778	17,150,285	17,019,764
Operating grossprofits	2,416,725	1,735,369	1,983,006	2,832,520	1,301,805
Operating profit and loss	1,114,681	446,973	845,999	1,770,821	384,342
Non-operatingincome andprofits	2,954,976	3,297,445	1,249,409	2,285,166	4,498,066
Non-operatingexpenses and loss	320,046	458,220	250,076	1,811,726	1,343,490
Profit and loss before tax of continued business departments	3,749,611	3,286,198	1,845,332	2,244,261	3,538,918
Profit and loss of continued business departments	3,338,968	3,011,145	1,723,608	1,266,888	2,191,718
Profit and loss out of business suspension departments	-	-	-	-	-
Extraordinary profit and loss	-	-	-	-	-
Total affected amount of changes in accounting principles	-	-	-	-	-
Profit and loss for currentperiod	3,338,968	3,011,145	1,723,608	1,266,888	2,191,718
Earningsper share	3.41	3.07	1.76	1.29	2.24

Note 1: Total affected amounts of profit and loss from business suspension units, extraordinary profit and loss and change in accounting principles are recognized on the basis of deduction of net amounts after income tax. Note 2: Upon notice by competent authorities, if financial information shall be corrected or prepared once again, it is required to recognize the figures after such correction or re-preparation, and to specify the conditions and reasons.

(III) Certified public accountants and audit opinions

Year	Certifiedpublic accountants	Names of certifiedpublic accountants	Audit opinions
2001	Baker TillyClock & Co	Xu Suqin and DingHongxun	Revised without reservation
2002	Baker TillyClock & Co	Xu Suqin and DingHongxun	Revised without reservation
2003	Baker TillyClock & Co	HuangGuoshi and Lai Yongji	Revised without reservation
2004	Baker TillyClock & Co	DingHongxun and HuangGuoshi	Revised without reservation
2005	Baker TillyClock & Co	DingHongxun and HuangGuoshi	Revised without reservation
2006	Baker TillyClock & Co	DingHongxun and HuangGuoshi	Revised without reservation
2007	Baker TillyClock & Co	DingHongxun and Lai Yongji	Revised without reservation
2008	Baker TillyClock & Co	Lai Yongji and Wu Xinliang	Revised without reservation
2009	Baker TillyClock & Co	DingHongxun and Wu Xinliang	Revised without reservation
2010	Deloitte & Touche	Fan Youwei and WangYiwen	Revised without reservation
2011	Deloitte & Touche	WangYiwen and Fan Youwei	Revised without reservation
2012	Deloitte & Touche	WangYiwen and Fan Youwei	Revised without reservation
2013	Deloitte & Touche	WangYiwen and Fan Youwei	Revised without reservation
2014	Deloitte & Touche	WangYiwen and Fan Youwei	Revised without reservation

105

Financial Summary

II. Financial Analysis over the Recent Five Years

(I) Financial analysis:

Year (Note 1) Analysis items (Note3)	Year (Note 1) Analysis items (Note3)	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	The year ended March 31st, 2015(Note 2)
		2014Year	2013Year	2012 Year (Note 1)	Year	Year
Financial structure(％)	liabilities to assets ratio	25.68	23.68	23.58			23.74
	long-term capital fixed assets ratio	192.46	164.17	164.49			191.11
Debt paying ability %	Current ratio	179.10	239.14	285.27			173.50
	Quick ratio	104.83	126.52	143.01			82.57
	Interest coverage	24,512.24	47,776.49	901,832.69			54.49
Operability	Receivables turnover rate(times)	5.64	5.62	6.03			1.18
	Average number of days of cash receipt	65	65	61			309
	Inventoryturnover rate(times)	4.17	3.7	4.23			0.94
	Payables turnover rate(times)	18.31	28.83	36.52			3.11
	Average number of days ofgoods sale	88	99	86			388
	Turnover rate (times) of real estate, plant and equipment	0.49	0.42	0.50			0.11
	Total asset turnover rate(times)	0.26	0.24	0.28			0.06
Profitability	Asset return rate(%)	4.53	3.82	6.39			0.08
	shareholders’ equityreturn rate(%)	5.94	5	8.47			0.09
	Paid-upcapital ratio(%)	29.05	26.85	47.57			0.17
	Net income rate(%)	17.52	15.84	22.48			1.23
	Earning per share(NT$)	3.13	2.59	4.31			0.05
Cash flow	cash flow ratio(%)	(10.27)	129.73	76.77			30.06
	Cash flow fair ratio(%)	45.80	71.38	42.73			63.71
	Cash re-investment ratio(%)	(3.82)	2.83	0.68			2.19
Leverage	Operation leverage	3.70	5.05	2.53			202.26
	Financial leverage	1	1	1			4
Please specify reasons for changes in financial ratios over the past two years. (There will be no necessary analysis if changes in increase or decrease fail to reach 20%) 1. Drop in current ratio mainly because of the increase in current assets receivable of property lower than the increase in current liabilities of short-term loan and accounts payable in 2014. 2. Drop in interest coverage mainly because of incremental short- and long-term lending interest as well as interest derived from tax administrative remedies in 2014. 3. Decrease in account payables turnover mainly because of increase of accounts payable for purchasing materials in 2014. 4. Higher earnings per share mainly because of increase in net operating profit after tax which was caused by increase in property benefits in 2014. 5. Lower cash flow ratio mainly because of decrease in cash flow in out of operating activities and because of increase of current liabilities due to decrease of cash incomes from property and Al-Jubail Fertilizer Company in 2014. 6. Drop in cash flow adequancy ratio mainly because of decrease in net cash flow in out of operating activities higher than capital expenditure as well as decrease in cash dividend expenses in 2014. 6. Drop in cash re-investment ratio mainly because of decrease in cash flow in out of operating activities in 2014. 8. Lower operating leverage mainly because of higher income out of housing in 2014 leading to increase in net operating profits.

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2. Financial Analysis (Individual)

Year Analysis items (Note 3)	Year Analysis items (Note 3)	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Theyear ended March 31st, 2015(Note 2)
		2014Year	2013Year (Note 1)	2012 Year (Note 1)	Year	Year
Financial structure (％)	liabilities to assets ratio	25.62	23.41	23.56			─
	long-term capital fixed assets ratio	194.43	165.56	164.64			─
Debt paying ability %	Current ratio	176.69	248.13	283.01			─
	Quick ratio	103.53	129.86	140.48			─
	Interest coverage	25,685.98	Not Interests	8,447.36			─
Operability	Receivables turnover rate(times)	5.55	5.55	6.03			─
	Average number of days of cash receipt	66	66	61			─
	Inventoryturnover rate(times)	4.17	3.68	4.23			─
	Payables turnover rate(times)	18.48	29.70	37.22			─
	Average number of days of goods sale	88	99	86			─
	Turnover rate (times) of real estate, plant and equipment	0.48	0.41	0.49			─
	Total asset turnover rate(times)	0.25	0.24	0.28			─
Profitability	Asset return rate(%)	4.55	3.82	6.39			─
	shareholders’equity return rate (%)	5.94	5	8.47			─
	Paid-upcapital ratio(%)(Note 7)	29.18	27.46	47.58			─
	Net income rate(%)	17.95	16.16	22.52			─
	Earning per share(NT$)	3.13	2.59	4.31			─
Cash flow	cash flow ratio(%)	(9.94)	140.50	78.25			─
	Cash flow fair ratio(%)	46.08	71.18	46.64			─
	Cash re-investment ratio(%)	(3.79)	2.90	0.73			─
Leverage	Operation leverage	3.35	4.00	2.50			─
	Financial leverage	1	1	1			─
Please specify reasons for changes in financial ratios over the past two years. (There will be no necessary analysis if changes in increase or decrease fail to reach 20%) 1. Drop in current ratio mainly because of the increase in current assets receivable of property lower than the increase in current liabilities of short-term loan and accounts payable in 2014. 2. Drop in quick ratio mainly because of increase in current liabilities higher than current assets and because of increase of advance payments in property in 2014. 3. Generation of interest coverage mainly because of incremental short- and long-term lending interest as well as interest derived from tax administrative remedies in 2014. 4. Decrease in account payables turnover mainly because of increase of accounts payable for purchasing materials in 2014. 5. Higher earnings per share mainly because of increase in net operating profit after tax which was caused by increase in property benefits in 2014. 6. Lower cash flow ratio mainly because of decrease in cash flow in out of operating activities and because of increase of current liabilities due to decrease of cash incomes from property and Al-Jubail Fertilizer Company in 2014. 7. Drop in cash flow adequancy ratio mainly because of decrease in net cash flow in out of operating activities higher than capital expenditure as well as decrease in cash dividend expenses in 2014. 8. Dropin cash re-investment ratio mainlybecause of decrease in cash flow in out of operatingactivities in 2014.

Note 1: 2012 data are consolidated and individual financial reports converted according to IFRSs.

Note 2: The consolidated financial report in 2015 and ended in March 31 was examined by the accountant, but the individual financial report was not examined by the accountant.

Note 3: Formulae for the analyzed items:

107

Financial Summary

Financial structure
(1) Liabilities to assets ratio＝total liabilities/total assets.
(2) Long-term capital to fixed assets ratio, plant to equipment ratio＝ (total equity ＋non-current liabilities) /net value of real estate, plant and equipment.
Debt paying ability
(1) Current ratio＝current assets /current liabilities.
(2) Quick ratio＝(Current assets－inventory－prepaid expenses)/current liabilities.
(3) Interest coverage＝Net income before income tax and interests expenses/interest expenses for the current period.
Operation capability
(1) Receivable (including accounts receivable and bills receivable arising from business operation) turnover rate＝Net sales of goods/Average receivables for different periods (including balance of accounts receivable and bills receivable arising from business operation).
(2) Average number of days of cash receipt＝365/Receivables turnover rate.
(3) Inventory turnover rate＝goods sale costs/average inventory (including inventory and construction work in progress).
(4) Payable (including accounts payable and bills payable arising from business operation) turnover rate＝balance of goods sale costs/average payables for different period (including accounts payable and bills payable arising from business operation).
(5) Average number of days of goods sale＝365/inventory turnover rate.
(6) Turnover rate of real estate, plant and equipment＝Net sales of good/net values of average real estate, plant and equipment.
(7) Total asset turnover rate＝Net sales of goods/total average assets.
Profitability (1) Asset return rate =〔Profit and loss after tax＋interests expenses×(1－tax rate)〕/average total assets.
(2) shareholders’ equity return rate＝Profit and loss after tax/net average shareholders’ equity.
(3) Net income rate＝Profit and loss after tax/Net sales of goods.
(4) Earning per share＝(Net profit after tax－special share dividends)/Weighted average number of shares issued. (Note 4)
Cash flow
(1) Cash flow ratio＝net cash flow due to operating activities/current liabilities.
(2) Net cash flow fair ratio＝Net cash flow from operating activities over the current five years/increase in (capital expenses ＋increase in inventory＋cash dividends) for the current five years＋cash dividends).
(3) Cash re-investment ratio＝(net cash flow due to operating activities－cash dividends)/(Gross fixed assets ＋long－term investment＋other assets＋Operating capital). (Note 5)
Leverage: (1) Operation leverage＝(Net operating income－variable operating costs and expenses)/operating interest. (Note 6).
(2) Financial leverage＝operating interest/(operating interest－interests expenses).

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(II) Financial analysis – Financial accounting standards in our country

Individual Financial analysis – Financial accounting standards in our country

Analysis item	Year (Note 1) (Note 2)	Year (Note 1) (Note 2)	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears
			2012	2011	2010	2009	2008
Financial structure (%)	Liabilities to assets ratio		21.07	21.50	22.59	19.27	22.06
	Ratio of long-term capital to fixed assets		143.34	148.25	157.61	175.99	182.95
Debt paying ability (%)	Current ratio		442.13	572.12	668.98	1,217.69	558.20
	Quick ratio		234.92	376.46	415.28	918.73	335.02
	Interests coverage ratio		No interest expenses	No interest expenses	No interest expenses	62,341.58	No interest expenses
Operation capability	Receivables turnover rate(times)		5.71	7.02	8.09	10.38	11.70
	Number of days of average cash receipt		63.92	51.99	45.12	35.16	31
	Inventoryturnover rate(times)		5	4.05	3.02	3.36	5.76
	Payables turnover rate(times)		36.92	30.90	37.65	26.68	17.33
	Days of average sale ofgoods		73	90.12	120.86	109	63
	Fixed assets turnover rate(times)		0.49	0.49	0.46	0.60	0.63
	Total asset turnover rate(times)		0.27	0.26	0.22	0.28	0.27
Profitability	Asset return rate(%)		5.04	4.62	2.73	2.02	3.43
	Shareholders’equity return rate (%)		6.41	5.93	3.45	2.55	4.32
	Ratio in paid-up capital (%)	Operatinginterest	11.37	4.56	8.63	18.07	3.92
		Net income before tax	38.26	33.53	18.83	22.90	36.11
	Net income rate(%)		18.76	17.74	11.95	7.39	12.88
	Earning per share(NT$)		3.41	3.07	1.76	1.29	2.24
Cash flow	Cash flow ratio(%)		129.59	186.18	46.54	421.38	(24.91)
	Cash flow fair ratio(%)		51.22	56.24	54.87	66.51	47.61
	Cash re-investment ratio(%)		0.71	1.59	(0.64)	5.76	(6.44)
Leverage	Operation leverage		3.67	5.74	4.25	1.88	2.28
	Financial leverage		1	1	1	1	1
Please specify reasons for changes in financial ratios over the past two years. (There may be no analysis if changes in increase or decrease fails to reach 20%) 1. Drop in current ratio and quick ratio mainly because of increase in income tax payable and decrease in cash. 2. Average number of cash receipt days rise, mainly because of failure to receive cash receipt out of accounts receivable as scheduled. 3. Increase in inventory turnover rate is mainly because decrease in gradual delivery of housing under construction work in process. 4. Increase in operating interest to paid-up capital, mainly caused by income out of construction works of high gross profits more than that of the previous period. 5. Lower cash flow ratio, mainly caused by increase in income tax payable and dividends and decrease in cash. 6. Cash re-investment ratio drops, mainly caused by decrease in net cash flow in out of operating activities for the current period and increase in cash dividend expenses. 7. Lower operating leverage, mainly caused by higher income out of housing under joint construction and distribution for the currentperiod leadingto increase in operatinginterests.

109

Financial Summary

2. Consolidated Financial analysis – Financial accounting standards in our country

Year (Note 1) Analysis item(Note 2)	Year (Note 1) Analysis item(Note 2)	Year (Note 1) Analysis item(Note 2)	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears	Financial analysis over the recent fiveyears
			2012	2011	2010	2009	2008
Financial structure (%)	Liabilities to assets ratio		21.09	21.50	22.59	19.27	22.05
	Ratio of long-term capital to fixed assets		143.21	148.1	157.43	175.76	182.71
Debt paying ability (%)	Current ratio		444.30	579.82	670.47	1,219.53	559.57
	Quick ratio		238.17	384.07	416.84	920.69	292.81
	Interests coverage ratio		No interest expenses	No interest expenses	No interest expenses	62,341.58	No interest expenses
Operation capability	Receivables turnover rate(times)		5.72	7.03	8.09	10.39	11.72
	Number of days of average cash receipt		64	52	45	35	31
	Inventoryturnover rate(times)		4.99	4.05	3.03	3.36	4.18
	Payables turnover rate(times)		36.23	30.91	37.66	26.68	17.32
	Days of average sale ofgoods		73	90	120	109	87
	Fixed assets turnover rate(times)		0.49	0.49	0.46	0.60	0.63
	Total asset turnover rate(times)		0.27	0.26	0.22	0.28	0.27
Profitability	Asset return rate(%)		5.04	4.62	2.73	2.02	3.43
	Shareholders’equityreturn rate(%)		6.41	5.93	3.45	2.55	4.32
	Ratio in paid- upcapital(%)	Operatinginterest	11.21	4.59	8.65	18.09	3.94
		Net income before tax	38.26	33.54	18.83	22.91	36.12
	Net income rate(%)		18.73	17.74	11.94	7.38	12.87
	Earning per share(NT$)		3.41	3.07	1.76	1.29	2.24
Cash flow	Cash flow ratio(%)		127.35	186.37	46.61	421.68	-37.01
	Cash flow fair ratio(%)		50.31	51.8	49.71	58.63	35.73
	Cash re-investment ratio(%)		0.68	1.60	-0.66	5.96	-6.97
Leverage	Operation leverage		3.75	5.72	4.25	1.88	2.28
	Financial leverage		1.00	1.00	1.00	1.00	1.00
Please specify reasons for changes in financial ratios over the past two years. (There may be no analysis if changes in increase or decrease fails to reach 20%) 1. Drop in current ratio and quick ratio is mainly because of increase in income tax payable and dividends, and decrease in cash. 2. Average number of cash receipt days rises is mainly because of failure to receive cash receipt out of accounts receivable as scheduled. 3. Increase in inventory turnover rate is mainly because decrease in gradual delivery of housing under construction work in process. 4. Increase in operating interest to paid-up capital is mainly caused by income out of construction works of high gross profits more than that of the previous period. 5. Lower cash flow ratio is mainly caused by increase in income tax payable and dividends, and decrease in cash. 6. Cash re-investment ratio drops is mainly caused by decrease in net cash flow in out of operating activities for the current period and increase in cash dividend expenses. 7. Lower operating leverage is mainly caused by higher income out of housing under joint construction and distribution for the current period leading to increase in operating interests.

Note 1: Formulae for the analyzed items:

Financial structure
(1) Liabilities to assets ratio＝total liabilities/total assets.
(2) Long-term capital to fixed assets ratio, plant to equipment ratio＝ (total equity ＋non-current liabilities) /net value of real estate, plant and equipment.
Debt paying ability
(1) Current ratio＝current assets /current liabilities.
(2) Quick ratio＝(Current assets－inventory－prepaid expenses)/current liabilities.
(3) Interest coverage＝Net income before income tax and interests expenses/interest expenses for the current period.
Operation capability
(1) Receivable (including accounts receivable and bills receivable arising from business operation) turnover rate＝Net sales of goods/Average receivables for different periods (including balance of accounts receivable and bills receivable arising from

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business operation).

(2) Average number of days of cash receipt＝365/Receivables turnover rate.
(3) Inventory turnover rate＝goods sale costs/average inventory (including inventory and construction work in progress).
(4) Payable (including accounts payable and bills payable arising from business operation) turnover rate＝balance of goods sale costs/average payables for different period (including accounts payable and bills payable arising from business operation).
(5) Average number of days of goods sale＝365/inventory turnover rate.
(6) Turnover rate of real estate, plant and equipment＝Net sales of good/net values of average real estate, plant and equipment.
(7) Total asset turnover rate＝Net sales of goods/total average assets.
Profitability
(1) Asset return rate =〔Profit and loss after tax＋interests expenses×(1－tax rate)〕/average total assets.
(2) shareholders’ equity return rate＝Profit and loss after tax/net average shareholders’ equity.
(3) Net income rate＝Profit and loss after tax/Net sales of goods.
(4) Earning per share＝(Net profit after tax－special share dividends)/Weighted average number of shares issued. (Note 4)
1. Cash flow
(1) Cash flow ratio＝net cash flow due to operating activities/current liabilities.
(2) Net cash flow fair ratio＝Net cash flow from operating activities over the current five years/increase in (capital expenses＋ increase in inventory＋cash dividends) for the current five years＋cash dividends).
(3) Cash re-investment ratio＝(net cash flow due to operating activities－cash dividends)/(Gross fixed assets ＋long－term investment＋other assets＋Operating capital). (Note 5)
Leverage:

(1) Operation leverage＝(Net operating income－variable operating costs and expenses)/operating interest. (Note 6).

(2) Financial leverage＝operating interest/(operating interest－interests expenses).

111

Financial Summary

III. Auditing Report by Supervisors on Financial Statements over the Recent Years

Supervisors Audit Report of Taiwan Fertilizer Co., Ltd

The Board of Directors has prepared the Business Report, Financial Statement and Retained Earning Distribution Proposal, etc of the Company for 2014. The financial statement has been reviewed and audited by Wang Yiwen and Fan Youwei from Deloitte & Touche, who have already provided auditing reports.

The foregoing Business Report, Financial Statement and Retained Earning Distribution Proposal have been reviewed and audited by the supervisors. It is believed that they comply with relevant regulations of the Company Law and they were reported above subject to the provisions set out in Section 219 of the Company Law.

Executive Meeting of Shareholders for 2015 of the Company

Supervisors:

Representative from China Postal Service Corporation:

Wu Yuanren Chen Zailai CaiLinglan

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27 March 2015

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IV. Financial reports for recent years

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Taiwan Fertilizer Co., Ltd.

We have audited the accompanying consolidated balance sheets of Taiwan Fertilizer Co., Ltd. (the “Corporation”) and its subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the years ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

However, as stated in Note 4 to the consolidated financial statements, we did not audit the financial statements as of and for the years ended December 31, 2014 and 2013 of some consolidated subsidiaries. The total assets of these subsidiaries as of December 31, 2014 and 2013 were 0.10% (NT$68,957 thousand) and 0.25% (NT$165,326 thousand), respectively, of the total consolidated assets. The total comprehensive losses for 2014 and 2013 were 2.78% (NT$99,401 thousand) and 3.82% (NT$101,137 thousand), respectively, of total consolidated comprehensive income. As stated in Note 12, we also did not audit the financial statements of some investees, the investments in which were accounted for by the equity method. As of December 31, 2014 and 2013, the investments in these investees had amounted to NT$73,044 thousand and NT$170,907 thousand, respectively. The investment losses on these investees in 2014 and 2013 were NT$100,891 thousand and NT$105,405 thousand, respectively. The financial statements of the subsidiaries and the investees had been audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for all these investees and the information disclosed in Note 34, was based solely on the reports of the other auditors.

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

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

113

Financial Summary

We have also audited, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the financial statements of the parent company, Taiwan Fertilizer Co., Ltd., as of and for the years ended December 31, 2014 and 2013, and expressed an unqualified opinion with an explanatory paragraph on the parent’s financial statements.

March 27, 2015

Notice to Readers

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

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

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TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Available-for-sale financial assets - current (Notes 4 and 7) Debt investment with no active market - current Notes receivable Accounts receivable (Notes 4 and 8) Other receivables (Note 30) Current tax assets (Notes 4 and 19) Inventories (Notes 4 and 10) Buildings and land held for sale (Notes 4 and 11) Prepayments Other Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4 and 7) Financial assets carried at cost - noncurrent (Notes 4 and 9) Debt investment with no active market - noncurrent (Note 31) Investments accounted for by the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13 and 31) Investment properties (Notes 4 and 14) Intangible assets (Notes 4 and 15) Deferred tax assets (Notes 4 and 24) Long-term receivables (Note 8) Long-term prepayments for lease (Note 16) Other noncurrent assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan borrowings (Note 17) Notes payable Accounts payable (Note 30) Other payables (Note 18) Current tax liabilities (Notes 4 and 24) Receipts in advance (Note 11) Long-term liabilities - current portion (Notes 17 and 31) Other Total current liabilities NONCURRENT LIABILITIES Long-term borrowings (Note 17) Provisions - noncurrent (Notes 4 and 19) Deferred tax liabilities (Notes 4 and 24) Deferred revenue - noncurrent (Note 14) Accrued pension liabilities (Notes 4 and 20) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 21) Capital stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2014 Amount % $ 610,560 1 - - 22,993 - 384,125 - 3,513,547 5 1,205,603 2 409,086 1 2,203,885 3 1,459,774 2 704,754 1 19,509 - 10,533,836 15 106,285 - 558,456 1 75,800 - 10,270,530 15 33,573,437 48 12,816,433 18 484,830 1 314,662 - 378,250 - 1,357,172 2 27,246 - 59,963,101 85 $ 70,496,937 100 $ 1,710,000 3 11,239 - 1,004,267 2 1,212,648 2 67,450 - 1,647,953 2 140,000 - 87,815 - 5,881,372 9 790,000 1 910,976 1 7,151,048 10 2,781,006 4 418,961 1 170,959 - 12,222,950 17 18,104,322 26 9,800,000 14 2,234,334 3 3,133,567 4 33,590,944 48 3,202,974 5 39,927,485 57 430,796 - 52,392,615 74 $ 70,496,937 100		2013
				Amount % $ 1,187,396 2 351,614 - 64,829 - 287,870 - 2,022,035 3 356,715 1 94,988 - 2,215,720 3 1,126,977 2 566,351 1 25,722 - 8,300,217 12 125,150 - 622,991 1 34,600 - 9,644,925 15 38,410,112 58 7,129,257 11 496,880 1 307,144 - - - 1,427,783 2 29,541 - 58,228,383 88 $ 66,528,600 100 $ 162,000 - 23,716 - 554,605 1 570,764 1 71,685 - 2,062,314 3 2,555 - 23,176 - 3,470,815 5 - - 2,228,068 4 6,696,136 10 2,855,952 4 364,801 1 138,456 - 12,283,413 19 15,754,228 24 9,800,000 15 2,234,334 3 2,902,726 4 33,609,707 51 2,308,409 3 38,820,842 58 (80,804 ) - 50,774,372 76 $ 66,528,600 100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 27, 2015)

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Financial Summary

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

OPERATING REVENUES (Notes 4, 14, 22 and 30) OPERATING COSTS (Notes 20, 22, 23 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 20 and 23) Marketing General and administrative Research and development Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSES Share of profits of associates and joint ventures (Notes 4 and 12) Other gains and losses (Note 23) Other income (Note 23) Finance costs Total nonoperating income and expenses INCOME BEFORE INCOME TAX INCOME TAX INCOME (EXPENSE) (Notes 4 and 24) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Share of other comprehensive income of associates and joint ventures Unrealized loss on available-for-sale financial assets Exchange differences arising on translation of foreign operations		2014 Amount % $ 17,510,273 100 14,597,642 84 2,912,631 16 446,535 3 748,536 4 57,610 - 1,252,681 7 1,659,950 9 1,676,767 10 (485,451) (3) 44,610 - (48,623 ) - 1,187,303 7 2,847,253 16 221,093 1 3,068,346 17 643,114 4 (20,479) - 188 -		2013
				Amount % $ 16,018,546 100 13,771,349 86 2,247,197 14 473,827 3 939,156 6 46,042 - 1,459,025 9 788,172 5 1,657,021 11 35,485 - 156,584 1 (5,520 ) - 1,843,570 12 2,631,742 17 (93,671 ) (1 ) 2,538,071 16 254,292 2 (41,059) - (4,532) - (Continued)

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TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

Actuarial (loss) gain on defined benefit plans Income tax expense related to components of other comprehensive income (Notes 4 and 24) Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET INCOME ATTRIBUTABLE TO: Shareholders of the parent TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Shareholders of the parent EARNINGS PER SHARE (Note 25) Basic Diluted		2014 Amount % $ (2,052) - (110,874 ) (1 ) 509,897 3 $ 3,578,243 20 $ 3,068,346 18 $ 3,587,243 20 $3.13 $3.13		2013
				Amount % $ 10,106 - (112,508 ) (1 ) 106,299 1 $ 2,644,370 17 $ 2,538,071 16 $ 2,644,370 17 $2.59 $2.59

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

(With Deloitte & Touche audit report dated March 27, 2015)

(Concluded)

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TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

	Equity A	ttributable to Shareholders of the Corporation	ttributable to Shareholders of the Corporation
Share Capital Capital Surplus $ 9,800,000 $ 2,232,791 - - - - - - - - - - - 1,543 - - 9,800,000 2,234,334 - - - - - - - - - - - - $ 9,800,000 $ 2,234,334		Retained Earnings Unappropriated Special Reserve Earnings $ 33,613,130 $ 2,738,424 - (333,897 ) - (2,646,000 ) - 2,538,071 - 8,388 - 2,546,459 - - (3,423 ) 3,423 33,609,707 2,308,409 - (230,841 ) - (1,960,000 ) - 3,068,346 - (1,703 ) - 3,066,643 (18,763 ) 18,763 $ 33,590,944 $ 3,202,974		Other Equity
			Exchange Differences on Translating Foreign Operations $ (302,945) - - - 138,970 138,970 - - (163,975) - - - 532,079 532,079 - $ 368,104	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 124,230 - - - (41,059 ) (41,059 ) - - 83,171 - - - (20,479 ) (20,479 ) - $ 62,692
	Legal Reserve $ 2,568,829 333,897 - - - - - - 2,902,726 230,841 - - - - - $ 3,133,567

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

(With Deloitte & Touche audit report dated March 27, 2015)

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TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Share of profits of associates and joint ventures Depreciation expenses Donation expenses Amortization expenses (amortization of prepayments for lease included) Impairment loss recognized on financial assets Finance costs Dividend income Net gain on foreign currency exchange Reversal of write-downs of inventories Loss (gain) on disposal of investments Loss on disposal of property, plant and equipment Loss (gain) on disposal of investment properties Interest income Gain on the remeasurement of previously held equity interest in the acquiree Provision for doubtful accounts Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Inventories Buildings and land held for sale Prepayments Other current assets Long-term receivables Notes payable Accounts payable Other payables Receipts in advance Other current liabilities Accrued pension liabilities Deferred revenue Cash (used in) generated from operations Interest received Dividend received Interest paid Income tax paid Cash (used in) generated from operating activities	2014 $ 2,847,253 (1,676,767) 582,521 421,575 92,909 49,510 48,623 (23,214) (18,037) (20,000) 9,409 7,639 2,675 (2,428) - - (96,255) (1,471,728) (165,233) 31,835 456,707 (1,156,150) 6,185 (378,250) (12,954) (197,777) (55,308) (414,361) 64,639 52,108 (74,946 ) (1,089,820) 2,385 621,474 (11,814) (126,481 ) (604,256 )	2013 $ 2,631,742 (1,657,021) 289,582 209,440 86,449 83,164 5,520 (21,585) (5,429) (22,113) (20,944) 3,253 (746) (15,348) (336,331) 18,186 (44,037) 1,180,837 77,576 1,203,200 (426,039) 301,885 7,553 - 4,493 179,149 (126,663) (9,017) (16,304) 32,567 (54,524 ) 3,558,495 15,383 1,553,969 (5,683) (619,397 ) 4,502,767 (Continued)

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Financial Summary

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Proceeds of the sale of available-for-sale financial assets Purchase of available-for-sale financial assets Purchase of investment properties Proceeds of the disposal of property, plant and equipment Return of capital on financial assets carried at cost Purchase of financial assets measured at cost Purchase of intangible assets Proceeds of the disposal of financial assets carried at cost Decrease in refundable deposits Decrease (increase) in debt investments with no active market Net cash outflow on acquisition of subsidiaries Increase in investments accounted for by the equity method Proceeds of the disposal of investment properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid Increase in short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowings Increase in guarantee deposits received Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2014 $ (719,454) 562,675 (213,990) (171,045) 18,460 18,000 (15,000) (10,248) 3,931 2,295 636 - - - (523,740 ) (1,960,000) 1,545,445 1,000,000 (70,000) 32,503 547,948 3,212 (576,836) 1,187,396 $ 610,560	2013 $ (1,226,904) 3,485,287 (3,212,039) (43,895) 9,898 - (100,000) (14,293) 3,589 35,350 (24,567) (373,963) (28,505) 746 (1,489,296 ) (2,646,000) 82,000 - (167,177) 32,443 (2,698,734 ) 1,641 316,378 871,018 $ 1,187,396

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

(With Deloitte & Touche audit report dated March 27, 2015)

(Concluded)

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TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

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

1. GENERAL INFORMATION

Taiwan Fertilizer Co., Ltd. (the “Corporation”) was incorporated in May 1946. It manufactures and sells inorganic and organic fertilizers and other chemical products. The Corporation also constructs and leases real estate.

The Corporation’s stock has been listed on the Taiwan Stock Exchange since March 24, 1998.

The functional currency of the Corporation is the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 27, 2015.

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

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

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

New, Amended and Revised Effective Date Standards and Interpretations (the “New IFRSs”) Announced by IASB (Note) Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1, 2010, as appropriate Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods ended on or after June 30, 2009 Improvements to IFRSs (2010) July 1, 2010 and January 1, 2011, as appropriate Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013 Amendment to IFRS 1 “Limited Exemption from Comparative July 1, 2010 IFRS 7 Disclosures for First-time Adopters” Amendment to IFRS 1 “Severe Hyperinflation and Removal of July 1, 2011 Fixed Dates for First-time Adopters” Amendment to IFRS 1 “Government Loans” January 1, 2013 (Continued)

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Financial Summary

New, Amended and Revised Effective Date Standards and Interpretations (the “New IFRSs”) Announced by IASB (Note) Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and January 1, 2013 Financial Liabilities” Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011 IFRS 10 “Consolidated Financial Statements” January 1, 2013 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated January 1, 2013 Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment January 1, 2014 Entities” IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012 Amendment to IAS 12 “Deferred Tax: Recovery of Underlying January 1, 2012 Assets” IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and Joint Ventures” January 1, 2013 Amendment to IAS 32 “Offsetting Financial Assets and Financial January 1, 2014 Liabilities” IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013 (Concluded)

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

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

1) IFRS 13 “Fair Value Measurement”

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

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

2) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 requires items of other comprehensive income to be grouped into those items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified subsequently to profit or loss. Income taxes on related items of other comprehensive income are grouped on the same basis. Under current IAS 1, there were

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no such requirements.

The Group will retrospectively apply the above amendments starting from 2015. Items not expected to be reclassified to profit or loss are remeasurements of the defined benefit plans and the share of the remeasurements of defined benefit plans of associates and joint ventures accounted for using the equity method. Items expected to be reclassified to profit or loss are the exchange differences on translating foreign operations, unrealized gains (loss) on available-for-sale financial assets, and share of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates and joint ventures accounted for using the equity method. Items expected to be reclassified to profit or loss for 2014 are an unrealized loss of $20,479 thousand on available-for-sale financial assets; the exchange differences of $1,706 thousand on translating foreign operations; and a share, amounting to $533,785 thousand, of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates and joint ventures accounted for using the equity method.

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

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

New IFRSs
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
Annual Improvements to IFRSs 2012-2014 Cycle
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”
Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 1 “Disclosure Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 27 “Equity Method in Separate Financial
Statements”
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 4)
January 1, 2018
January 1, 2018
January 1, 2016 (Note 3)
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014

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Financial Summary

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

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

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

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

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

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

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss.

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No subsequent impairment assessment is required.

The impairment of financial assets

IFRS 9 requires the recognition of impairment loss on financial assets using the expected credit losses model. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers,” and certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. For trade receivables with no significant financing component, there should be a loss allowance throughout the lives of the receivables.

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition, and these losses should be discounted using the credit-adjusted effective interest rate. Subsequently, any changes from the initial expected credit losses are recognized as a loss allowance, with the gain or loss recognized immediately in profit or loss.

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

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

Except for the above impact, as of the date the accompanying consolidated financial statements had been authorized for issue, the Group was continuing to assess the possible impact that the application of other standards and interpretations would have on the Group’s financial position and financial performance, and will disclose the impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

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

Basis of Preparation

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

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Financial Summary

Basis of Consolidation

a. Principles for preparing consolidated financial statements

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

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

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

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

b. Subsidiary included in consolidated financial statements

% of Ownership

December 31

2014
2013
100
100
100
100
100
100
100
100
100
100
100
100
100
100

c. Subsidiaries not included in the consolidated financial statements: None.

Foreign Currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured at historical cost in foreign currencies are not retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items shall be recognised in profit or loss in the period in which they arise.

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For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income.

Classification of Current and Noncurrent Assets and Liabilities

Current assets are assets held for trading purposes and assets expected to be realized or sold within one year from the end of the reporting period. Assets that are not classified as current such as property, plant and equipments, investment properties and intangible assets are classified as noncurrent assets. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled within one year from the end of the reporting period. Liabilities that are not classified as current are noncurrent liabilities.

Cash Equivalents

Cash equivalents are 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.

Inventories

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

Investments Accounted for Using Equity Method

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

The Group accounted for associates and jointly controlled entities by using the equity method. Under the equity method, investments in associates and jointly controlled entities are initially recognized in the statement of financial position at cost and adjusted thereafter to recognize the Group’s share of profit or loss and other comprehensive income of the associates and jointly controlled entities as well as the distribution received. The Group also recognized its share in the changes in the equity of associates and jointly controlled entities.

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

Business Combination

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

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Financial Summary

Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss. Major additions and improvements to properties are capitalized, while costs of repairs and maintenance are expensed currently.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation is recognized using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at least once at the end of each reporting period.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Leases

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties also include land held for a currently undetermined future use which is regarded as held for capital appreciation.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

An item of investment property is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on derecognition of the property is calculated as the difference between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss in the period in which the property is derecognized.

Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units that is expected to benefit from the synergies of the combination. If the

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recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Impairment of Tangible and Intangible Assets Other than Goodwill

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Financial Instruments

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

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

a. Financial assets

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

Financial assets are classified into the following categories: Available-for-sale financial assets and loans and receivables.

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Financial Summary

1) Available-for-sale financial assets

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

Stocks held by the Group that are traded in an active market are classified as available-for-sale financial assets and are stated at fair value at the end of each reporting period.

Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in profit or loss or other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

2) Loans and receivables

Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables including cash and cash equivalents, notes and accounts receivable and other receivables are measured at amortized cost using the effective interest method, less any impairment, except for those loans and receivables with immaterial discounted effect.

3) Impairment of financial assets

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

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

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of

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estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period. In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

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

4) Derecognition of financial assets

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

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

b. Financial liabilities

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

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

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Financial Summary

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

a. Sale of goods

Revenue from the sale of goods is recognized at which time all the following conditions are satisfied:

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

Income from properties developed for sale is recognized when construction is complete, rewards of ownership of the properties are transferred to buyers, and collectability of the related receivables is reasonably assured. Installment payments are carried in the consolidated balance sheets under current liabilities.

Revenue from sales of goods is recognized when the Group has transferred to the buyer the significant risks and rewards of the ownership of the goods.

b. Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

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

Retirement Benefits

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

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For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method. All actuarial gains and losses on the defined benefit obligation are recognized immediately in other comprehensive income. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

Taxation

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

a. Current tax

Income tax on unappropriated earnings at a rate of 10% is expensed in the year the shareholders approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.

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

b. Deferred tax

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

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

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

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Financial Summary

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

c. Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

The following are the critical judgments, apart from those involving estimations, that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements.

Impairment of Tangible and Intangible Assets Other than Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets other than goodwill to determine whether there is any indication that those assets have suffered an impairment loss. In the process of evaluating the potential impairment, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of the Group’s industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years. As of December 31, 2014 and 2013, there were $47,873,385 thousand and $47,105,545 thousand including in the carrying amounts of tangible and intangible assets other than goodwill, respectively.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

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As of December 31, 2014, the carrying amount of goodwill was $358,487 thousand on which there had been no impairment loss recognized.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2014 $ 4,232 606,328 $ 610,560	2013 $ 3,331 1,184,065 $ 1,187,396

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

Bank balance	December 31
	2014 2013 0.02%-0.33% 0.02%-0.17%

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Domestic listed shares Mutual funds Current Noncurrent		December 31	December 31
		2014 $ 106,285 - $ 106,285 $ - 106,285 $ 106,285	2013 $ 125,150 351,614 $ 476,764 $ 351,614 125,150 $ 476,764

8. ACCOUNTS RECEIVABLE

Accounts receivable - sales of goods Real estate receivable Less: Allowance for impairment loss Accounts receivable Long-term receivable		December 31	December 31
		2014 $ 1,115,997 2,796,682 (20,882 ) $ 3,891,797 $ 3,513,547 378,250 $ 3,891,797	2013 $ 2,042,917 - (20,882 ) $ 2,022,035 $ 2,022,035 - $ 2,022,035

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Financial Summary

The average credit period on sales of goods was 30-120 days. Allowance for impairment loss were based on estimated irrecoverable amounts determined by reference to aging analysis, past default experience of the counterparties and an analysis of their current financial position.

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

The aging of accounts receivable that were past due but not impaired was as follows:

Past due 1-30 days Past due 31-60 days Past due over 61 days		December 31	December 31
		2014 $ 3,428 223 111 $ 3,762	2013 $ 139,877 133,336 212,545 $ 485,758

As of December 31, 2014, real estate receivables amounted to $2,769,682 thousand, including the long-term receivable from sales on installment, amounting to $378,250 thousand. Expected recovery of these long-term receivables is at these amounts: $182,716 thousand in 2015; $98,737 thousand in 2016; and $96,797 thousand in 2017.

On a certain sold real estate for which there are receivables, the Group had a secondary priority mortgage amounting to $571,600 thousand.

9. FINANCIAL ASSETS CARRIED AT COST

Noncurrent Domestic unlisted shares Eminent II VC Corp. Top Taiwan V Venture Capital Co., Ltd. Eminent Venture Capital Corporation Taiwan Stock Exchange Corporation TSCBio Ventures Capital Co. Visgeneer Inc. Green Cellulosity Corporation TaiAn Technologies Corporation VIBO Telecom Inc. Classified according to financial asset measurement categories Available-for-sale financial assets		December 31	December 31
		2014 $ 200,000 120,000 100,000 52,800 42,000 20,989 15,000 7,667 - $ 558,456 $ 558,456	2013 $ 200,000 120,000 100,000 52,800 60,000 20,989 - 7,667 61,535 $ 622,991 $ 622,991

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Management believed that the above unlisted equity investments held by the Corporation, whose fair value cannot be reliably measured due to the range of reasonable fair value estimates was so significant; therefore they were measured at cost less impairment at the end of reporting period.

On March 25, 2014, VIBO Telecom Inc. reduced its capital to decrease its loss; the Corporation thus recognized an impairment loss of $49,510 thousand based on the percentage of its ownership of VIBO Telecom Inc.

The Corporation sold its entire holding of VIBO Telecom Inc.’s shares in the second quarter of 2014 and recognized a disposal loss of $8,094 thousand.

In October 2014, TSCBio Ventures Capital Co. (“TSCBio”) reduced its capital, and the Corporation received $18,000 thousand as capital return; the percentage of the Corporation’s ownership of TSCBio remained the same despite this capital reduction.

10. INVENTORIES

Raw materials Finished goods Merchandise		December 31	December 31
		2014 $ 1,423,710 773,452 6,723 $ 2,203,885	2013 $ 1,555,062 651,365 9,293 $ 2,215,720

The costs of inventories recognized as cost of goods sold were $12,961,560 thousand for 2014 and $13,395,679 thousand for 2013.

The cost of inventories recognized as cost of goods sold for 2014 and 2013 included a reversal of inventory write-downs amounting to $20,000 thousand and $22,113 thousand, respectively. Previous write-downs were reversed as a result of increased selling prices in chemical product markets.

11. BUILDINGS AND LAND HELD FOR SALE/RECEIPTS IN ADVANCE

Buildings and land held for sale Nangang R5 Residential Project Others Receipts in Advance Nangang R5 Residential Project		December 31	December 31
		2014 $ 1,453,770 6,004 $ 1,459,774 $ 1,580,199	2013 $ 1,122,046 4,931 $ 1,126,977 $ 2,005,656

Buildings and land held for sale mainly referred to investment in and development of residentialcommercial complexes on self-owned lots.

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Financial Summary

Nangang R5 Residential Project

The Corporation and seven other landlords (Gu-Ji Chen and others) signed a cooperative construction contract. The Corporation’s Lot Nos. 66-1 and 68-2, with a combined area of 2,039.69 pings and a book value of $818,790 thousand, and the other landlords’ adjacent Lot Nos. 66-2 and 68-3, with a combined area of 514.38 pings, would be developed into a residential-commercial housing complex and then sold for a joint commission. The construction site totaled 2,554.08 pings. Three parties would cofinance the project in accordance with the percentage of the land area each owned (the Corporation - 79.8605%, Chen - 12.7725%, and Du - 7.3670%). One bank would provide additional capital financing and real estate trust to the parties.

As of December 31, 2014, the land had been transferred to 45 of the buyers, and the Corporation recognized property revenues of $4,023,449 thousand and related costs of $1,047,992 thousand.

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in jointly controlled entities a. Investment in associates Unlisted companies Al-Jubail Fertilizer Company (“Al-Jubail”) Bion Tech Inc.		December 31	December 31
		2014 2013 $ 10,201,637 $ 9,479,659 68,893 165,266 $ 10,270,530 $ 9,644,925 December 31
		2014 $ 10,197,486 4,151 $ 10,201,637	2013 $ 9,474,018 5,641 $ 9,479,659

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

Name of Associate Unlisted companies Al-Jubail Bion Tech Inc.	December 31
	2014 2013 50.00% 50.00% 22.42% 22.42%

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

	December 31	December 31	December 31
2014 2013 $ 24,930,444 $ 22,483,117 $ 1,745,186 $ 1,484,490 For the Year Ended December 31
	2014 2013 $ 12,947,238 $ 12,488,006 $ 3,972,564 $ 4,386,213 $ - $ - $ 1,776,169 $ 1,758,158 December 31

		2014 $ 68,893	2013 $ 165,266

b. Investments in jointly controlled entities

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

Name of Jointly Controlled Entities TR Electronic Chemical Co., Ltd.	December 31
	2014 2013 51.00% 51.00%

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

Current assets Noncurrent assets Current liabilities Income recognized in profit or loss Profit Loss Other comprehensive income		December 31	December 31
	2014 2013 $ 80,663 $ 100,909 $ 507,624 $ 493,370 $ 517,284 $ 428,004 For the Year Ended December 31
		2014 $ 45,562 $ (144,963 ) $ -	2013 $ 14,275 $ (115,413 ) $ -

c. On March 31, 2011, under the authorization of the Investment Commission of the Ministry of Economic Affairs, the Corporation established TR Electronic Chemical Co., Ltd. (TREC) in

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Financial Summary

the Cayman Islands through a subsidiary, Taifer (Cayman) International Group Co., Ltd. TREC then invested in TR Electronic Chemical (Kunshan) Co., Ltd. (TREC-K), which enabled the Corporation to have a 51% indirect interest in TREC-K. TREC-K manufactures and sells electronic chemicals. Later, under a joint venture agreement between the Corporation and Shiung-Shing Chemical International Trade Corp. (“Shiung-Shing”), another TREC shareholder, Shiung-Shing assigned a manager to handle TREC’s daily business and management. Thus, the Corporation had no control over TREC and TREC-K. As of December 31, 2014, the Corporation investment in TREC-K through TREC was US$10,965 thousand.

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2013 Additions Disposals Acquisitions through business combinations Decommissioning liabilities accrued Effect of foreign currency exchange differences Transfer from completion Balance at December 31, 2013 Accumulated depreciation and impairment Balance at January 1, 2013 Disposals Depreciation expense Acquisitions through business combinations Effect of foreign currency exchange differences Transfer from completion Balance at December 31, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposals Transfer to investment property Decommissioning liabilities accrued Effect of foreign currency exchange difference Transfer from completion Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Disposals Depreciation expense Effect of foreign currency exchange difference Transfer from completion Balance at December 31, 2014 Carrying amounts at December 31, 2014	Land $ 27,414,048 81,587 (1,448 ) - - $ - - 27,494,187 - - - - - - - $ 27,494,187 $ 27,494,187 - - (5,480,245 ) - - - 22,013,942 - - - - - - $ 22,013,942	Buildings $ 1,511,159 179,461 (18,778 ) 199,016 - $ (17,353 ) 1,253,736 3,107,241 (688,594 ) 18,232 (56,920 ) (39,630 ) 3,057 - (763,855 ) $ 2,343,386 $ 3,107,241 22,278 (34,914 ) - - (1,649 ) 797,873 3,890,829 (763,855 ) 34,096 (94,186 ) 467 - (823,478 ) $ 3,067,351	Machinery and Equipment $ 2,632,148 13,599 (220,837 ) 601,447 - $ 603 5,160,377 8,187,337 (1,964,729 ) 211,086 (218,975 ) (234,271 ) (428 ) 1,533 (2,205,784 ) $ 5,981,553 $ 8,187,337 266,315 (593,411 ) - - (45 ) 1,584,370 9,444,566 (2,205,784 ) 568,656 (459,963 ) 38 120,400 (1,976,683 ) $ 7,467,883	Transportation Equipment O $ 63,900 5,431 (2,381 ) 925 - $ - 7,273 75,148 (42,856 ) 2,188 (5,950 ) (659 ) - 2,192 (45,085 ) $ 30,063 $ 75,148 3,298 (2,350 ) - - - (6,670 ) 69,426 (45,085 ) 2,032 (5,669 ) - 1,239 (47,483 ) $ 21,943	ther Equipment $ 63,235 3,199 (2,977 ) 19,846 156,614 $ (2,426 ) 65,073 302,564 (38,728 ) 1,763 (7,721 ) (14,936 ) 2,097 7,215 (50,310 ) $ 252,254 $ 302,564 15,276 (5,786 ) - 67,033 1,802 62 380,951 (50,310 ) 5,608 (22,694 ) (1,858 ) 147 (69,107 ) $ 311,844	Property in Construction $ 9,306,544 943,628 - 11,429 - $ - (7,952,932 ) 2,308,669 - - - - - - - $ 2,308,669 $ 2,308,669 918,385 - (38,570 ) - - (2,498,010 ) 690,474 - - - - - - $ 690,474	Total $ 40,991,034 1,226,905 (246,421 ) 832,663 156,614 $ (19,176 ) (1,466,473 ) 41,475,146 (2,734,907 ) 233,269 (289,566 ) (289,496 ) 4,726 10,940 (3,065,034 ) $ 38,410,112 $ 41,475,146 1,225,552 (636,461 ) (5,518,815 ) 67,033 108 (122,375 ) 36,490,188 (3,065,034 ) 610,362 (582,512 ) (1,353 ) 121,786 (2,916,751 ) $ 33,573,437

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The following property, plant and equipment were depreciated on a straight-line basis over their useful lives:

Building: Leasehold improvements and others 3-15 years Building: Buildings, warehouses, storage sheds 16-60 years Equipment: Production equipment 3-15 years Equipment: Storage tank, power transmission system, etc. 16-40 years Transportation equipment 3-15 years Other equipment 3-15 years

14. INVESTMENT PROPERTIES

Cost Balance at January 1, 2013 Additions Disposals Reclassification Balance at December 31, 2013 Accumulated depreciation and impairment Balance at January 1, 2013 Depreciation expense Disposals Balance at December 31, 2013 Carrying amounts at January 1, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposals Reclassification Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Disposals Depreciation expense Balance at December 31, 2014 Carrying amounts at December 31, 2014	Completed Investment Property Investment Property Under Construction $ 4,201,469 $ 409,128 326 43,569 - - - - 4,201,795 452,697 $ - $ - - - - - - - $ 4,201,469 $ 409,128 $ 4,201,795 $ 452,697 $ 4,201,795 $ 452,697 - 171,045 - - - 4,428,857 4,201,795 5,052,599 - - - - - - - - $ 4,201,795 $ 5,052,590	Undeveloped Investment Property $ 3,135,637 - (746 ) (5,164 ) 3,129,727 $ (655,692 ) (16 ) 746 (654,962 ) $ 2,479,945 $ 2,474,765 $ 3,129,727 - (47,444 ) 1,089,958 4,172,241 (654,962 ) 44,769 (9 ) (610,202 ) $ 3,562,039	Total $ 7,746,234 43,895 (746) (5,164 ) 7,784,219 $ (655,692) (16) 746 (654,962 ) $ 7,090,542 $ 7,129,257 $ 7,784,219 171,045 (47,444) 5,518,815 13,426,635 (654,962) 44,769 (9 ) (610,202 ) $ 12,816,433

The Group pledged land use rights on its completed investment property with an area of 30,692 square meters located in C6/C7/C8/C9 in the Nangang Economic and Trade Park. The main provisions of the contract on the pledging of land use rights were as follows:

a. Land use rights are for 50 years from the date of registration of these rights. When these rights expire or the contract is terminated, the pledgee should cancel its registration for the land use rights and transfer to the Group all the land improvements (including the main building, attached building, parking space and all other attached facilities and improvements

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Financial Summary

such as air-conditioning, and utility fixtures).

b. The land use rights (accounted for as deferred income-noncurrent) amounted to $3,200,889 thousand, which has been treated as royalty revenue (accounted for as operating revenue) amortizable over 50 years from June 13, 2006. As of December 31, 2014 and 2013, the unamortized balances of the land used rights under above mentioned contract were $2,654,270 thousand and $2,718,088 thousand, respectively.
c. In addition to the land use right, the annual rental payable by the pledgee is 8% of the reference land price announced by the local government, with the calculation starting from the contract date. When the reference land price is adjusted, the annual rental will be revised at the percentage the same as that set on the date of the reference price adjustment. The annual rentals in 2014 and 2013 were both $216,781 thousand.
d. The pledgee should not transfer the land use rights or the ownership of leasehold improvements to a third party. Also prohibited are the placing of the land rights under a trust and the use of the rights as collateral.
e. The pledgee should not pledge liabilities on land use rights and improvements to a third party.

The fair value of the Group’s completed investment property (land located in C6/C7/C8/C9) as of December 31, 2014 and 2013 were $23,489,684 thousand and $22,746,927 thousand, respectively, which was based on a valuation by a qualified independent professional appraiser on April 25, 2014 and 2013. As of December 31, 2014, the Group noted there was no significant change in fair value after the valuation. The valuation was arrived at by reference to market evidence of transaction prices for similar property.

Investment properties under construction are located in Hsinchu City and Hualien City and included land for “C2 Tourist Hotel Project” (C2) at the Nangang Economic and Trade Park. The fair value of C2 as of December 31, 2014 was $17,839,404 thousand, which was determined by the Group’s management by reference to the fair value of similar properties in the vicinity of the Group’s investment properties.

The C2 bidding project was won by the Grand Hi-Lai Hotel Co., Ltd. and the Caesar Park Hotel Co., Ltd., which both signed a front-end agreement (FEA) on December 31, 2013; both parties (or the “Hotels”) will sign a lease agreement under this FEA.

The main terms of the FEA were as follows:

a. The Group is responsible for the construction of the lease premises (the “Premises”), and the Hotels should assist the Group in construction-related matters. The Group will shoulder the construction cost. Both parties are responsible for the completion of the premises in six years after signing the FEA (the tentative project completion is set for October 8, 2019).
b. The lease contract is for 20 years from the start of the lease contract, and the lessee has the first option to extend the lease for another 10 years. Upon expiry or termination of this lease agreement, the lessee should turn over the Premises as is to the Corporation.
c. The lessee should pay monthly rentals, calculated at the higher of the guaranteed rentals or revenue-based rentals payable to the Group from the Premises opening date. The guaranteed rental will be increased 1% each year, and the revenue-based rentals are 16% of the gross revenue of the hotel each month.

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d. Under this FEA and lease agreement, the lessee should not assign and transfer any of its rights or obligation to a third party.

As of December 31, 2014, the Group had applied for the document review of the urban design to the authorities, and land development will continue upon the authorities’ approval of the documents.

The undeveloped investment properties are mainly located in C3 of the Nangang Economic and Trade Park. The fair value of C3 as of December 31, 2014 was $31,789,044 thousand, as determined by the Group’s management by reference to the fair value of similar properties in the vicinity of the Group’s investment properties.

The other investment properties held by the Group are mainly located in different industrial zones. They have no quoted prices in an active market and there was no alternative basis for estimating their fair values. Thus, the fair values of the investment properties were not reliably determinable.

15. INTANGIBLE ASSETS

Cost Balance at January 1, 2013 Additions Acquisitions through business combinations Balance at December 31, 2013 Accumulated amortization and impairment Balance at January 1, 2013 Amortization expense Balance at December 31, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposals Balance at December 31, 2014 Accumulated amortization and impairment Balance at January 1, 2014 Amortization expense Disposals Balance at December 31, 2014 Carrying amounts at December 31, 2014	Patents $ 28,010 1,000 - 29,010 (19,148) (3,047 ) (22,195 ) $ 6,815 $ 29,010 - - 29,010 (22,195) (3,047) - (25,242 ) $ 3,768	Computer Software Trademark $ 88,856 $ - 13,293 - 507 84,900 102,656 84,900 (45,275) - (10,703 ) - (55,978 ) - $ 46,678 $ 84,900 $ 102,656 $ 84,900 10,248 - (433 ) - 112,471 84,900 (55,978) - (19,251) - 433 - (74,796 ) - $ 37,675 $ 84,900	Goodwill $ - - 358,487 358,487 - - - $ 358,487 $ 358,487 - - 358,487 - - - - $ 358,487	Total $ 116,866 14,293 443,894 575,053 (64,423) (13,750 ) (78,173 ) $ 496,880 $ 575,053 10,248 (433 ) 584,868 (78,173) (22,298) 433 (100,038 ) $ 484,830

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Financial Summary

a. The above items of intangible assets with finite useful lives were depreciated on a straight-line basis over the estimated useful life of the asset:
Patents 5-10 years Computer software 1-5 years
b. The Group acquired trademark and goodwill were acquired through the acquisition of an additional 50% equity in Taiwan Yes Deep Ocean Water Co., Ltd. (“Taiwan Yes”, please refer to Note 26). As of December 31, 2014 and 2013, the Group had conducted an impairment test on Taiwan Yes and its subsidiaries, which were considered as a cash-generating unit. The recoverable amount of this cash-generating unit was determined through a value in use calculation which uses cash flow projections based on financial budgets approved by management, and an annual discount rate of 2% and 2.06% per annum for the years ended December 31, 2014 and 2013, respectively. Management believed that any reasonably possible change in the key assumptions on which the recoverable amount was based would not cause the carrying amount of the cash-generating unit to exceed its recoverable amount.

16. LONG-TERM PREPAYMENT FOR LEASE

Land		December 31	December 31
		2014 $ 1,357,172	2013 $ 1,427,783

On October 31, 2006, the Corporation leased from the Taichung Harbor Bureau, the Ministry of Transportation and Communications (“THB”) a 247.298-square meter lot in a special petrochemical industry zone in Taichung to develop wharf areas, called wests 8 and 9, and construct warehouse facilities and public roads. In April 2007, the Corporation informed THB that an inspection showed the area of the land as stated in the lease contract was the same as that to be actually used by the Corporation; thus, the Corporation signed the contract. The main provisions of the lease agreement were as follows:

a. The lease term for the land in a special industrial zone is 20 years, and the agreement is renewable until the total lease reaches 50 years. The ownership of the real estate and its improvements constructed with the Corporation’s capital belongs to the Corporation. In principle, the Corporation will return the land to the government on the agreement expiry or upon early termination of the lease agreement.
b. As mentioned above, the Corporation has leased land and developed wests 8 and 9 of the wharf area and constructed warehouse facilities and public roads on behalf of THB. The Corporation used its capital expenses for the construction as rentals in advance. However, once the lease term ends or the agreement is early terminated, all the titles to the facilities and improvements on the leased land should be transferred to THB.

The Corporation uses its expenditures of $1,500,481 thousand for the construction of wests 8 and 9 of Taichung Harbor as rentals until March 20, 2034. The construction had been completed in 2012, and the expenditures were accounted for as long-term prepayments for lease, which should be amortized over its rent-free periods.

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17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Fixed rate bank loans		December 31	December 31
		2014 $ 1,710,000	2013 $ 162,000

The effective interest rates for bank loans were from 1.05% to 1.5% and from 1.35% to 2.06% per annum as of December 31, 2014 and 2013, respectively.

b. Long-term borrowings

Secured borrowings Floating rate bank loans Unsecured borrowings Floating rate bank borrowings Less: Current portion Interest rate Maturity date		December	31
		2014 $ 930,000 - 140,000 $ 790,000 December	2013 $ 1,994 561 2,555 $ - 31
		2014 2013 1.48% 2.00%-2.51% 2018.03.18 2014.03.19

On June 18, 2010, the Corporation signed a syndicated loan agreement with Mega International Commercial Bank and nine other financial institutions to pay for the construction of a factory in Taichung. The Corporation could borrow up to NT$8.4 billion under this loan agreement. The tern of this borrowing is 7 years and have to repay the first installment after 3.5 year. The Corporation also has to pay 7% of the principal for each of first to the seventh installments, and the remaining 51% of the principal has to be repaid on the 8th installment. In September 2014, the Corporation reduced the credit line to NT$1 billion. Under the syndicated loan rule, throughout the loan term, the Corporation’s consolidated financial statements should show a current ratio at a minimum of at least 100%, debt ratio less than 100%, and interest coverage ratio at a minimum of 300%, with the tangible assets having a carrying amount of at least NT$40 billion. If the Corporation fails to meet any of the above financial ratio and tangible asset requirements, the Corporation must issue shares or carry out other remedial measures within six months after the approval of the issue date of the consolidated financial statements.

Also under the syndicated loan rule, the Corporation should provide buildings, equipment, and related ancillary facilities of the Taichung factory as collateral and should complete the factory’s mortgage registration by June 18, 2015.

Please refer to Note 31 for the borrowings pledged or mortgaged as collaterals.

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Financial Summary

18. OTHER PAYABLES

Payable for purchase of equipment Salaries and bonus Payable for land value increment tax Employees’ bonus and remuneration to directors and supervisors Payable for construction Interest Payable Utilities payable Payable for annual leave Payable for taxation Others		December 31	December 31
		2014 $ 506,098 170,111 154,762 113,474 52,149 35,791 23,784 21,926 11,661 122,892 $ 1,212,648	2013 $ 11,275 238,529 - 103,158 32,814 - 29,049 21,926 9,243 124,770 $ 570,764

19. PROVISIONS-NONCURRENT

Income tax provisions Decommissioning liabilities Others		December 31	December 31
		2014 $ 648,958 223,648 38,370 $ 910,976	2013 $ 2,033,084 156,614 38,370 $ 2,228,068

Income Tax Provisions

On the Corporation’s income tax return for 2008, the tax authorities said that the offshore income tax the Corporation paid on its investment in Al-Jubail could not be deducted from the ROC enterprise income tax levied on domestic and foreign-source income. Thus, after examining the Corporation’s returns, the tax authorities determined that the Corporation had to pay $2,033,084 thousand on its 2005 to 2009 returns. The Corporation disagreed with the tax authorities’ ruling on these returns and thus filed appeals with the Ministry of Finance (MOF) on the returns of 2005, 2006, and 2008 in July 2012, October 2012 and November 2012, respectively. Nevertheless, the Corporation paid $391,738 thousand, half of the authorities’ assessment amount on the 2005, 2006 and 2008 returns. During February and March 2013, the Ministry of Finance dismissed all the above appeals. In April 2013, the Corporation made a reappeal. In July 2013, the Taipei High Administrative Court decided against the income tax return for 2005 of the reappeal. In August 2013, the Corporation filed an appeal with the Supreme Administrative Court. In December 2013, the Supreme Administrative Court dismissed the judgment made by the Taipei High Administrative Court and remanded the case to the Taipei High Administrative Court. In addition, the Corporation applied for the reexamination of the returns of 2007 and 2009 in December 2013. The Corporation paid $626,627 thousand, half of the authorities’ assessment amount, on its 2005, 2006 and 2008 returns. Nevertheless, under the principle of conservatism, the Corporation accrued $2,033,084 thousand based on the authorities’ assessment and classified this amount under other liabilities.

In December 2014, the Corporation and the tax authorities reached a settlement, which included the dismissal of the tax administrative relief on the 2005, 2006 and 2008 returns.

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In January 2015, the Corporation received the decision on its appeal on the 2007 and 2009 returns. The tax authorities agreed that the offshore income tax paid by the Corporation can be deducted from the dividend income distributed by Al-Jubail. Thus, the Corporation recognized an income tax benefit of $365,761 thousand based on the decreased tax amount agreed upon by both the authorities and the Corporation.

The Corporation also applied for tax return corrections on its 2010 to 2013 returns based on the dividend income calculation method agreed to by the tax authorities; thus, the decrease of $314,084 thousand in tax amount was recorded under current tax assets.

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation, Taifer Chemicals International Inc., Taifer Biotech Co., Ltd., Taiwan Yes Deep Ocean Water Co., Ltd. and Hasbo Biotech Co., Ltd. of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Accordingly, the Group recognized expenses of $14,662 thousand and $11,087 thousand in the consolidated statements of comprehensive income for the years ended December 31, 2014 and 2013, respectively.

b. Defined benefit plans

The Corporation adopted the defined benefit plan under the Labor Standards Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Corporation contributes amounts equal to 9% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund the return generated by employees' pension contribution should not be below the interest rate for a 2-year time deposit with local banks.

The actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out by qualifying actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase Expected return on plan assets	December 31
	2014 2013 1.50% 1.50% 1.00% 1.00% 1.75% 1.75%

The assessment of the overall expected rate of return was based on historical return trends and analysts’ predictions of the market for the asset over the life of the related obligation, by reference to the aforementioned use of the plan assets and the impact of the related minimum return.

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Financial Summary

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

Current service cost Interest cost Expected return on plan assets Losses arising from curtailment or settlement An analysis by function Operating cost Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 42,918 11,040 (6,779) 164,928 $ 212,107 $ 178,588 33,519 $ 212,107	2013 $ 58,752 9,423 (7,499) 35,595 $ 96,271 $ 48,842 47,429 $ 96,271

Actuarial gains and losses (net of tax) recognized in other comprehensive income for the years ended December 31, 2014 and 2013 were loss of $1,703 thousand and gains of $8,388 thousand, respectively. The cumulative amounts of actuarial losses recognized in other comprehensive income as of December 31, 2014 and 2013 was $25,954 thousand and $24,251 thousand, respectively.

The amount included in the consolidated balance sheet arising from the Corporation’s obligation in respect of its defined benefit plans was as follows:

Present value of the funded defined benefit obligation Fair value of plan assets Net liability arising from defined benefit obligation		December	31
		2014 $ (640,962) 222,001 $ (418,961 )	2013 $ (780,157) 415,356 $ (364,801 )

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

Opening defined benefit obligation Current service cost Interest cost Actuarial (losses) gains Gains on curtailments Benefits paid Closing defined benefit obligation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ (780,157) (42,918) (11,040) (4,817) 169,468 28,502 $ (640,962 )	2013 $ (774,248) (58,752) (9,423) 12,156 40,344 9,766 $ (780,157 )

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Movements in the fair value of the plan assets were as follows:

Opening fair value of plan assets Expected return on plan assets Contributions from the employer Benefits paid Plan assets gains (losses) Assets distributed on settlements Closing fair value of plan assets	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 415,356 6,779 26,651 (22,255) 2,765 (207,295 ) $ 222,001	2013 $ 431,908 7,499 29,613 (5,227) (2,049) (46,388 ) $ 415,356

The major categories of plan assets at the end of the reporting period for each category were disclosed based on the information announced by Bureau of Labor Funds, Ministry of Labor:

Bank deposits Domestic debt securities Domestic equity securities Foreign debt securities Foreign equity securities Others	December 31 2014 2013 19.12 22.86 13.90 13.47 30.49 29.36 14.46 18.11 19.20 15.41 2.83 0.79

The Group expects to make a contribution of $29,339 thousand to the defined benefit plans during the annual period beginning after 2014.

21. EQUITY

a. Share capital

Number of shares authorized and issued (in thousands) Capital authorized and issued		December 31	December 31
		2014 980,000 $ 9,800,000	2013 980,000 $ 9,800,000

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

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Donations Treasury share transactions May not be used Arising from share of changes in capital surplus of associates		December 31	December 31
		2014 $ 44,803 2,187,988 1,543 $ 2,234,334	2013 $ 44,803 2,187,988 1,543 $ 2,234,334

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Financial Summary

c. Retained earnings and dividend policy

The Corporation’s Articles of Incorporation provide that the appropriation for legal reserve should be made at 10% of annual net income after deductions for any deficit and payment for income tax. The remainder, less special reserve based on business need, together with unappropriated earnings of prior years, should be distributed as follows:

1)	Remuneration to directors and supervisors	Not more than 2%
2)	Bonus to employees	3%
3)	Dividends	95%

The appropriations will be recommended by the board of directors and resolved in the shareholders’ meeting.

Under the Company Law, the Corporation may, by a resolution adopted by the board of directors, have all or a part of the surplus profit distributed as dividends and as bonuses in the form of new shares.

To determine dividend amounts, the Corporation should take into account the diversity of its business, cycles of the industry, and capital demand in relation to specific products and services. To balance business development and shareholders’ welfare, the cash dividend should not be less than 10% of total annual dividends, unless there is any capital demand due to essential investment plan, change in financial position, business operation, extension of capacity or any other capital expenditure and should be approved in the shareholders’ meetings.

For the years ended December 31, 2014 and 2013, the proposed bonus to employees was $68,084 thousand and $61,895 thousand, respectively, and the proposed remuneration to directors and supervisors was $45,390 thousand and $41,263 thousand, respectively. The bonus to employees and remuneration to directors and supervisors represented 3% and 2%, respectively, of net income (net of the bonus and remuneration). Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the parent company only financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the parent company only financial statements are authorized for issue, the differences are recorded as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing the amount of the share bonus by the fair value of the shares. The fair value of the shares refer to the closing price (after considering the effect of cash and share dividends) of the shares on the day immediately preceding the shareholders’ meeting.

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

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. Legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

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Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Corporation.

The appropriations from the 2013 and 2012 earnings, which included dividends and the bonus to employees and the remuneration to directors and supervisors, were as follows:

Legal reserve Cash dividends Amounts approved in shareholders’ meetings Amounts recognized in respective financial statements	Appropriation of Earnings Dividends Per Share (NT$) For the Year Ended December 31 For the Year Ended December 31 2013 2012 2013 2012 $ 230,841 $ 333,897 1,960,000 2,646,000 $2.0 $2.7 For the Year Ended December 31	Dividends Per Share (NT$)
		For the Year Ended December 31
	2013 Bonus to Employee Bonus Remuneration to Directors and Supervisors $ 61,895 $ 41,263 61,895 41,263 $ - $ -	2012
		Bonus to Employee Bonus Remuneration to Directors and Supervisors $ 83,558 $ 55,705 74,273 49,516 $ 9,285 $ 6,189

The differences between the approved amounts of the bonus to employees and the remuneration to directors and supervisors and the amounts recognized in the financial statements each year were primarily due from changes in estimates and were adjusted to profit and loss in next year.

The appropriations of earnings for 2014 had been proposed by the Corporation’s board of directors on March 27, 2015. The appropriations and dividends per share were as follows:

	Appropriation of	Appropriation of	Dividends Per
		Earnings	Share (NT$)
Legal reserve	$	306,834	$ -
Cash dividends		2,156,000	2.2

The appropriations of earnings, the bonus to employees, and the remuneration to directors and supervisors for 2014 are subject to the resolution of the shareholders’ meeting to be held on June 24, 2015.

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

d. Special reserves appropriated under Rule No. 1010012865 issued by the FSC

On the first-time adoption of IFRSs, the Corporation appropriated a special reserve, of which the amount was the same as the unrealized revaluation increment transferred to retained earnings. The special reserve can be reversed on the disposal or reclassification of the

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Financial Summary

related assets.

The Corporation’s special reserve relating to land reversed on disposal was $18,763 thousand and $3,423 thousand in 2014 and 2013, respectively.

22. OPERATING REVENUES AND COSTS

Operating revenues Sales revenue Rental revenue Property sales Other revenue Less: Sales returns and allowances Net operating revenues Operating costs Cost of goods sold Rental cost Property selling cost Total operating costs Gross profit		For the Year Ended December 31	For the Year Ended December 31
		2014 $ 12,783,630 703,613 4,023,449 29,751 (30,170 ) 17,510,273 12,961,559 588,091 1,047,992 14,597,642 $ 2,912,631	2013 $ 13,633,326 661,366 1,749,568 33,427 (59,141 ) 16,018,546 13,395,679 319,379 56,291 13,771,349 $ 2,247,197

23. NET PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS)

Income included the following items:

a. Other gains and losses

Donation expenses (Note 32) Loss on impairment of equipment (Note 9) Net foreign exchange gain (Loss) gain on disposal of investment Loss on disposal of financial assets (Loss) gain on disposal of investment property Gain on remeasurement of previously held equity interest in the acquiree (Note 26) Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ (421,575) (49,510) 23,283 (9,409) (7,639) (2,675) - (17,926 ) $ (485,451 )	2013 $ (209,440) (83,164) 26,000 20,944 (3,253) 746 336,331 (52,679 ) $ 35,485

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b. Other income

Dividends Interest income - bank deposits Income due to default of counterparties Compensation income Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 23,214 2,428 - - 18,968 $ 44,610	2013 $ 21,585 15,348 84,948 22,821 11,882 $ 156,584

c. Depreciation and amortization

Summarized by function Operating costs Operating expenses Nonoperating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 606,505 68,916 9 $ 675,430	2013 $ 318,703 57,312 16 $ 376,031

d. Employee benefit expense

Short-term employee benefits Salary Labor and health insurance Others Retirement benefits (Note 20) Defined contribution plans Defined benefit plans Termination benefits Other employee benefits Total employee benefit expense Summarized by function Operating costs Operating expenses Nonoperating expenses		For the Year Ended December 31	For the Year Ended December 31
		2014 $ 1,002,556 63,221 38,380 1,104,157 14,662 85,005 99,667 127,102 3,294 $ 1,334,220 $ 796,087 538,133 - $ 1,334,220	2013 $ 893,749 51,151 35,530 980,430 11,087 96,271 107,358 28,651 3,900 $ 1,120,339 $ 500,856 587,568 31,915 $ 1,120,339

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Financial Summary

24. INCOME TAX

a. Income tax recognized in profit or loss
1) The major components of tax benefit (expense) were as follows:

Current tax Current year Prior periods Deferred tax Current year Income tax benefit (expense) recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ (97,747) 341,276 (22,436 ) $ 221,093	2013 $ (256,125) 6,923 155,531 $ (93,671 )

2) A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Additional income tax on unappropriated earnings Adjustments for deferred tax Adjustments for prior years’ tax Income tax (benefit) expense recognized in profit or loss		For the Year Ended December 31	For the Year Ended December 31
		2014 $ 2,847,253 $ 482,614 72,321 (466,071) 11,757 19,562 (341,276 ) $ (221,093 )	2013 $ 2,631,742 $ 441,778 39,830 (343,776) 35,946 (73,184) (6,923 ) $ 93,671

The applicable tax rate used by the Corporation and subsidiaries in Taiwan was the corporate tax rate of 17%, and the applicable tax rate used by the subsidiaries in Mongolia was 10%.

b. Income tax recognized in other comprehensive income

Deferred tax Current year Translation of foreign operations Actuarial (losses) gains on the defined benefit plan Total income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ (111,223) 349 $ (110,874 )	2013 $ (110,790) (1,718 ) $ (112,508 )

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c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2014

Deferred Tax Assets Unamortized manufacturing costs Tax losses Defined benefit obligation Impairment loss on assets Deferred estate marketing expense Other Deferred Tax Liabilities Land value increment tax Investment income recognized under the equity method Exchange difference on the translation of foreign operations Other	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 42,353 $ 34,116 $ - 62,700 13,000 - 62,016 8,858 349 56,426 (208) - 41,404 (17,344) - 42,245 (31,253 ) - $ 307,144 $ 7,169 $ 349 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 6,420,466 $ - $ - 246,536 28,247 - 29,134 - 111,223 - 1,358 - $ 6,696,136 $ 29,605 $ 111,223	Others $ - - - - - - $ - Others $ - 314,084 - - $ 314,084	Closing Balance $ 76,469 75,700 71,223 56,218 24,060 10,992
			$ 314,662
			Closing Balance $ 6,420,466 588,867 140,357 1,358
			$ 7,151,048

For the year ended December 31, 2013

Deferred Tax Assets Exchange difference of foreign operations Defined benefit obligation Impairment loss on assets Deferred estate marketing expense Unamortized manufacturing costs Investment loss recognized under the equity method Unrealized inventory write-downs Unrealized exchange loss Tax losses	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 81,656 $ - $ (81,656) $ - 61,700 2,034 (1,718) 62,016 56,426 - - 56,426 44,353 (2,949) - 41,404 29,359 12,994 - 42,353 - 29,031 - 29,031 13,293 (169) - 13,124 432 (342) - 90 2,791 59,909 - 62,700 $ 290,010 $ 100,508 $ (83,374 ) $ 307,144

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Financial Summary

Deferred Tax Liabilities Land value increment tax Investment income recognized under the equity method Exchange difference on the translation of foreign operations	Opening Balance $ 6,420,797 301,228 - $ 6,722,025	Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ (331) $ - $ 6,420,466 (54,692) - 246,536 - 29,134 29,134 $ (55,023 ) $ 29,134 $ 6,696,136

d. Integrated income tax

Unappropriated earnings generated on and after January 1, 1998 Imputation credit accounts		December 31	December 31
		2014 $ 3,202,974 $ 888,952	2013 $ 2,308,409 $ 610,073

The creditable ratios for the distribution of the 2014 and 2013 earnings were 20.97% (expected ratio) and 20.48%, respectively.

e. Income tax assessments

Please refer to Note 19 for the tax authorities’ assessments.

25. EARNINGS PER SHARE

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

Net Profit for This Year

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share Number of Shares Weighted average number of common shares used in the computation of basic earnings per share Effect of dilutive potential common shares: Bonus issue to employee Weighted average number of common shares used in the computation of diluted earnings per share		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 2013 $ 3,068,346 $ 2,538,071 $ 3,068,346 $ 2,538,071 Unit: In Thousands For the Year Ended December 31
			2014 980,000 1,736 981,736	2013 980,000 1,438 981,438

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If the Group offered to settle bonuses paid to employees in cash or shares, the Group assumed the entire amount of the bonus would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

26. BUSINESS COMBINATIONS

a. Subsidiaries acquired

On December 25, 2012, the Corporation’ s board of directors decided to acquire another 50% equity interest in Taiwan Yes Deep Ocean Water Co., Ltd. (“Taiwan Yes”) from Young Energy Source Co., Ltd. (“Young Energy”) to have an enhanced business management and equity strategy as well as future potential interest. Taiwan Yes is a wholesaler of drinks, food and groceries. Under the share purchase agreement and its supplementary measures, the consideration transferred to Taiwan Yes amounted to $399,500 thousand. After the share purchase on January 7, 2013, the Corporation’s equity in Taiwan Yes, increased from 50% to 100%, and the Corporation thus acquired control power over Taiwan Yes. The Corporation and Young Energy then agreed to share in the payment on the land value tax incurred in prior periods, and this tax payment sharing resulted in a $265 thousand decrease in the above consideration. As of December 31, 2013, the Corporation had paid Young Energy $399,235 thousand, net of the above decrease in the consideration. Thus, The Corporation remeasured its previously held 50% equity interest in Taiwan Yes, amounting to $63,169 thousand, to the acquisition-date fair value of $399,500 thousand, and the resulting difference was recognized as gain on investments disposal.

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

Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Other Noncurrent assets Plant and equipment Intangible assets Trademark Other Current liabilities Short-term borrowings Trade and other payables Receipts in advance Other Long-term liabilities - current portion Noncurrent liabilities Long-term loans	Taiwan Yes $ 25,272 66,476 2,820 2,718 23,907 543,165 507 84,900 1,716 (80,000) (57,577) (450) (3,474) (26,519) (143,213 ) $ 440,248

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Financial Summary

c. Goodwill arising on acquisition

Consideration transferred Add: Fair value of previously held 50% equity interest in acquiree Deduct: Fair value of identifiable net assets acquired Goodwill arising on acquisition	Taiwan Yes $ 399,235 399,500 (440,248 ) $ 358,487

Goodwill arose from the acquisition of Taiwan Yes because the cost of the combination included a control premium. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Taiwan Yes. These benefits were not recognized separately from goodwill because they did not meet the recognition criteria for identifiable intangible assets.

d. Net cash outflow on the acquisition of subsidiaries

	For the Year	For the Year
	Ended December
		31, 2013
Consideration paid in cash	$	399,235
Less: Cash and cash equivalent acquired		(25,272 )
	$	373,963

e. Impact of the acquisitions on the results of the Group

The results of the inclusion of the acquisitions in the consolidated statements of comprehensive income were as follows:

	For the Year	For the Year
	Ended December
		31, 2013
Revenue
Taiwan Yes and its subsidiaries	$	183,912
Profit
Taiwan Yes and its subsidiaries	$	47

27. OPERATING LEASE AGREEMENTS

The Group as Lessor

Operating leases relate to the investment property owned by the Corporation with lease terms between 1 to 50 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have a bargain purchase option to acquire the property at the expiry of the lease period.

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The future minimum lease payments of noncancellable operating lease were as follows (not include the royalty the Corporation received for the land use right):

Not later than 1 year Later than 1 year and not later than 5 years later than 5 years		December 31	December 31
		2014 $ 385,486 1,341,169 8,484,748 $ 10,211,403	2013 $ 342,730 1,217,206 8,560,307 $ 10,120,243

28. CAPITAL MANAGEMENT

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

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

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

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

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value

The Group's management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

2) Fair value measurements recognized in the consolidated balance sheets

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

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Financial Summary

directly (i.e. as prices) or indirectly (i.e. derived from prices); and

c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014

Available-for-sale financial assets Domestic quoted stocks December 31, 2013 Available-for-sale financial assets Domestic quoted stocks Mutual funds	Level 1 $ 106,285 Level 1 $ 125,150 351,614 $ 476,764	Level 2 $ - Level 2 $ - - $ -	Level 3 $ - Level 3 $ - - $ -	Total $ 106,285
				Total $ 125,150 351,614
				$ 476,764

There were no transfers between Levels 1 and 2 in the current and prior periods.

b. Categories of financial instruments

Financial assets Loans and receivables (1) Available-for-sale financial assets (2) Financial liabilities Amortized cost (3)	December 31
	2014 2013 $ 6,109,878 $ 3,953,445 664,741 1,099,755 4,868,154 1,313,640

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, and trade and other receivables.
2) The balances included the carrying amount of available-for-sale financial assets measured at cost.
3) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, long-term loans, trade and other payables.
c. Financial risk management objectives and policies

The Group’s Corporate Treasury function is responsible for the preparation of financial plans, capital allocation and risk management, and coordinates access to domestic and international

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financial markets, monitors and manages the financial risks relating to the operations of the Corporation through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (mainly including currency risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

a) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Assets USD Liabilities USD Sensitivity analysis	December 31
	2014 2013 $ 15,159 $ 17,640 5,176 11,458

The Group was mainly exposed to USD.

The following are the details of the Group’s sensitivity to a 10% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. For the years ended December 31, 2014 and 2013, for a 10% strengthening weakening of New Taiwan dollars against US dollars there would be an (decrease) increase of $31,596 thousand and $18,413 thousand on pre-tax profit, respectively. The effect of exchange rate changes was mainly attributable to the exposure outstanding on USD receivables and payables, which were not hedged at the end of the reporting period.

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts and forward interest rate contracts.

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Financial Summary

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2014 2013 $ 270,527 $ 54,000 1,710,000 162,000 531,290 1,116,758 930,000 2,555

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and nonderivative instruments at the end of the reporting period.

If interest rates had been 100 basis point higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2014 and 2013 would decrease/increase by $3,987 thousand and $11,142 thousand.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure of counterparties to discharge an obligation and financial guarantees provided by the Group could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets; and the amount of contingent liabilities in relation to financial guarantee issued by the Group.

The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

Credit risk represents the potential loss that would be incurred by the Company if the counter-parties breach contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties to the foregoing financial instruments are reputable financial institutions and business organizations. Management does not expect the Company’s exposure to default by those parties to be material.

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On some properties sold in installments, the Group had the secondary priority mortgage rights to ensure the protection of the Group’s interests.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Liquidity and interest risk rate tables

The following table details the Group’s remaining contractual maturity for its nonderivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other nonderivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2014

On Demand or Less than 1 Month Nonderivative financial liabilities Noninterest bearing $ 273,107 Fixed interest rate liabilities 1,310,870 Variable interest rate liabilities - $ 1,583,977 December 31, 2013 On Demand or Less than 1 Month Nonderivative financial liabilities Noninterest bearing $ 72,775 Floating interest rate liabilities 112,000 Fixed interest rate liabilities 561 $ 185,336	1-3 Months $ 543,014 400,725 72,897 $ 1,016,636 1-3 Months $ 540,070 - 1,994 $ 542,064	3 Months to 1 Year $ 1,412,033 - 76,402 $ 1,488,435 3 Months to 1 Year $ 607,925 50,000 - $ 657,925	1-5 Years $ - - 813,991	1-5 Years $ - - 813,991
			$ 813,991
				1-5 Years $ - - - $ -

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Financial Summary

The amounts included above for floating interest rate instruments for both nonderivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

Financing facilities

Unsecured bank facility Amount used Amount unused Secured bank facility Amount used Amount unused Unsecured bank overdraft facility Amount used Amount unused		December 31	December 31
		2014 $ 1,710,000 14,056,650 $ 15,766,650 $ 930,000 - $ 930,000 $ - 650,000 $ 650,000	2013 $ 162,561 13,409,100 $ 13,571,661 $ 1,994 9,580,006 $ 9,582,000 $ - 700,000 $ 700,000

30. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

a. Operating transactions

Associates		Purchase of Goods	Purchase of Goods
		For the Year Ended December 31
		2014 $ 2,680,906	2013 $ 2,419,629

The related-party transactions were conducted under normal terms.

Joint controlled entities		Receivables to Related Parties	Receivables to Related Parties
		December 31
		2014 $ 144,641	2013 $ -

TR Electronic Chemical Co., Ltd. (TR), a joint controlled entity of the Corporation, had obtained a financing of US$10,000 thousand from a bank, and the Corporation and Jing, a shareholder of TR, guaranteed the repayment of this financing. The loan maturity date was March 27, 2014, but TR failed to repay the loan on time. The bank then required the guarantors to repay a part of the loans. On June 23, 2014, the Corporation’s board decided to

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pay the bank $144,641 thousand (US$4,570 thousand) on TR’s behalf.

Associates		Payables to Related Parties	Payables to Related Parties
		For the Year Ended December 31
		2014 $ 163,760	2013 $ 300,028

b. Compensation of key management personnel

For 2014 and 2013, the compensation to directors and other key management personnel was as follows:

Short-term employee benefits Post-employment benefits		For the Year Ended December 31	For the Year Ended December 31
		2014 $ 75,214 8,433 $ 83,647	2013 $ 76,648 3,493 $ 80,141

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets have been pledged or mortgaged as collaterals for bank loans.

Pledge deposits Property, plant and equipment	December 31
	2014 2013 $ 29,800 $ 36,600 See Note 17 13,116

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. As of December 31, 2014, the Group had unused letters of credits of US$8,949 thousand.
b. As of December 31, 2014, the Group had guarantee notes payable for its debt of $18,606,088 thousand, which was not reflected in the consolidated financial statements.
c. Huaku Development Co., Ltd. (“Huaku”) filed an appeal with the Taipei District Civil Court (the “Court”) for the Corporation to pay a co-building trade business tax of $38,370 thousand. The Court ruled that the Corporation should make this payment. The Corporation brought this case to a higher court; as of December 31, 2014, this case was still pending. The Corporation accrued a possible loss of $38,370 thousand for this case in 2012 financial statements.
d. On June 25, 2013, the shareholders resolved that, in order to enhance the long-term business relationship with Saudi Arabian Basic Industries Corporation as well as to maintain the relationship with the Kingdom of Saudi Arabia (“Saudi Arabia”), the Corporation shall donate its share of Al-Jubail’s profit, with US$50,000 thousand as the donation limit, to the government or organizations in Saudi Arabia.

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Financial Summary

In October 2013, the Corporation and Al-Jubail signed a Memorandum of Understanding (MOU); the main contents of the MOU are summarized as follows:

1) The Corporation agreed to donate US$42,000 thousand by way of six equal semiannual installments of US$7,000 thousand each, to the government or a nonprofit organization in Saudi Arabia. The first donation should be made by October 31, 2013.
2) The donation will be funded from the dividends of Al-Jubail that have been declared and are to be distributed to the Corporation. Al-Jubail will keep the above funds in a separate account in its name in a local bank. As administrator of the donations, Al-Jubail should designate the recipient of the donation.

In October 2013, the Corporation donated $209,440 thousand (US$7,000 thousand), part of its share of Al-Jubail’s profit, as the first donation installment. The Corporation donated $208,635 (US$7,000 thousand) in June 2014 and $212,940 thousand (US$7,000 thousand) in December 2014 as the second and third donation installments.

e. On April 29, 2014, the Corporation’s board of directors approved the issuance by Taifer (Cayman) International Group Co., Ltd. (“Taifer”) of a letter endorsing the request of TR Electronic Chemical (Kunshan) Ltd. (TR) for a bank financing of US$3,000 thousand; the main contents of the letter are summarized as follows:
1) Taifer will inform the bank if its equity interest in TR becomes less than 51%.
2) Taifer will maintain its management of and control over TR
3) Taifer will provide TR with appropriate resources (including but not limited to financial, employee and technology support) to help TR carry out its obligations.
4) If TR significantly breaches the contract, Taifer will take lawful measures to assist TR, or monitor TR, in fully repaying its loan or in providing other collaterals to the bank.

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

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

December 31, 2014

		Foreign
	Currencies		Exchange Rate	Carrying Amount
Financial assets
Monetary items
USD	$	15,159	31.65	$	479,782
Financial liabilities
Monetary items
USD		5,176	31.65		163,820

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December 31, 2013

	Foreign	Exchange	Carrying
	Currencies	Rate	Amount
Financial assets
Monetary items
USD	$ 17,640	29.81	$ 525,848
Financial liabilities
Monetary items
USD	11,458	29.81	341,563

34. SEPARATELY DISCLOSED ITEMS

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Corporation and its investees:
1) Financings provided: None
2) Endorsements/guarantees provided: Table 1
3) Marketable securities held (excluding investment in subsidiaries, associates and jointly controlled entities): Table 2
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None
7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 3
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4
9) Trading in derivative instruments: None
10) Intercompany relationships and significant intercompany transactions: Table 5
11) Information on investees: Table 6
b. Investments in Mainland China:

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Financial Summary

1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: (Table 7)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: None
a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
c) The amount of property transactions and the amount of the resultant gains or losses.
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services.

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments under IFRS 8 “Operating Segments” were fertilizer and chemical and construction (rental is included).

a. Segment revenues and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment.

Fertilizer and chemical Construction Others Share of the profits of associates and joint ventures Other gains and losses Other income Finance costs Profit before tax		Segment Revenues Year Ended December 31 2014 2013 $ 12,358,261 $ 13,299,691 4,727,062 2,410,934 424,950 307,921 $ 17,510,273 $ 16,018,546		Segment Income	Segment Income
				Year Ended December 31
		2014 $ 12,358,261 4,727,062 424,950 $ 17,510,273		2014 $ (1,408,745) 3,085,750 (17,055 ) 1,659,950 1,676,767 (485,451) 44,610 (48,623 ) $ 2,847,253	2013 $ (1,141,781) 2,028,109 (98,156 ) 788,172 1,657,021 35,485 156,584 (5,520 ) $ 2,631,742

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Segment revenue reported was generated from external customers. There were no intersegment sales in 2014.

b. Segment total assets

Segment assets Fertilizer and chemical Construction Others Consolidated total assets		December 31	December 31
		2014 $ 56,085,750 13,706,964 704,223 $ 70,496,937	2013 $ 57,278,798 8,643,315 606,487 $ 66,528,600

c. Segment total liabilities

Segment liabilities Fertilizer and chemical Construction Others Consolidated total liabilities		December 31	December 31
		2014 $ 13,307,845 4,597,639 198,838 $ 18,104,322	2013 $ 10,464,911 5,056,978 232,339 $ 15,754,228

d. Geographical information

As of December 31, 2014, the revenue-generating units of the Group were mainly in Republic of China. Thus, the disclosure of geographical information was not required.

e. Information about major customers

The Corporation and its subsidiaries had no sales to a single customer that were at least 10% of total sales in 2014.

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Financial Summary

No. Endorser/ Guarantor Endorsee/Guarantee Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1) Maximum Balance for the Period Ending Balance Ending Used Balance Value of Collaterals Property, Plant, or Equipment Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement Maximum Collateral/ Guarantee Amounts Allowable (Note 2) Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent Endorsement/ Guarantee Given on Behalf of Companies in Mainland China Name Nature of Relationship 0 Taiwan Fertilizer Co., Ltd. (the “Corporation”) TR Electronic Chemical Co., Ltd. Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership $ 162,482 (Note 3) $ 298,890 (US$ 10,000 thousand) $ 162,438 (US$ 5,430 thousand) $ 162,438 $ - 0.31 $ 26,196,308 No No No Taifer Chemicals International Inc. Subsidiary 26,154 30,000 23,500 23,500 - 0.04 26,196,308 Yes No No Taiwan Yes Deep Ocean Water Co., Ltd. Subsidiary 63,193 50,000 50,000 - - 0.01 26,196,308 Yes No No Note 1: The total amount of the guarantee provided by the Corporation to any individual entity shall not exceed twenty percent (20%) of the Company’s net worth, or fifty percent (50%) of net worth of such entity. Note 2: The total amount of guarantee shall not exceed fifty percent (50%) of the Corporation’s net worth. Note 3: The Corporation originally provided TR Electronic Chemical Co., Ltd. (TR) with a guarantee amounting to US$10,000 thousand. (The exchange rate on the guarantee contract date was US$1=NT$29.889). In April 2014, the Corporation’s Board of Directors approved the reduction of the guarantee amount to US$5.43 million (approximately NT$162 million) because of the decline in carrying value of TR’s net assets. On March 27, 2015, the Board of Directors decided to reduce the guarantee amount to US$2.13 million.	No. Endorser/ Guarantor Endorsee/Guarantee Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1) Maximum Balance for the Period Ending Balance Ending Used Balance Value of Collaterals Property, Plant, or Equipment Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement Maximum Collateral/ Guarantee Amounts Allowable (Note 2) Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent Endorsement/ Guarantee Given on Behalf of Companies in Mainland China Name Nature of Relationship 0 Taiwan Fertilizer Co., Ltd. (the “Corporation”) TR Electronic Chemical Co., Ltd. Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership $ 162,482 (Note 3) $ 298,890 (US$ 10,000 thousand) $ 162,438 (US$ 5,430 thousand) $ 162,438 $ - 0.31 $ 26,196,308 No No No Taifer Chemicals International Inc. Subsidiary 26,154 30,000 23,500 23,500 - 0.04 26,196,308 Yes No No Taiwan Yes Deep Ocean Water Co., Ltd. Subsidiary 63,193 50,000 50,000 - - 0.01 26,196,308 Yes No No Note 1: The total amount of the guarantee provided by the Corporation to any individual entity shall not exceed twenty percent (20%) of the Company’s net worth, or fifty percent (50%) of net worth of such entity. Note 2: The total amount of guarantee shall not exceed fifty percent (50%) of the Corporation’s net worth. Note 3: The Corporation originally provided TR Electronic Chemical Co., Ltd. (TR) with a guarantee amounting to US$10,000 thousand. (The exchange rate on the guarantee contract date was US$1=NT$29.889). In April 2014, the Corporation’s Board of Directors approved the reduction of the guarantee amount to US$5.43 million (approximately NT$162 million) because of the decline in carrying value of TR’s net assets. On March 27, 2015, the Board of Directors decided to reduce the guarantee amount to US$2.13 million.	No. Endorser/ Guarantor Endorsee/Guarantee Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1) Maximum Balance for the Period Ending Balance Ending Used Balance Value of Collaterals Property, Plant, or Equipment Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement Maximum Collateral/ Guarantee Amounts Allowable (Note 2) Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent Endorsement/ Guarantee Given on Behalf of Companies in Mainland China Name Nature of Relationship 0 Taiwan Fertilizer Co., Ltd. (the “Corporation”) TR Electronic Chemical Co., Ltd. Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership $ 162,482 (Note 3) $ 298,890 (US$ 10,000 thousand) $ 162,438 (US$ 5,430 thousand) $ 162,438 $ - 0.31 $ 26,196,308 No No No Taifer Chemicals International Inc. Subsidiary 26,154 30,000 23,500 23,500 - 0.04 26,196,308 Yes No No Taiwan Yes Deep Ocean Water Co., Ltd. Subsidiary 63,193 50,000 50,000 - - 0.01 26,196,308 Yes No No Note 1: The total amount of the guarantee provided by the Corporation to any individual entity shall not exceed twenty percent (20%) of the Company’s net worth, or fifty percent (50%) of net worth of such entity. Note 2: The total amount of guarantee shall not exceed fifty percent (50%) of the Corporation’s net worth. Note 3: The Corporation originally provided TR Electronic Chemical Co., Ltd. (TR) with a guarantee amounting to US$10,000 thousand. (The exchange rate on the guarantee contract date was US$1=NT$29.889). In April 2014, the Corporation’s Board of Directors approved the reduction of the guarantee amount to US$5.43 million (approximately NT$162 million) because of the decline in carrying value of TR’s net assets. On March 27, 2015, the Board of Directors decided to reduce the guarantee amount to US$2.13 million.
Endorsement/ Guarantee Given on Behalf of Companies in Mainland China		No No No
Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent		No No No
Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries		No Yes Yes
Maximum Collateral/ Guarantee Amounts Allowable (Note 2)		$ 26,196,308 26,196,308 26,196,308
Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement		0.31 0.04 0.01
Value of Collaterals Property, Plant, or Equipment		$ - - -
Ending Used Balance		$ 162,438 23,500 -
Ending Balance		$ 162,438 (US$ 5,430 thousand) 23,500 50,000
Maximum Balance for the Period		$ 298,890 (US$ 10,000 thousand) 30,000 50,000
Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1)		$ 162,482 (Note 3) 26,154 63,193
Endorsee/Guarantee	Nature of Relationship	Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership Subsidiary Subsidiary
	Name	TR Electronic Chemical Co., Ltd. Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd.
	Endorser/ Guarantor	Taiwan Fertilizer Co., Ltd. (the “Corporation”)
	No.	0

170

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	Note	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2
December 31, 2014	Market Value or Net Asset Value	$ 12,124 129,282 144,849 203,006 45,146 923,897 32,502 13,537 106,285
	Percentage of Ownership	6.71 9.76 10.00 18.50 19.75 2.00 10.42 16.67 0.40
	Carrying Value	$ 15,000 120,000 100,000 200,000 42,000 52,800 20,989 7,667 106,285
	Shares or Units (Thousands)	1,500 12,000 10,000 20,000 4,200 12,568 2,855 741 9,202
	Financial Statement Account	Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Available-for-sale financial assets - noncurrent
Relationship with the Holding Company		- - - - - - - - -
Marketable Securities Type/ Name and Issuer		Common stocks Ding-Tang Top Taiwan V Venture Capital Co., Ltd. Eminent Venture Capital Corporation Eminent II VC Corp TSCBio Ventures Capital Co. Taiwan Stock Exchange Corporation Visgeneer Inc. TaiAn Technologies Corporation China Petrochemical Development Corporation
Holding Company Name		Taiwan Fertilizer Co., Ltd.

171

Financial Summary

Note	Note	-
Notes/Accounts Receivable (Payable)	% to Total	43
	Ending Balance	$ (163,760)
Abnormal Transaction	Payment Terms	30 days
	Unit Price	Determined under the considerations of international market price and production cost
Transaction Details	Payment Terms	Same as those for third parties
	% to Total	18
	Amount	$ 2,680,906
	Purchase (Sale)	Purchase
Nature of Relationship		Equity-method investee
Related Party		AI-Jabail Fertilizer Company
Company Name		Taiwan Fertilizer Co., Ltd.

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Allowance for Impairment Loss	Allowance for Impairment Loss	$ -
Amounts Received in Subsequent Period		$ -
Overdue	Actions Taken	-
	Amount	$ -
Turnover Rate		-
Ending Balance		Other receivable $144,641
Relationship		Jointly controlled entity
Related Party		TR Electronic Chemical Co., Ltd.
Company Name		Taiwan Fertilizer Co., Ltd.

173

Financial Summary

Percentage of Transaction Amount to Consolidated Operating Revenue or Total Assets	Percentage of Transaction Amount to Consolidated Operating Revenue or Total Assets	- - - -	- - -
Transaction Details	Transaction Terms	Based on regular terms Based on regular terms Based on regular terms Based on regular terms	Based on regular terms Based on regular terms Based on regular terms
	Amount	$ 1,430 10,525 1,235 6,165	25,565 45,841 12,736
	Account	Sales revenue Rental revenue Other revenue Rental revenue	Accounts receivable Sales revenue Account payable - related party
Flow of Transaction (Note)		1 1 1 1	2 2 2
Counter-party		Taiwan Yes Deep Ocean Water Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer Chemicals International Inc.	Hasbo Biotech Co., Ltd. Hasbo Biotech Co., Ltd. Taifer Biotech Co., Ltd.
Company Name		Taiwan Fertilizer Co., Ltd.	Taiwan Yes Deep Ocean Water Co., Ltd.
Number		0	1

174

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Note	Note	Associate Subsidiary Subsidiary Associate Subsidiary Subsidiary Jointly controlled entity Subsidiary Subsidiary Subsidiary
Investment (Loss) Income		$ 1,777,659 1,083 (29,845) (1,490) (99,401) 115 (99,401) (13,471) 6,500 6,533
Net (Loss) Income of the Investee		$ 3,979,208 1,083 2,015 (6,646) (99,401) 115 (194,905) (13,471) 6,500 6,533
Balance as of December 31 2014	, Carrying Value	$10,197,486 70,418 957,813 4,151 68,893 70,695 68,893 (103,530) 46,619 46,354
	Percentage of Ownership	50.00 100.00 100.00 22.42 100.00 100.00 51.00 100.00 100.00 100.00
	Shares/Units (Thousands)	6,715 units 5,500 95,000 4,167 10,966 units 10,000 - 24,000 - -
Investment Amount	December 31, 2013	$ 3,050,000 101,300 974,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	December 31, 2014	$ 3,050,000 126,300 1,224,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	Main Businesses and Products	Manufacture of urea, 2-EH (2-ethyl hexanol), and DOP (dioctyl phthalate) International trade; wholesale of fertilizer, tobacco, liquor, beverage, forage, machinery, electrical equipment, etc.; development, operation and management of residential buildings and factory buildings; special zone development; investment in and construction of public works; development of new towns and districts; agent services on regional district requisition; land adjustment; and real estate rental or leasing a) Wholesale of drinks, food and grocery and other articles for daily use; tobacco and liquor; glass and pottery; hygiene products; fertilizers and other chemical products; and cosmetics; and b) International trade Manufacture of biopesticides, microbial fertilizers, animal feed additives and probiotics Investment and holding Wholesale and retail of products for organic agriculture Investment and holding Wholesale of Nonalcoholic Beverages and Cosmetics Investment and holding Real estate rental and leasing
	Location	Kingdom of Saudi Arabia Taiwan Taiwan Taiwan Cayman Islands Taiwan Cayman Islands Taiwan Samoa Mongolia
	Investee	Al-Jubail Fertilizer Company Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd. Bion Tech Inc. Taifer (Cayman) International Group Co., Ltd. Taifer Biotech Co., Ltd. TR Electronic Chemical Co., Ltd. Hasbo Biotech Co., Ltd. Taifer International (Samoa) Group Co., Ltd. Taifer Chemical International Co., Ltd.
	Investor	Taiwan Fertilizer Co., Ltd. Taifer (Cayman) International Group Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer Chemicals International Inc. Taifer International (Samoa) Group Co., Ltd.

175

Financial Summary

Accumulated Inward Remittance of Earnings as of December 31, 2014	Accumulated Inward Remittance of Earnings as of December 31, 2014	US$ -	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$347,042 (US$10,965) (Note 3) NT$347,042 (US$10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$347,042 (US$10,965) (Note 3) NT$347,042 (US$10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.
Carrying Value as of December 31, 2014		US$ 2,177 (NT$ 68,893) (Note 3)
Investment Gain (Loss)		US$ (3,280) (NT$ (99,401)) (Note 4)
% Ownership of Direct or Indirect Investment		51
Net Income (Loss) of the Investment		US$ (6,431) (NT$ (194,905)) (Note 3)
Accumulated Outflow of Investment from Taiwan as of December 31, 2014		US$ 10,965 (NT$ 347,042) (Note 3)
			Limit on Investment	NT$31,435,569 (Note 2)
Investment Flows	Inflow	US$ -
	Outflow	US$ -
	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	US$ 10,965 (NT$ 347,042 (Note 3)
			Investment Amounts Authorized by Investment Commission, MOEA	NT$347,042 (US$10,965) (Note 3)
	Investment Type	The investor companies were incorporated in Mainland China by the Company which was incorporated in the area other than Taiwan and Mainland China in order to invest in Mainland China.
	Total Amount of Paid-in Capital	US$ 21,500 (NT$ 680,475) (Note 3)
			Accumulated Investment in Mainland China as of December 31, 2014	NT$347,042 (US$10,965) (Note 3)
	Main Businesses and Products	Manufacture of nitric acid, hydrofluoric acid, ammonia, phosphoric acid, oxalic acid, ammonia fluoride and LCD and IC Stripper
	Investee Company Name	TR Electronic Chemical (Kunshan) Ltd.

176

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V. Individual financial reports for recent years audited and certified by public accountants

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Taiwan Fertilizer Co., Ltd.

We have audited the accompanying balance sheets of Taiwan Fertilizer Co., Ltd. (the “Corporation”) as of December 31, 2014 and 2013, and the related statements of comprehensive income, changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits. However, we did not audit the financial statements as of and for the years ended December 31, 2014 and 2013 of certain investees. As of December 31, 2014 and 2013, the investments in these investees were 0.10% (NT$73,044 thousand) and 0.26% (NT$170,907 thousand), respectively, of the Corporation’s total assets. In 2014 and 2013, the investment losses on these investees were 3.53% (NT$100,891 thousand) and 3.92% (NT$105,405 thousand), respectively, of the Corporation’s income before income tax. These investees’ financial statements had been audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these investees, is based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of the other auditors, the financial statements of Taiwan Fertilizer Co., Ltd. referred to above present fairly, in all material respects, its financial position o as of December 31, 2014 and 2013, and its financial performance and its cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

March 27, 2015

Notice to Readers

177

Financial Summary

TAIWAN FERTILIZER CO., LTD.

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

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Available-for-sale financial assets - current (Notes 4 and 7) Notes receivable Accounts receivable (Notes 4 and 8) Other receivables Current tax assets (Notes 4 and 18) Inventories (Notes 4 and 10) Buildings and land held for sale (Notes 4 and 11) Prepayments Other Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4 and 7) Financial assets carried at cost - noncurrent (Notes 4 and 9) Debt investments with no active market - noncurrent (Note 30) Investments accounted for by the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13, 17 and 29) Investment properties (Notes 4 and 14) Intangible assets (Note 4) Deferred tax assets (Notes 4 and 23) Long-term receivable (Note 8) Long-term prepayments for lease (Note 15) Other Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Notes payable Accounts payable (Note 29) Other payables (Note 17) Current tax liabilities (Note 4) Receipts in advance (Note 11) Long-term liabilities - current portion Other Total current liabilities NONCURRENT LIABILITIES Long-term borrowings (Note 16) Provisions - noncurrent (Notes 4 and 18) Deferred tax liabilities (Notes 4 and 23) Deferred revenue - noncurrent (Note 15) Accrued pension liabilities (Notes 4 and 19) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY (Note 20) Capital stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2014 Amount % $ 518,738 1 - - 383,329 - 3,498,094 5 1,203,397 2 408,944 1 2,113,478 3 1,459,774 2 688,984 1 19,227 - 10,293,965 15 106,285 - 558,456 1 23,800 - 11,369,456 16 33,231,463 47 12,815,536 18 40,945 - 238,962 - 378,250 1 1,357,172 2 25,292 - 60,145,617 85 $ 70,439,582 100 $ 1,700,000 3 11,165 - 982,931 1 1,191,258 2 67,315 - 1,647,285 2 140,000 - 86,191 - 5,826,145 8 790,000 1 910,976 2 7,151,048 10 2,781,006 4 418,961 1 168,831 - 12,220,822 18 18,046,967 26 9,800,000 14 2,234,334 3 3,133,567 4 33,590,944 48 3,202,974 5 39,927,485 57 430,796 - 52,392,615 74 $ 70,439,582 100		2013
				Amount % $ 1,098,890 2 351,614 - 286,743 - 1,991,359 3 356,485 1 94,860 - 2,151,248 3 1,126,977 2 551,420 1 25,202 - 8,034,798 12 125,150 - 622,991 1 28,600 - 10,514,386 16 38,088,566 58 7,128,360 11 52,956 - 244,444 - - - 1,427,783 2 27,851 - 58,261,087 88 $ 66,295,885 100 $ - - 20,889 - 530,715 1 536,914 1 71,565 - 2,061,935 3 - - 16,098 - 3,238,116 5 - - 2,228,068 3 6,696,136 10 2,855,952 4 364,801 1 138,440 - 12,283,397 18 15,521,513 23 9,800,000 15 2,234,334 3 2,902,726 4 33,609,707 51 2,308,409 4 38,820,842 59 (80,804 ) - 50,774,372 77 $ 66,295,885 100

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 27, 2015)

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TAIWAN FERTILIZER CO., LTD.

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

OPERATING REVENUES (Notes 4, 15, 21 and 29) OPERATING COSTS (Notes 10, 19, 21, 22 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 19 and 22) Marketing General and administrative Research and development Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Share of the profits of subsidiaries, associates and joint ventures (Notes 4 and 12) Other gains and losses (Note 22) Other income (Note 22) Finance costs Total nonoperating income and expenses INCOME BEFORE INCOME TAX INCOME TAX BENEFIT (EXPENSE) (Notes 4 and 23) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Share of other comprehensive income of subsidiaries, associates and joint ventures Unrealized loss on available-for-sale financial assets Actuarial (loss) gain on defined benefit plans Income tax relating to components of other comprehensive income (Notes 4 and 23) Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2014 Amount % $ 17,093,170 100 14,284,717 84 2,808,453 16 307,358 2 732,665 4 57,610 - 1,097,633 6 1,710,820 10 1,648,121 10 (489,257 ) (3) 38,483 - (48,275 ) - 1,149,072 7 2,859,892 17 208,454 1 3,068,346 18 643,302 4 (20,479 ) - (2,052 ) - (110,874 ) (1 ) 509,897 3 $ 3,578,243 21		2013 Amount % $ 15,706,163 100 13,536,896 86 2,169,267 14 286,441 2 918,904 6 45,149 - 1,250,494 8 918,773 6 1,589,730 10 31,010 - 151,439 1 - - 1,772,179 11 2,690,952 17 (152,881 ) (1 ) 2,538,071 16 249,760 2 (41,059 ) - 10,106 - (112,508 ) (1 ) 106,299 1 $ 2,644,370 17 (Continued)

179

Financial Summary

TAIWAN FERTILIZER CO., LTD.

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

EARNINGS PER SHARE (Note 24) Basic Diluted	2014 Amount % $ 3.13 $ 3.13	2013
		Amount % $ 2.59 $ 2.59

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

(With Deloitte & Touche audit report dated March 27, 2015)

(Concluded)

180

TAIWAN FERTILIZER CO., LTD.

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

BALANCE AT JANUARY 1, 2013 Appropriation of the 2012 earnings Legal reserve Cash dividends - NT$2.7 per share Net income in 2013 Other comprehensive income in 2013, net of income tax Total comprehensive income in 2013 Adjustment to capital surplus due to nonproportional investment in an investee's shares issued for a capital increase Reversal of special reserve due to sale of land BALANCE AT DECEMBER 31, 2013 Appropriation of the 2013 earnings Legal reserve Cash dividends - NT$2.0 per share Net income in 2014 Other comprehensive income in 2014, net of income tax Total comprehensive income in 2014 Reversal of special reserve due to sale of land BALANCE AT DECEMBER 31, 2014 The accompanying notes are an integral part of th (With Deloitte & Touche audit report dated March	Share Capital Capital Surplus $ 9,800,000 $ 2,232,791 - - - - - - - - - - - 1,543 - - 9,800,000 2,234,334 - - - - - - - - - - - - $ 9,800,000 $ 2,234,334 e financial statements. 27, 2015)		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 2,568,829 $ 33,613,130 $ 2,738,424 333,897 - (333,897 ) - - (2,646,000 ) - - 2,538,071 - - 8,388 - - 2,546,459 - - - - (3,423 ) 3,423 2,902,726 33,609,707 2,308,409 230,841 - (230,841 ) - - (1,960,000 ) - - 3,068,346 - - (1,703 ) - - 3,066,643 - (18,763 ) 18,763 $ 3,133,567 $ 33,590,944 $ 3,202,974			Other Equity	Total $ (178,715 ) - - - 97,911 97,911 - - (80,804 ) - - - 511,600 511,600 - $ 430,796	Total Equity $ 50,774,459 - (2,646,000 ) 2,538,071 106,299 2,644,370 1,543 - 50,774,372 - (1,960,000 ) 3,068,346 509,897 3,578,243 - $ 52,392,615
					Exchange Differences on Translating Foreign Operations $ (302,945 ) - - - 138,970 138,970 - - (163,975 ) - - - 532,079 532,079 - $ 368,104	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 124,230 - - - (41,059 ) (41,059 ) - - 83,171 - - - (20,479 ) (20,479 ) - $ 62,692

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Financial Summary

TAIWAN FERTILIZER CO., LTD.

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Share of profits of subsidiaries, associates and joint ventures Depreciation expenses Donation expenses Amortization expenses Impairment loss recognized on financial assets Finance costs Dividend income (Reversal of write-downs) write-down of inventories Net gain on foreign currency exchange Loss (gain) on disposal of investments Loss on disposal of property, plant and equipment Loss (gain) on disposal of investment properties Interest income Gain on the remeasurement of previously held equity interest in the acquiree Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Long-term receivables Inventories Buildings and land held for sale Prepayments Other current assets Notes payable Accounts payable Other payables Receipts in advance Other current liabilities Accrued pension liabilities Deferred revenue Cash generated from (used in) operations Interest received Dividend received Interest paid Income tax paid Net cash (used in) generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Proceeds of the sale of available-for-sale financial assets	2014 $ 2,859,892 (1,648,121) 526,967 421,575 92,713 49,510 48,275 (23,214) (20,000) (14,906) 9,409 7,582 2,675 (1,281) - (96,586) (1,486,951) (163,302) (378,250) 57,770 456,707 (1,155,311) 5,947 (10,201) (195,223) (42,992) (414,650) 70,093 52,108 (74,946 ) (1,064,711) 1,283 621,474 (11,322) (126,121 ) (579,397 ) (657,713) 562,675	2013 $ 2,690,952 (1,589,730) 203,608 209,440 85,874 83,164 - (21,585) 1,257 (1,717) (20,944) 3,330 (746) (13,239) (336,331) (43,113) 1,157,911 77,102 - 1,225,757 (426,039) 309,219 (15,834) 17,491 174,075 (117,886) (8,827) (19,780) 32,567 (54,524 ) 3,601,452 13,217 1,553,969 - (619,029 ) 4,549,609 (1,384,835) 3,485,287 (Continued)

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TAIWAN FERTILIZER CO., LTD.

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

Increase in investments accounted for by the equity method Purchase of available-for-sale financial assets Increase in investment properties Proceeds of the disposal of property, plant and equipment Return of capital on financial assets carried at cost Purchase of financial assets measured at cost Purchase of intangible assets Decrease (increase) in debt investments with no active market Proceeds of the disposal of financial assets carried at cost Decrease in refundable deposits Net cash outflow on acquisition of subsidiaries Proceeds of the disposal of investment properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid Proceeds from short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowing Increase in guarantee deposits received Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2014 $ (275,000) (213,990) (171,045) 48,051 18,000 (15,000) (10,091) 4,800 3,931 2,559 - - (702,823 ) (1,960,000) 1,700,000 1,000,000 (70,000) 30,391 700,391 1,677 (580,152) 1,098,890 $ 518,738	2013 $ (28,504) (3,212,039) (43,569) 12,571 - (100,000) (13,804) (12,238) 3,589 35,204 (399,235) 746 (1,656,827 ) (2,646,000) - - - 33,007 (2,612,993 ) 1,639 281,428 817,462 $ 1,098,890

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

(With Deloitte & Touche audit report dated March 27, 2015)

(Concluded)

183

Financial Summary

TAIWAN FERTILIZER CO., LTD.

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

1. GENERAL INFORMATION

Taiwan Fertilizer Co., Ltd. (the “Corporation”) was incorporated in May 1946. It manufactures and sells inorganic, organic fertilizers and other chemical products. The Corporation also constructs and leases real estate.

The Corporation’s stock has been listed on the Taiwan Stock Exchange since March 24, 1998.

The functional currency of the Corporation is the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying parent company only financial statements were approved and authorized for issue by the Board of Directors on March 27, 2015.

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

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

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

New, Amended and Revised
Standards and Interpretations (the“New IFRSs”)
Improvements to IFRSs (2009) - amendment to IAS 39
Amendment to IAS 39 “Embedded Derivatives”
Improvements to IFRSs (2010)
Annual Improvements to IFRSs 2009-2011 Cycle
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS
7 Disclosures for First-time Adopters”
Amendment to IFRS 1 “Severe Hyperinflation and Removal of
Fixed Dates for First-time Adopters”
Amendment to IFRS 1 “Government Loans”
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
Financial Liabilities”

Effective Date
Announced by IASB (Note)

January 1, 2009 and January 1,
2010, as appropriate
Effective for annual periods ended
on or after June 30, 2009
July 1, 2010 and January 1, 2011,
as appropriate
January 1, 2013
July 1, 2010
July 1, 2011
January 1, 2013
January 1, 2013
(Continued)

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New, Amended and Revised Standards and Interpretations (the “New IFRSs”)

Effective Date Announced by IASB (Note)

Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011 IFRS 10 “Consolidated Financial Statements” January 1, 2013 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated January 1, 2013 Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment January 1, 2014 Entities” IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other Comprehensive July 1, 2012 Income” Amendment to IAS 12 “Deferred Tax: Recovery of Underlying January 1, 2012 Assets” IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and Joint January 1, 2013 Ventures” Amendment to IAS 32 “Offsetting Financial Assets and Financial January 1, 2014 Liabilities” IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013 (Concluded)

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

1) IFRS 13 “Fair Value Measurement”

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

2) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

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Financial Summary

The Corporation will retrospectively apply the above amendments starting from 2015. Items not expected to be reclassified to profit or loss are remeasurements of the defined benefit plans and the share of the remeasurements of defined benefit plans of associates and joint ventures accounted for using the equity method. Items expected to be reclassified to profit or loss are the exchange differences on translating foreign operations, unrealized gains (loss) on available-for-sale financial assets, and share of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates and joint ventures accounted for using the equity method. For 2014, items expected to be reclassified to profit or loss are the unrealized loss of $20,479 thousand on available-for-sale financial assets, and the share, amounting to $532,079 thousand, of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates and joint ventures accounted for using the equity method.

b. New IFRSs issued but not yet endorsed by the FSC

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

New IFRSs
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
Annual Improvements to IFRSs 2012-2014 Cycle
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture”
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”
Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 1 “Disclosure Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 27 “Equity Method in Separate Financial
Statements”
Amendment to IAS 36 “Impairment of Assets: Recoverable
Amount Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and Continuation
of Hedge Accounting”
IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

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Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; and the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: The amendments apply to transactions occurring in annual periods beginning on or after January 1, 2016.
Note 4: The amendment to IFRS 5 applies to the changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

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

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

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

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

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

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Financial Summary

The impairment of financial assets

IFRS 9 requires the recognition of impairment loss on financial assets using the expected credit losses model. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers,” and certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. For trade receivables with no significant financing component, there should be a loss allowance throughout the lives of the receivables.

For purchased or originated credit-impaired financial assets, the Corporation takes into account the expected credit losses on initial recognition, and these losses should be discounted using the credit-adjusted effective interest rate. Subsequently, any changes from the initial expected credit losses are recognized as a loss allowance, with a corresponding gain or loss recognized immediately in profit or loss.

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

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

Except for the above impact, as of the date the accompanying financial statements had been authorized for issue, the Corporation was continuing to assess the possible impact that the application of other standards and interpretations would have on the Corporation’s financial position and financial performance, and will disclose the impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Preparation

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

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When preparing the parent company only financial statements, the Corporation accounted for its investment in subsidiaries, associates and jointly controlled entities by using the equity method. The amounts of net income, other comprehensive income and equity in the parent company only financial statements are the same with the amounts attributable to shareholders of the Corporation in the consolidated financial statements.

Foreign Currencies

In preparing the parent company only financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured at historical cost in foreign currencies are not retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items shall be recognised in profit or loss in the period in which they arise.

For the purposes of presenting parent company only financial statements, the assets and liabilities of the Corporation’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income.

Classification of Current and Noncurrent Assets and Liabilities

Cash Equivalents

Cash equivalents are 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.

Inventories

Investments Accounted for Using Equity Method

Investments in subsidiaries and associates are accounted for by the equity method.

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Financial Summary

Investment in subsidiaries

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Corporation also recognized its share in the changes in the equity of subsidiaries.

The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. The acquisition-date fair value of the net identifiable assets acquired in excess of the acquisition cost is recognized immediately in profit or loss.

When testing for impairment, the cash-generating unit is determined based on the financial statements as a whole by comparing its recoverable amount with its carrying amount. If the recoverable amount of the asset subsequently increases, the reversal of the impairment loss is recognized as a gain, but the increased carrying amount of an asset after a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized on the asset in prior years. An impairment loss recognized for goodwill shall not be reversed in a subsequent period.

Profits and losses from downstream transactions with a subsidiary are eliminated in full. Profits and losses from upstream with a subsidiary and sidestream transactions between subsidiaries are recognized in the Corporation’s financial statements only to the extent of interests in the subsidiary that are not related to the Corporation.

Investment in associates

An associate is an entity over which the Corporation has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The Corporation account for associates by using the equity method. Under the equity method, investments in associates are initially recognized in the statement of financial position at cost and adjusted thereafter to recognize the Corporation’s share of profit or loss and other comprehensive income of the associates as well as the distribution received. The Corporation also recognized its share in the changes in the equity of associates.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized.

Business Combination

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

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When a business combination is achieved in stages, the Corporation’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date, and the resulting gain or loss is recognized in profit or loss.

Property, Plant and Equipment

Depreciation is recognized using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at least once at the end of each reporting period.

Leases

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

Investment Properties

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Financial Summary

Impairment of Tangible and Intangible Assets

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication of asset impairment.

Financial Instruments

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

a. Financial assets

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

Financial assets are classified into the following categories: Available-for-sale financial assets, and loans and receivables.

1) Available-for-sale financial assets

Stocks held by the Corporation that are traded in an active market are classified as

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available-for-sale financial assets and are stated at fair value at the end of each reporting period.

2) Loans and receivables

3) Impairment of financial assets

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

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

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Financial Summary

at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

4) Derecognition of financial assets

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

b. Financial liabilities

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

The Corporation derecognizes financial liabilities when, and only when, the Corporation’s obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Provisions

Provisions are recognized when the Corporation has a present obligation (legal or constructive) as a result of a past event, it is probable that the Corporation will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

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a. Sale of goods

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

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

Revenue from sales of goods is recognized when the Corporation has transferred to the buyer the significant risks and rewards of the ownership of the goods.

b. Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Corporation and the amount of income can be measured reliably.

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

Retirement Benefits

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

The retirement benefit obligation recognized in the balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

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Financial Summary

Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

Taxation

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

a. Current tax

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

b. Deferred tax

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

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

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

c. Current and deferred tax for the year

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respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The following are the critical judgments, apart from those involving estimations, that the directors have made in the process of applying the Corporation’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements.

Impairment of Tangible and Intangible Assets

At the end of each reporting period, the Corporation reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. In the process of evaluating the potential impairment of tangible and intangible assets, the Corporation is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of the Corporation’s industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years. As of December 31, 2014 and 2013, there were $47,445,116 thousand and $46,697,665 thousand including in the carrying amounts of tangible and intangible assets, respectively.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2014 $ 2,847 515,891 $ 518,738	2013 $ 2,899 1,095,991 $ 1,098,890

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

Bank balance	December 31
	2014 2013 0.02%-0.33% 0.02%-0.17%

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Financial Summary

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Domestic listed shares Mutual funds Current Noncurrent		December 31	December 31
		2014 $ 106,285 - $ 106,285 $ - 106,285 $ 106,285	2013 $ 125,150 351,614 $ 476,764 $ 351,614 125,150 $ 476,764

8. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable - fertilizers and chemical products Real estate receivable Less: Allowance for impairment loss Accounts receivable Long-term receivable		December 31	December 31
		2014 $ 1,079,662 2,796,682 - $ 3,876,344 $ 3,498,094 378,250 $ 3,876,344	2013 $ 1,991,359 - - $ 1,991,359 $ 1,991,359 - $ 1,991,359

The average credit period for the sales of fertilizers and other chemical products was 90 to 120 days. For the accounts receivables balances that were past due at the end of the reporting period, the Corporation did not recognize an allowance for impairment loss, because there was not a significant change in credit quality and the amounts were still considered recoverable. The Corporation did not hold any collateral or other credit enhancements for these balances.

The aging of accounts receivable in the above part that were past due but not impaired was as follows:

Past due 1-30 days Past due 31-60 days Past due over 61 days		December 31	December 31
		2014 $ 3,428 223 111 $ 3,762	2013 $ 128,687 131,288 208,004 $ 467,979

As of December 31, 2014, real estate receivables amounted to $2,769,682 thousand, including the long-term receivable from sales on installment, amounting to $378,250 thousand. Expected

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recovery of these long-term receivables is at these amounts: $182,716 thousand in 2015; $98,737 thousand in 2016; and $96,797 thousand in 2017.

On a certain sold real estate for which there are receivables, the Corporation had a secondary priority mortgage amounting to $571,600 thousand.

9. FINANCIAL ASSETS CARRIED AT COST

Noncurrent Domestic unlisted shares Eminent II VC Corp Top Taiwan V Venture Capital Co., Ltd. Eminent Venture Capital Corporation Taiwan Stock Exchange Corporation TSCBio Ventures Capital Co. Visgeneer Inc. Green Cellulosity Corporation TaiAn Technologies Corporation VIBO Telecom Inc. Classified according to financial asset measurement categories Available-for-sale financial assets		December 31	December 31
		2014 $ 200,000 120,000 100,000 52,800 42,000 20,989 15,000 7,667 - $ 558,456 $ 558,456	2013 $ 200,000 120,000 100,000 52,800 60,000 20,989 - 7,667 61,535 $ 622,991 $ 622,991

The Corporation sold its entire holding of VIBO Telecom Inc.’s shares in the second quarter of 2014 and recognized a disposal loss of $8,094 thousand.

In October 2014, TSCBio Ventures Capital Co. (“TSCBio” reduced its capital, and the Corporation received $18,000 thousand as capital return; the percentage of the Corporation’s ownership of TSCBio remained the same despite this capital reduction.

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Financial Summary

10. INVENTORIES

Raw materials Finished goods Merchandise		December 31	December 31
		2014 $ 1,410,477 701,622 1,379 $ 2,113,478	2013 $ 1,544,498 605,806 944 $ 2,151,248

The costs of inventories recognized as cost of goods sold were $12,648,634 thousand for 2014 and $13,161,226 thousand for 2013.

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013 included a reversal of inventory write-downs amounting to $20,000 thousand and inventory write-downs of $1,257 thousand. Previous write downs were reversed as a result of increased selling price in chemical product markets.

11. BUILDINGS AND LAND HELD FOR SALE/RECEIPTS IN ADVANCE

Buildings and land held for sale Nangang R5 Residential Project Others Receipts in advance Nangang R5 Residential Project		December 31	December 31
		2014 $ 1,453,770 6,004 $ 1,459,774 $ 1,580,199	2013 $ 1,122,046 4,931 $ 1,126,977 $ 2,005,656

Buildings and land held for sale mainly referred to investment in and development of residentialcommercial complexes on self-owned lots.

Nangang R5 Residential Project

As of December 31, 2014, the land had been transferred to 45 of the buyers, and the Corporation recognized property revenues of $4,023,449 thousand and related costs of $1,047,992 thousand.

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12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2014 $ 1,167,819 10,201,637 $ 11,369,456	2013 $ 1,034,727 9,479,659 $ 10,514,386

a. Investments in subsidiaries

Unlisted companies Taifer Biotech Co., Ltd. Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer (Cayman) International Group Co., Ltd.		December 31	December 31
		2014 $ 70,695 70,418 957,813 68,893 $ 1,167,819	2013 $ 73,580 51,185 744,696 165,266 $ 1,034,727

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

Name of Subsidiaries Unlisted Companies Taifer Biotech Co., Ltd. Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer (Cayman) International Group Co., Ltd.	December 31
	2014 2013 100% 100% 100% 100% 100% 100% 100% 100%

b. Investment in associates

Unlisted companies Al-Jubail Fertilizer Company (“Al-Jubail”) Bion Tech Inc.		December 31	December 31
		2014 $ 10,197,486 4,151 $ 10,201,637	2013 $ 9,474,018 5,641 $ 9,479,659

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Financial Summary

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

Unlisted companies Al-Jubail Bion Tech Inc.	December 31
	2014 2013 50.00% 50.00% 22.42% 22.42%

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

Total assets Total liabilities Revenue for the year Profit for the year Other comprehensive income for the year The Corporation’s share of profits and other comprehensive income of associates		December 31	December 31
	2014 2013 $ 24,930,444 $ 22,483,117 $ 1,745,186 $ 1,484,490 For the Year Ended December 31
		2014 $ 12,947,238 $ 3,972,564 $ - $ 1,776,169	2013 $ 12,488,006 $ 4,386,213 $ - $ 1,758,158

c. On March 31, 2011, under the authorization of the Investment Commission of the Ministry of Economic Affairs, the Corporation established TR Electronic Chemical Co., Ltd. (TREC) in the Cayman Islands through a subsidiary, Taifer (Cayman) International Group Co., Ltd. TREC then invested in TR Electronic Chemical (Kunshan) Co., Ltd. (TREC-K), which enabled the Corporation to have a 51% indirect interest in TREC-K. TREC-K manufactures and sells electronic chemicals. Later, under a joint venture agreement between the Corporation and Shiung-Shing Chemical International Trade Corp. (“Shiung-Shing”), another TREC shareholder, Shiung-Shing assigned a manager to handle TREC’s daily business and management. Thus, the Corporation had no control over TREC and TREC-K. As of December 31, 2014, the Corporation investment in TREC-K through TREC was US$10,965 thousand.

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13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2013 Additions Disposals Decommissioning liabilities accrued Transfer from completion Balance at December 31, 2013 Accumulated depreciation and impairment Balance at January 1, 2013 Disposals Depreciation expense Transfer from completion Balance at December 31, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposals Transfer to investment properties Decommissioning liabilities accrued Transfer from completion Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Disposals Depreciation expense Transfer from completion Balance at December 31, 2014 Carrying amounts at December 31, 2014	Land $ 27,413,721 82,762 (3,781 ) - - 27,492,702 - - - - - $ 27,492,702 27,492,702 - (15,563 ) (5,480,245 ) - - 21,996,894 - - - - - $ 21,996,894	Buildings $ 1,469,174 350,775 (18,717 ) - 1,253,736 3,054,968 (679,212 ) 18,179 (49,170 ) - (710,203 ) $ 2,344,765 3,054,968 22,278 (34,914 ) - - 797,873 3,840,205 (710,203 ) 36,096 (94,397 ) - (770,504 ) $ 3,069,701	Machinery and Equipment Transportation Equipment $ 2,631,842 $ 63,900 8,066 5,431 (220,837 ) (2,381 ) - - 5,160,377 7,273 7,579,448 74,223 (1,964,651 ) (42,856 ) 211,086 2,188 (143,493 ) (5,844 ) 1,533 2,192 (1,895,525 ) (44,320 ) $ 5,683,923 $ 29,903 7,579,448 74,223 262,046 3,298 (593,411 ) (2,350 ) - - - - 1,584,370 (6,670 ) 8,832,453 68,501 (1,895,525 ) (44,320 ) 568,626 2,032 (406,470 ) (5,562 ) 120,400 1,239 (1,612,969 ) (46,611 ) $ 7,219,484 $ 21,890	Other Equipment $ 58,865 1,635 (2,373 ) 156,614 71,668 286,409 (35,610 ) 1,161 (5,085 ) 620 (38,914 ) $ 247,495 286,409 14,603 (1,976 ) - 67,033 62 366,131 (38,914 ) 1,875 (20,529 ) 147 (57,421 ) $ 308,710	Property in Construction $ 9,306,431 936,166 - - (7,952,819 ) 2,289,778 - - - - - $ 2,289,778 2,289,778 861,586 - (38,570 ) - (2,498,010 ) 614,784 - - - - - $ 614,784	Total $ 40,943,933 1,384,835 (248,089 ) 156,614 (1,459,765 ) 40,777,528 (2,722,329 ) 232,614 (203,592 ) 4,345 (2,688,962 ) $ 38,088,566 40,777,528 1,163,811 (648,214 ) (5,518,825 ) 67,033 (122,375 ) 35,718,968 (2,688,962 ) 606,629 (526,958 ) 121,786 (2,487,505 ) $ 33,231,463

The following property, plant and equipment were depreciated on a straight-line basis over their useful lives:

Building: Leasehold improvements and others	3-15 years
Building: Buildings, warehouses, storage sheds	16-60 years
Equipment: Production equipment	3-15 years
Equipment: Storage tank, power transmission system, etc.	16-40 years
Transportation equipment	3-15 years
Other equipment	3-15 years

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Financial Summary

14. INVESTMENT PROPERTIES

Cost Balance at January 1, 2013 Additions Disposals Reclassification Balance at December 31, 2013 Accumulated depreciation and impairment Balance at January 1, 2013 Disposals Depreciation expense Balance at December 31, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposals Reclassification Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Impairment loss Depreciation expense Balance at December 31, 2014 Carrying amounts at December 31, 2014	Completed Investment Property $ 4,200,898 - - - 4,200,898 - - - - $ 4,200,898 $ 4,200,898 - - - 4,200,898 - - - - $ 4,200,898	Investment Property under Construction $ 409,128 43,569 - - 452,697 - - - - $ 452,697 $ 452,697 171,045 - 4,428,857 5,052,599 - - - - $ 5,052,599	Undeveloped Investment Property $ 3,135,637 - (746) (5,164 ) 3,129,727 (655,692) 746 (16 ) (654,962 ) $ 2,474,765 $ 3,129,727 - (47,444) 1,089,958 4,172,241 (654,962) (44,769) (9 ) (610,202 ) $ 3,562,039	Total $ 7,745,663 43,569 (746) (5,164 ) 7,783,322 (655,692) 746 (16 ) (654,962 ) $ 7,128,360 $ 7,783,322 171,045 (47,444) 5,518,815 13,425,738 (654,962) (44,769) (9 ) (610,202 ) $ 12,815,536

The Corporation pledged land use rights on its completed investment property with an area of 30,692 square meters located in C6/C7/C8/C9 in the Nangang Economic and Trade Park. The main provisions of the contract on the pledging of land use rights were as follows:

a. Land use rights are for 50 years from the date of registration of these rights. When these rights expire or the contract is terminated, the pledgee should cancel its registration for the land use rights and transfer to the Corporation all the land improvements (including the main building, attached building, parking space and all other attached facilities and improvements such as air-conditioning, and utility fixtures).
b. The land use rights (accounted for as deferred income-noncurrent) amounted to $3,200,889 thousand, which has been treated as royalty revenue (accounted for as operating revenue)

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amortizable over 50 years from June 13, 2006. As of December 31, 2014 and 2013, the unamortized balances of the land used rights under above mentioned contract were $2,654,270 thousand and $2,718,088 thousand, respectively.

c. In addition to the land use right, the annual rental payable by the pledgee is 8% of the reference land price announced by the local government, with the calculation starting from the contract date. When the reference land price is adjusted, the annual rental will be revised at the percentage the same as that set on the date of the reference price adjustment. The annual rentals in 2014 and 2013 were both $216,781 thousand.
d. The pledgee should not transfer the land use rights or the ownership of leasehold improvements to a third party. Also prohibited are the placing of the land rights under a trust and the use of the rights as collateral.
e. The pledgee should not pledge liabilities on land use rights and improvements to a third party.

The fair value of the Corporation’s completed investment property (land located in C6/C7/C8/C9) as of December 31, 2014 and 2013 were $23,489,684 thousand and $22,746,927 thousand, respectively, which was based on a valuation by a qualified independent professional appraiser on April 25, 2014 and 2013. As of December 31, 2014, the Corporation noted there was no significant change in fair value after the valuation. The valuation was arrived at by reference to market transaction prices for similar property.

Investment properties under construction are located in Hsinchu City and Hualien City and included land for “C2 Tourist Hotel Project” (C2) at the Nangang Economic and Trade Park. The fair value of C2 as of December 31, 2014 was $17,839,404 thousand, which was determined by the Corporation’s management by reference to the fair value of similar properties in the vicinity of the Corporation’s investment properties.

The main terms of the FEA were as follows:

a. The Corporation is responsible for the construction of the lease premises (the “Premises”), and the Hotels should assist the Corporation in construction-related matters. The Corporation will shoulder the construction cost. Both parties are responsible for the completion of the premises in six years after signing the FEA (the tentative project completion is set for October 8, 2019).
b. The lease contract is for 20 years from the start of the lease contract, and the lessee has the first option to extend lease for another 10 years. Upon expiry or termination of this lease agreement, the lessee should turn over the Premises as is to the Corporation.
c. The lessee should pay monthly rentals calculated at the higher of the guaranteed rentals or revenue-based rentals payable to the Corporation from the Premises opening date. The guaranteed rental will be increased 1% each year, and the revenue-based rentals are 16% of the gross revenue of the hotel each month.
d. Under this FEA and lease agreement, the lessee should not assign and transfer any of its rights or obligations to a third party.

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Financial Summary

As of December 31, 2014, the Corporation had applied for the document review of the urban design to the authorities, and land development will continue upon the authorities’ approval of the documents.

The undeveloped investment properties are mainly located in C3 of the Nangang Economic and Trade Park. The fair value of C3 as of December 31, 2014 was $31,789,044 thousand, as determined by the Corporation’s management by reference to the fair value of similar properties in the vicinity of the Corporation’s investment properties.

The other investment properties held by the Corporation are mainly located in different industrial zones. They have no quoted prices in an active market and there was no alternative basis for estimating their fair values. Thus, the fair values of the investment properties were not reliably determinable.

15. LONG-TERM PREPAYMENT FOR LEASE

Land		December 31	December 31
		2014 $ 1,357,172	2013 $ 1,427,783

On October 31, 2006, the Corporation leased from the Taichung Harbor Bureau, Ministry of Transportation and Communications (“THB”) a 247.298-square meter lot in a special petrochemical industry zone in Taichung to develop wharf areas, called wests 8 and 9, and construct warehouse facilities and public roads. In April 2007, the Corporation informed THB that an inspection showed the area of the land as stated in the lease contract was the same as that to be actually used by the Corporation; thus, the Corporation signed the contract. The main provisions of the lease agreement were as follows:

a. The lease term for the land in a special industrial zone is 20 years, and the agreement is renewable until the total lease reaches 50 years. The ownership of the real estate and its improvements constructed with the Corporation’s capital belongs to the Corporation. In principle, the Corporation will return the land to the government on the agreement expiry or upon early termination of the lease agreement.
b. As mentioned above, the Corporation has leased land, developed wests 8 and 9 of the wharf area and constructed warehouse facilities and public roads on behalf of THB. The Corporation used its capital expenses for the construction as rentals in advance. However, once the lease term ends or the agreement is early terminated, all the titles to the facilities and improvements on the leased land should be transferred to THB.

The Corporation uses its expenditures of $1,500,481 thousand for the construction of wests 8 and 9 of Taichung Harbor as rentals until March 20, 2034. The construction had been completed in 2013, and the expenditures were accounted for as long-term prepayments for lease, which should be amortized over its rent-free periods.

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16. BORROWINGS

a. Short-term borrowing

Unsecured borrowings Fixed rate bank loans		December 31	December 31
		2014 $ 1,700,000	2013 $ -

The effective interest rate for bank loans ranged from 1.05% to 1.15% per annum as of December 31, 2014.

b. Long-term borrowing

Secured borrowings Floating rate bank loans Less: Current portion Interest rate Maturity date		December 31	December 31
		2014 $ 930,000 140,000 $ 790,000 1.48% 2018.3.18	2013 $ - - $ - - -

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Financial Summary

17. OTHER PAYABLES

Payable for purchase of equipment Salaries and bonus Payable for land value-added tax Employees’ bonus and remuneration to directors and supervisors Interest payable Utilities payable Payable for annual leave Payable for taxation Others		December 31	December 31
		2014 $ 506,098 162,250 154,762 113,474 35,791 23,126 21,926 11,661 110,021 $ 1,191,258	2013 $ 11,275 247,226 - 103,158 - 29,049 21,926 9,243 82,223 $ 536,914

18. PROVISIONS - NONCURRENT

Income tax provisions Decommissioning liabilities Others		December 31	December 31
		2014 $ 648,958 223,648 38,370 $ 910,976	2013 $ 2,033,084 156,614 38,370 $ 2,228,068

Income Tax Provisions

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In December 2014, the Corporation and the tax authorities reached a settlement, which included the dismissal of the tax administrative relief on the 2005, 2006 and 2008 returns.

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. Accordingly, the Corporation recognized expenses of $11,742 thousand and $8,601 thousand in the parent company only statements of comprehensive income for the years ended December 31, 2014 and 2013, respectively.

b. Defined benefit plans

The Corporation adopted the defined benefit plan under the Labor Standards Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Corporation contributes amounts equal to 9% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund the return generated by employees’ pension contribution should not be below the interest rate for a 2-year time deposit with local banks.

The actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase Expected return on plan assets	Measurement Date
	December 31
	2014 2013 1.50% 1.50% 1.00% 1.00% 1.75% 1.75%

The assessment of the overall expected rate of return was based on historical return trends and analysts’ predictions of the market for the asset over the life of the related obligation, by

209

Financial Summary

reference to the aforementioned use of the plan assets and the impact of the related minimum return.

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

Current service cost Interest cost Expected return on plan assets Losses arising from settlement An analysis by function Operating cost Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 42,918 11,040 (6,779) 164,928 $ 212,107 $ 178,588 33,519 $ 212,107	2013 $ 58,752 9,423 (7,499) 35,595 $ 96,271 $ 48,842 47,429 $ 96,271

Actuarial losses (net of tax) recognized in other comprehensive income for the years ended December 31, 2014 and 2013 were losses of $1,703 thousand and gains of $8,388 thousand, respectively. The cumulative amounts of actuarial losses recognized in other comprehensive income as of December 31, 2014 and 2013 were $25,954 thousand and $24,251 thousand, respectively.

The amount included in the parent company only balance sheet arising from the Corporation’s obligation in respect of its defined benefit plans was as follows:

Present value of funded defined benefit obligation Fair value of plan assets Net liability arising from defined benefit obligation		December 31	December 31
		2014 $ (640,962) 222,001 $ (418,961 )	2013 $ (780,157) 415,356 $ (364,801 )

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

Opening defined benefit obligation Current service cost Interest cost Actuarial (losses) gains Gains on curtailments Benefits paid Closing defined benefit obligation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ (780,157) (42,918) (11,040) (4,817) 169,468 28,502 $ (640,962 )	2013 $ (774,248) (58,752) (9,423) 12,156 40,344 9,766 $ (780,157 )

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Movements in the fair value of the plan assets were as follows:

Opening fair value of plan assets Expected return on plan assets Contributions from the employer Benefits paid Plan assets gains (losses) Assets distributed on settlements Closing fair value of plan assets	For the Year Ended	For the Year Ended	December 31
		2014 $ 415,356 6,779 26,651 (22,255) 2,765 (207,295 ) $ 222,001	2013 $ 431,907 7,499 29,613 (5,227) (2,049) (46,387 ) $ 415,356

The major categories of plan assets at the end of the reporting period for each category were disclosed based on the information announced by Bureau of Labor Funds, Ministry of Labor:

Bank deposit Domestic debt securities Domestic equity securities Foreign debt securities Foreign equity securities Others	December 31
	2014 2013 19.12 22.86 13.90 13.47 30.49 29.36 14.46 18.11 19.20 15.41 2.83 0.79

The Corporation expects to make a contribution of $29,339 thousand to the defined benefit plans during the annual period beginning after December 31, 2014.

20. EQUITY

a. Share capital

Number of shares authorized and issued (in thousands) Capital authorized and issued		December 31	December 31
		2014 980,000 $ 9,800,000	2013 980,000 $ 9,800,000

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

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Financial Summary

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Donations Treasury share transactions May not be used Arising from share of changes in capital surplus of associates		December 31	December 31
		2014 $ 44,803 2,187,988 1,543 $ 2,234,334	2013 $ 44,803 2,187,988 1,543 $ 2,234,334

c. Retained earnings and dividend policy

1)	Remuneration to directors and supervisors	Not more than 2%
2)	Bonus to employees	3%
3)	Dividends	95%

The appropriations will be recommended by the board of directors and resolved in the shareholders’ meeting.

For the years ended December 31, 2014 and 2013, the proposed bonus to employees was $68,084 thousand and $61,895 thousand, respectively, and the proposed remuneration to directors and supervisors was $45,390 thousand and $41,263 thousand, respectively. The bonus to employees and remuneration to directors and supervisors represented 3% and 2%, respectively, of net income (net of the bonus and remuneration). Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the financial statements are authorized for issue, the differences are recorded as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number

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of shares is determined by dividing the amount of the share bonus by the fair value of the shares. The fair value of the shares refer to the closing price (after considering the effect of cash and share dividends) of the shares on the day immediately preceding the shareholders’ meeting.

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

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Corporation.

The appropriations from the 2013 and 2012 earnings, which included dividends and the bonus to employees and the remuneration to directors and supervisors, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2013 2012 $ 230,841 $ 333,897 1,960,000 2,646,000	Dividends Per Share (NT$)
		For the Year Ended December 31
		2013 2012 $2.0 $2.7

Amounts approved in shareholders’ meetings Amounts recognized in respective financial statements		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2013 Bonus to Employee Bonus Remuneration to Directors and Supervisors $ 61,895 $ 41,263 61,895 41,263 $ - $ -		2012
				Bonus to Employee Bonus Remuneration to Directors and Supervisors $ 83,558 $ 55,705 74,273 49,516 $ 9,285 $ 6,189

213

Financial Summary

and loss in next year.

The appropriations of earnings for 2014 had been proposed by the Corporation’s board of directors on March 27, 2015. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	306,834	$ -
Cash dividends		2,156,000	2.2

d. Special reserves appropriated under Rule No. 1010012865 issued by the FSC

The Corporation’s special reserve relating to land reversed on disposal was $18,763 thousand and $3,423 thousand in 2014 and 2013, respectively.

21. OPERATING REVENUES AND COSTS

Operating revenues Sales revenue Rental revenue Property revenue Other revenue Less: Sales returns and allowances Net operating revenues Operating costs Cost of goods sold Rental cost Property selling cost Total operating costs Gross profit	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 12,350,940 711,460 4,023,449 29,939 (22,618 ) 17,093,170 12,648,634 588,091 1,047,992 14,284,717 $ 2,808,453	2013 $ 13,289,371 653,786 1,749,568 32,989 (19,551 ) 15,706,163 13,161,226 319,379 56,291 13,536,896 $ 2,169,267

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21. NET PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS) FROM CONTINUING OPERATIONS

Income from continuing operation included the following items:

a. Other gains and losses

Donation expenses (Note 30) Loss on impairment of financial assets (Note 9) Net foreign exchange gain (Loss) gain on disposal of investment Loss on disposal of property, plant and equipment Loss on disposal of investment property Gain on remeasurement of previously held equity interest in the acquiree (Note 25) Others	For the Year Ended	For the Year Ended	December 31
		2014 $ (421,575) (49,510) 19,416 (9,409) (7,582) (2,675) - (17,922 ) $ (489,257 )	2013 $ (209,440) (83,164) 21,219 20,944 (3,330) - 336,331 (51,550 ) $ 31,010

b. Other income

Dividends Interest income - bank deposits Income due to default of counterparties Compensation income Others Depreciation and amortization Summarized by function: Operating costs Operating expenses Nonoperating expenses	For the Year Ended	For the Year Ended	December 31
	2014 $ 23,214 1,281 - - 13,988 $ 38,483 For the Year Ended		2013 $ 21,585 13,239 84,948 22,821 8,846 $ 151,439 December 31
		2014 $ 552,174 67,497 9 $ 619,680	2013 $ 235,482 53,984 16 $ 289,482

c. Depreciation and amortization

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Financial Summary

d. Employee benefit expense

Short-term employee benefits Salary Labor and health Insurance Others Retirement benefits (Note 19) Defined contribution plans Defined benefit plans Termination benefits Other employee benefits Total employee benefits expense Summarized by function: Operating costs Operating expenses Nonoperating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 944,668 57,303 37,111 1,039,082 11,742 85,005 96,747 127,102 3,294 $ 1,266,225 $ 777,329 488,896 - $ 1,266,225	2013 $ 844,888 46,126 33,775 924,789 8,601 96,271 104,872 28,651 3,900 $ 1,062,212 $ 468,326 561,971 31,915 $ 1,062,212

As of December 31, 2014 and 2013, the Corporation had 733 and 809 employee, respectively.

23. INCOME TAX

a. Income tax recognized in profit or loss
1) The major components of tax income (expense) were as follows:

Current tax Current year Prior periods Deferred tax Current year Income tax income (expense) recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2014 $ (97,357) 341,247 (35,436 ) $ 208,454	2013 $ (255,947) 6,923 96,143 $ (152,881 )

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2) A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Additional income tax on unappropriated earnings Adjustments for deferred tax Adjustments for prior years’ tax Income tax income (expense) recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 2,859,892 $ 486,182 71,668 (468,360) 11,757 31,546 (341,247 ) $ (208,454 )	2013 $ 2,690,952 $ 457,462 35,756 (343,776) 35,907 (25,545) (6,923 ) $ 152,881

The applicable tax rate used above is the corporate tax rate of 17%.

b. Income tax recognized in other comprehensive income

Deferred tax Current year Translation of foreign operations Actuarial losses (gains) on the defined benefit plan Total income tax recognized in other comprehensive income	For the Year Ended	For the Year Ended	December 31
		2014 $ (111,223) 349 $ (110,874 )	2013 $ (110,790) (1,718 ) $ (112,508 )

c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2014

Deferred Tax Assets Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Unamortized manufacturing costs $ 42,353 $ 34,116 $ - Defined benefit obligation 62,016 8,858 349 Impairment loss on assets 56,426 (208) - Deferred estate marketing expense 41,404 (17,344) - Others 42,245 (31,253 ) - $ 244,444 $ (5,831 ) $ 349	Others Closing Balance $ - $ 76,469 - 71,223 - 56,218 - 24,060 - 10,992 $ - $ 238,962

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Financial Summary

Deferred Tax Liabilities Opening Balance Land value increment tax $ 6,420,466 Investment income recognized under the equity method 246,536 Exchange difference on the translation of foreign operations 29,134 Others - $ 6,669,136	Recognized in Profit or Loss Recognized in Other Comprehensive Income $ - $ - 28,247 - - 111,223 1,358 - $ 29,605 $ 111,223	Others Closing Balance $ - $ 6,420,466 314,084 588,867 - 140,357 - 1,358 $ 314,084 $ 7,151,048

For the year ended December 31, 2013

Deferred Tax Assets
Opening Balance
Exchange difference of
foreign operations
$ 81,656
Defined benefit obligation
61,700
Impairment loss on assets
56,426
Deferred estate marketing
expense
44,353
Unamortized
manufacturing costs
29,359
Investment loss recognized
under the equity method
-
Others

13,725
$ 286,696
Deferred Tax Liabilities Opening Balance
Land value increment tax
$ 6,420,797

Investment income
recognized under the
equity method
301,226
Exchange difference on the
translation of foreign
operations

-

$ 6,722,023

Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ -
$ (81,656)
$ -
2,034
(1,718)
62,016
-
-
56,426
(2,949)
-
41,404
12,994
-
42,353
29,031
-
29,031

(511
)

-

13,214
$ 41,122
$ (83,374
)
$ 244,444
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ (331)
$ -
$ 6,420,466
(54,690)
-
246,536

-

29,134

29,134
$ (55,021
)
$ 29,134
$ 6,669,136

d. Integrated income tax

Unappropriated earnings generated on and after January 1, 1998 Imputation credit accounts

	December 31	December 31
	2014 $ 3,202,974 $ 888,952	2013 $ 2,308,409 $ 610,073

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The creditable ratios for the distribution of the 2014 and 2013 earnings were 20.97% (expected ratio) and 20.48%, respectively.

e. Income tax assessments

Please refer to Note 18 for the tax returns that had been assessed by the tax authorities.

24. EARNINGS PER SHARE

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

Net Profit for This Year

Profit used in the computation of basic earnings per share Profit used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 3,068,346 $ 3,068,346	2013 $ 2,538,071 $ 2,538,071

Number of Shares

Unit: Thousand Shares

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of dilutive potential ordinary shares Bonus issue to employee Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 980,000 1,736 981,736	2013 980,000 1,438 981,438

If the Corporation offered to settle bonuses paid to employees in cash or shares, the Corporation assumed the entire amount of the bonus would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

25. ACQUISITION OF SUBSIDIARIES WITH OBTAINED CONTROL

Taiwan Yes Deep Ocean Water Co., Ltd. was acquired in order to continue the Corporation’s expansion in wholesale market of drinks, food and groceries. For further details about the acquisition of Taiwan Yes Deep Ocean Water Co., Ltd., please refer to Note 26 to the consolidated financial statements for the year ended December 31, 2014.

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Financial Summary

26. OPERATING LEASE AGREEMENTS

The Corporation as Lessor

The future minimum lease payments of non-cancellable operating lease were as follows (not include the royalty the Corporation received for the land use right):

Not later than 1 year Later than 1 year and not later than 5 years later than 5 years		December 31	December 31
		2014 $ 385,486 1,341,169 8,484,748 $ 10,211,403	2013 $ 342,730 1,217,206 8,560,307 $ 10,120,243

27. CAPITAL MANAGEMENT

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

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

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

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

28. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value

The Corporation’s management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values or their fair values cannot be reliably measured.

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2) Fair value measurements recognized in the parent company only balance sheets

a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014

Available-for-sale financial assets Domestic quoted stocks December 31, 2013 Available-for-sale financial assets Domestic quoted stocks Mutual funds	Level 1 $ 106,285 Level 1 $ 125,150 351,614 $ 476,764	Level 2 $ - Level 2 $ - - $ -	Level 3 $ - Level 3 $ - - $ -	Total $ 106,285
				Total $ 125,150 351,614
				$ 476,764

There were no transfers between Levels 1 and 2 in the current and prior periods.

b. Categories of financial instruments

Financial assets Loans and receivables (1) Available-for-sale financial assets (2) Financial liabilities Amortized cost (3)	December 31
	2014 2013 $ 6,005,609 $ 3,762,077 664,741 1,099,755 4,815,354 1,088,518

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Financial Summary

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, and trade and other receivables.
2) The balances included the carrying amount of available-for-sale financial assets measured at cost.
3) The balances included financial liabilities measured at amortized cost, which comprised short-term loans; long-term loans - current portion; and note, trade and other payables.
c. Financial risk management objectives and policies

The Corporation’s Corporate Treasury function is responsible for the preparation of financial plans, capital allocation and risk management, and coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Corporation through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (mainly including currency risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

The Corporation’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

a) Foreign currency risk

The Corporation had foreign currency sales and purchases, which exposed the Corporation to foreign currency risk.

The carrying amounts of the Corporation’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Assets USD Liabilities USD Sensitivity analysis	December 31
	2014 2013 $ 14,255 $ 16,855 5,176 11,458

The Corporation was mainly exposed to USD.

The following are the details of the Corporation’s sensitivity to a 10% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of

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the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. For the years ended December 31, 2014 and 2013, for a 10% strengthening weakening of New Taiwan dollars against U.S. dollars, there would be an decrease/increase of $28,735 thousand and $16,074 thousand on pre-tax profit, respectively. The effect of exchange rate changes was mainly attributable to the exposure outstanding on USD receivables and payables, which were not hedged at the end of the reporting period.

b) Interest rate risk

The Corporation was exposed to interest rate risk because entities in the Corporation borrowed funds at both fixed and floating interest rates. The risk is managed by the Corporation by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts and forward interest rate contracts.

The carrying amount of the Corporation’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2014 2013 $ 195,534 $ - 1,700,000 - $ 448,083 $ 1,029,692 930,000 -

Sensitivity analysis

The sensitivity analyses below were determined based on the Corporation’s exposure to interest rates for both derivatives and nonderivative instruments at the end of the reporting period.

If interest rates had been 1 basis point higher/lower and all other variables were held constant, the Corporation’s pre-tax profit for the years ended December 31, 2014 and 2013 would decrease/increase by $4,819 thousand and $10,297 thousand.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Corporation. As at the end of the reporting period, the Corporation’s maximum exposure to credit risk which will cause a financial loss to the Corporation due to failure of counterparties to discharge an obligation and financial guarantees provided by the Corporation could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets; and the amount of contingent liabilities in relation to financial guarantee issued by the Corporation.

223

Financial Summary

The Corporation adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Corporation only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Corporation uses other publicly available financial information and its own trading records to rate its major customers. The Corporation’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

On some properties sold in installments, the Corporation had the secondary priority mortgage rights to ensure the protection of the Corporation’s interests.

3) Liquidity risk

The Corporation manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Corporation’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Liquidity and interest risk rate tables

The following table details the Corporation’s remaining contractual maturity for its nonderivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Corporation can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other nonderivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

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December 31, 2014

Nonderivative financial liabilities Noninterest bearing Fixed interest rate liabilities Variable interest rate liabilities December 31, 2013 Nonderivative financial liabilities Noninterest bearing	On Demand or Less than 1 Month $ 265,316 1,300,857 - $ 1,566,173 On Demand or Less than 1 Month $ 65,766	1-3 Months $ 521,604 400,725 72,897 $ 995,226 1-3 Months $ 554,815	3 Months to 1 Year $ 1,398,434 - 76,402 $ 1,474,836 3 Months to 1 Year $ 467,937	1-5 Years $ - - 813,991	1-5 Years $ - - 813,991
				$ 813,991
					1-5 Years $ -

The amounts included above for floating interest rate instruments for both nonderivative financial assets and liabilities was subject to change if changes in floating interest rates differ from those estimates of interest rates determined at the end of the reporting period.

Financing facilities

Unsecured bank facility Amount used Amount unused Secured bank facility Amount used Amount unused Unsecured bank overdraft facility Amount used Amount unused		December 31	December 31
		2014 $ 1,700,000 13,951,650 $ 15,651,650 $ 930,000 - $ 930,000 $ - 650,000 $ 650,000	2013 $ - 13,379,100 $ 13,379,100 $ - 9,552,000 $ 9,552,000 $ - 700,000 $ 700,000

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Financial Summary

29. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Corporation and other related parties are disclosed below.

a. Operating transactions

Associates	Purchase of Goods	Purchase of Goods	Purchase of Goods
	For the Year Ended December 31
		2014 $ 2,680,906	2013 $ 2,419,629

The related-party transactions were conducted under normal terms.

Rental Revenue	Rental Revenue	Rental Revenue
For the Year Ended December 31
	2014 2013 $ 16,690 $ - Other Receivables
	December 31
	2014 $ 144,641	2013 $ -

TR Electronic Chemical Co., Ltd. (TR), an associates of subsidiaries of the Corporation, had obtained a financing of US$10,000 thousand from a bank, and the Corporation and Jing, a shareholder of TR, guaranteed the repayment of this financing. The loan maturity date was March 27, 2014, but TR failed to repay the loan on time. The bank then required the guarantors to repay a part of the loans. On June 23, 2014, the Corporation’s board decided to pay the bank $144,641 thousand (US$4,570 thousand) on TR’s behalf.

Associates		Accounts Payable	Accounts Payable
		December 31
		2014 $ 163,760	2013 $ 300,028

b. Property, plant and equipment acquired

Subsidiaries	Price	Price	Price
	For the Year Ended December 31
		2014 $ -	2013 $ 171,314

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c. Property, plant and equipment disposal

Subsidiaries		For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2014			2013
		Price $ 29,611	Gain on Disposal $ 14,048		Price $ 2,759	Gain on Disposal $ 426

d. Compensation of key management personnel

The compensation to directors and other key management personnel were as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 69,807 8,126 $ 77,933	2013 $ 75,748 3,444 $ 79,192

30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collaterals to a financial institution for the rental for the Kaohsiung Harbor and for the subsidiaries purchase of materials.

Pledge deposits Property, plant and equipment		December	31
	2014 $ 23,800 See Note 16		2013 $ 28,600 -

31. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. As of December 31, 2014, the Corporation had unused letters of credits of US$8,949 thousand.
b. As of December 31, 2014, the Corporation had guarantee notes payable for its debt of $18,606,088 thousand, which was not reflected in the financial statements.
c. Huaku Development Co., Ltd. (“Huaku”) filed an appeal with the Taipei District Civil Court (the “Court”) for the Corporation to pay a co-building trade business tax of $38,370 thousand. The Court ruled that the Corporation should make this payment. The Corporation brought this case to a higher court; as of December 31, 2014, this case was still pending. The Corporation accrued a possible loss of $38,370 thousand for this case in 2012 financial statements.
d. On June 25, 2013, the shareholders resolved that, in order to enhance the long-term business relationship with Saudi Arabian Basic Industries Corporation as well as to maintain the relationship with the Kingdom of Saudi Arabia (“Saudi Arabia”), the Corporation shall donate

227

Financial Summary

its share of Al-Jubail’s profit, with US$50,000 thousand as the donation limit, to the government or organizations in Saudi Arabia.

In October 2013, the Corporation and Al-Jubail signed a Memorandum of Understanding (MOU); the main contents of the MOU are summarized as follows:

1) The Corporation agreed to donate US$42,000 thousand by way of six equal semiannual installments of US$7,000 thousand to the government or a nonprofit organization in Saudi Arabia. The first donation should be made by October 31, 2013.
2) The donation will be funded from the dividends of Al-Jubail that have been declared and are to be distributed to the Corporation. Al-Jubail will keep the above funds in a separate account in its name in a local bank. As administrator of the donations, Al-Jubail should designate the recipient of the donation.

In October 2013, the Corporation donated $209,440 thousand (US$7,000 thousand), part of its share of Al-Jubail’s profit, as the first donation installment. The Corporation donated $208,635 (US$7,000 thousand) in June 2014 and $212,940 thousand (US$7,000) in December 2014 as the second and third donation installments, respectively.

e. On April 29, 2014, The Corporation’s board of directors approved the issuance by Taifer (Cayman) International Group Co., Ltd. (“Taifer”) of a letter endorsing the request of TR Electronic Chemical (Kunshan) Ltd. (TR) for a bank financing of US$3,000 thousand; the main contents of the letter are summarized as follows:
1) Taifer will inform the bank if its equity interest in TR becomes less than 51%.
2) Taifer will maintain its management of and control over TR.
3) Taifer will provide TR with appropriate resources (including but not limited to financial, employee and technology support) to help TR carry out its obligations.
4) If TR significantly breaches the contract, Taifer will take lawful measures to assist TR, or monitor TR, in fully repaying its loan or in providing other collaterals to the bank.

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

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

December 31, 2014

December 31, 2014
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	14,255	31.65	$ 451,171
Financial liabilities
Monetary items
USD		5,176	31.65	163,820

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December 31, 2013

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	16,855	29.81	$ 502,448
Financial liabilities
Monetary items
USD		11,458	29.81	341,563

33. SEPARATELY DISCLOSED ITEMS

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Corporation and its investees:
1) Financings provided: None
2) Endorsements/guarantees provided: Table 1
3) Marketable securities held (excluding investment in subsidiaries, associates and jointly controlled entities): Table 2
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None
7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 3
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4
9) Derivative transactions of investees over which the Corporation has a controlling interest: None
10) Information of investees: Table 5

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Financial Summary

b. Investments in Mainland China:
1) Information on any investee company in Mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the Mainland China area. (Table 6)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: None
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
- f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services.

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Endorsement / Guarantee Given on Behalf of Companies in Mainland China	Endorsement / Guarantee Given on Behalf of Companies in Mainland China	No No No
Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent		No No No
Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries		No Yes Yes
Maximum Collateral/ Guarantee Amounts Allowable (Note 2)		$ 26,196,308 26,196,308 26,196,308
Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement		0.31% 0.04% 0.01%
Value of Collaterals Property, Plant, or Equipment		$ - - -
Ending Used Balance		$ 162,438 23,500 -
Ending Balance		$ 162,438 (US$ 5,430 thousand) 23,500 50,000
Maximum Balance for the Period		$ 298,890 (US$ 10,000 thousand) 30,000 50,000
Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1)		$ 162,482 (Note 3) 26,154 63,193
Endorsee/Guarantee	Nature of Relationship	Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership Subsidiary Subsidiary
	Name	TR Electronic Chemical Co., Ltd. Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd.
	Endorser/ Guarantor	Taiwan Fertilizer Co., Ltd. (the “Corporation”)
	No.	0

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Financial Summary

	Note	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2
December 31, 2014	Market Value or Net Asset Value	$ 12,124 129,282 144,849 203,006 45,146 923,897 32,502 13,537 106,285
	Percentage of Ownership	6.71 9.76 10.00 18.50 19.75 2.00 10.42 16.67 0.40
	Carrying Value	$ 15,000 120,000 100,000 200,000 42,000 52,800 20,989 7,667 106,285
	Shares or Units (Thousands)	1,500 12,000 10,000 20,000 4,200 12,568 2,855 741 9,202
	Financial Statement Account	Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Available-for-sale financial assets - noncurrent
Relationship with the Holding Company		- - - - - - - - -
Marketable Securities Type/Name and Issuer		Common stocks Ding-Tang Top Taiwan V Venture Capital Co., Ltd. Eminent Venture Capital Corporation Eminent II VC Corp TSCBioVentures Capital Co. Taiwan Stock Exchange Corporation Visgeneer Inc. TaiAn Technologies Corporation China Petrochemical Development Corporation
Holding Company Name		Taiwan Fertilizer Co., Ltd.

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Note	Note	-
Notes/Accounts Receivable (Payable)	% to Total	43
	Ending Balance	$ (163,760)
Abnormal Transaction	Payment Terms	30 days
	Unit Price	Determined under the considerations of international market price and production cost
Transaction Details	Payment Terms	Same as those for third parties
	% to Total	18
	Amount	$ 2,680,906
	Purchase (Sale)	Purchase
Nature of Relationship		Equity-method investee
Related Party		AI-Jabail Fertilizer Company
Company Name		Taiwan Fertilizer Co., Ltd.

233

Financial Summary

Allowance for Impairment Loss	Allowance for Impairment Loss	$ -
Amounts	Received in Subsequent Period	$ -
Overdue	Actions Taken	-
	Amount	$ -
	Turnover Rate	-
	Ending Balance	Other receivable $ 144,641
	Relationship	Joint controlled entity
	Related Party	TR Electronic Chemical Co., Ltd.
	Company Name	Taiwan Fertilizer Co., Ltd.

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Note	Note	Associate Subsidiary Subsidiary Associate Subsidiary Subsidiary Jointly controlled entity Subsidiary Subsidiary Subsidiary
Investment (Loss) Income		$ 1,777,659 1,083 (29,845) (1,490) (99,401) 115 (99,401) (13,471) 6,500 6,533
Net (Loss) Income of the Investee		$ 3,979,208 1,083 2,015 (6,646) (99,401) 115 (194,905) (13,471) 6,500 6,533
Balance as of December 31, 2014	Carrying Value	$ 10,197,486 70,418 957,813 4,151 68,893 70,695 68,893 (103,530) 46,619 46,354
	Percentage of Ownership	50.00 100.00 100.00 22.42 100.00 100.00 51.00 100.00 100.00 100.00
	Shares/Units (Thousands)	6,715 units 5,500 95,000 4,167 10,966 units 10,000 - 24,000 - -
Investment Amount	December 31, 2013	$ 3,050,000 101,300 974,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	December 31, 2014	$ 3,050,000 126,300 1,224,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	Main Businesses and Products	Manufacture of urea, 2-EH (2-ethyl hexanol), and DOP (dioctyl phthalate) International trade; wholesale of fertilizer, tobacco, liquor, beverage, forage, machinery, electrical equipment, etc.; development, operation and management of residential buildings and factory buildings; special zone development; investment in and construction of public works; development of new towns and districts; agent services on regional district requisition; land adjustment; and real estate rental or leasing a. Wholesale of drinks, food and grocery and other articles for daily use; tobacco and liquor; glass and pottery; hygiene products; fertilizers and other chemical products; and cosmetics; and b. International trade Manufacture of biopesticides, microbial fertilizers, animal feed additives and probiotics Investment and holding Wholesale and retail of products for organic agriculture Investment and holding Wholesale of Nonalcoholic Beverages and Cosmetics Investment and holding Real estate rental and leasing
	Location	Kingdom of Saudi Arabia Taiwan Taiwan Taiwan Cayman Islands Taiwan Cayman Islands Taiwan Samoa Mongolia
	Investee	Al-Jubail Fertilizer Company Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd. Bion Tech Inc. Taifer (Cayman) International Group Co., Ltd. Taifer Biotech Co., Ltd. TR Electronic Chemical Co., Ltd. Hasbo Biotech Co., Ltd. Taifer International (Samoa) Group Co., Ltd. Taifer Chemical International Co., Ltd.
	Investor	Taiwan Fertilizer Co., Ltd. Taifer (Cayman) International Group Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer Chemicals International Inc. Taifer International (Samoa) Group Co., Ltd.

235

Financial Summary

Accumulated Inward Remittance of Earnings as of December 31, 2014	Accumulated Inward Remittance of Earnings as of December 31, 2014	US$ -	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$ 347,042 (US$ 10,965) (Note 3) NT$ 347,042 (US$ 10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$ 347,042 (US$ 10,965) (Note 3) NT$ 347,042 (US$ 10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.
Carrying Value as of December 31, 2014		US$ 2,177 (NT$ 68,893) (Note 3)
Investment Gain (Loss)		US$ (3,280) (NT$ (99,401)) (Note 4)
% Ownership of Direct or Indirect Investment		51
Net Income (Loss) of the Investment		US$ (6,431) (NT$ (194,905)) (Note 3)
Accumulated Outflow of Investment from Taiwan as of December 31, 2014		US$ 10,965 (NT$ 347,042) (Note 3)
			Limit on Investment	NT$31,435,569 (Note 2)
Investment Flows	Inflow	US$ -
	Outflow	US$ -
Accumulated Outflow of Investment from Taiwan as of January 1, 2014		US$ 10,965 (NT$ 347,042) (Note 3)
			Investment Amounts Authorized by Investment Commission, MOEA	NT$ 347,042 (US$ 10,965) (Note 3)
Investment Type		The investor companies were incorporated in Mainland China by the Company which was incorporated in the area other than Taiwan and Mainland China in order to invest in Mainland China.
Total Amount of Paid-in Capital		US$ 21,500 (NT$ 680,475) (Note 3)
			Accumulated Investment in Mainland China as of December 31, 2014	NT$ 347,042 (US$ 10,965) (Note 3)
Main Businesses and Products		Manufacture of nitric acid, hydrofluoric acid, ammonia, phosphoric acid, oxalic acid, ammonia fluoride and LCD and IC Stripper
Investee Company Name		TR Electronic Chemical (Kunshan) Ltd.

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VI. Matters on difficulty in financial turnover in the Company and its affiliated entities for the current year and up to the date of the publication of the annual report: None

237

Matters on Financial Standing and Operation Result Review and Analysis and Risks

Part Seven: Matters on Financial Standing and Operation Result Review and Analysis and Risks

I. Financial Standing

Unit: NT$K

			Unit: NT$K	Unit: NT$K
Year Items	2014	2013	Difference
			Amount	Amount
Current assets	10,533,836	8,300,217	2,233,619	26.91
Real estate, plant and equipment	33,573,437	38,410,112	(4,836,675)	(12.59)
Intangible assets	484,830	496,880	(12,050)	(2.43)
Other assets	25,904,834	19,321,391	6,583,443	34.07
Total assets	70,496,937	66,528,600	3,968,337	5.96
Current liabilities	5,881,372	3,470,815	2,410,557	69.45
Non-current liabilities	12,222,950	12,283,413	(60,463)	(0.49)
Total liabilities	18,104,322	15,754,228	2,350,094	14.92
Share capital	9,800,000	9,800,000	0	0.00
Capital reserve	2,234,334	2,234,334	0	0.00
Retained earnings	39,927,485	38,820,842	1,106,643	2.85
Owners’ equity due to parent company	52,392,615	50,774,372	1,618,243	3.19
Remarks on the analysis of changes in percentages of increase and decrease: (with increase and decrease changes living up to more than 20%, and amounts of changes living up to NT$10,000K) 1. Current assets: mainly refer to increase in the property income receivable. 2. Other assets : mainly refer to increase due to adjustment of investment property category. 3. Current liabilities : mainly refer to increase in short-term loan, equipment payment and land-value increment tax.

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II. Operation Results

(I) Comparative analysis of operating results:

Unit: NT$K

				Unit: NT$K
Year Items	2014	2011	Increased (decreased) amount	Change percentage (%)
Total operating income Less: Sales return and discounts Net operating income Operating costs Operating gross profit Operating expenses Operating interest Non operating expenses and losses Net income before tax from departments continuing business operation Income tax expenses Net profit after tax from departments continuing business operation	17,540,443 (30,170) 17,510,273 14,597,642 2,912,631 1,252,681 1,659,950 1,187,303 2,847,253 (221,093) 3,068,346	16,077,687 (59,141) 16,018,546 13,771,349 2,247,197 1,459,025 788,172 1,843,570 2,631,742 93,671 2,538,071	1,462,756 (28,971 ) 1,491,727 826,293 665,434 (206,344) 871,778 (656,267) 215,511 (314,764) 530,275	9.10 (48.99) 9.31 6.00 29.61 (14.14) 110.61 (35.60) 8.19 (336.03) 20.89
Analysis of causes of change differences up to 20% or more: 1. Analysis of operating gross profits and benefit : increase of gross profit and interest mainly refers to increase in property incomes and decrease in operating expenditures. 2. Analysis of non-operating expenses and loss: decrease in non-operating income is mainly due to increase in donations and the revalued benefits and rights of the merged company. 3. Analysis of income tax expense (benefit) : generation of income tax expense (benefit) mainly refers to the income tax (benefit) recognized due to reconciliation of tax administrative remedy by Al-Jubail Fertilizer Company. 4.Analysis of net profit for this period : mainly refers to increase in net operating profit after tax which was caused by increase in property benefits for the current period.

239

Matters on Financial Standing and Operation Result Review and Analysis and Risks

(II) Table of analysis of changes in operating gross profits:

Unit: NT$K

		Unit: NT$K	Unit: NT$K	Unit: NT$K	Unit: NT$K
	Amount of changes in increase (decrees) in subsequent and later period	Causes for differences
		Selling price difference	Cost Difference	Selling price difference	Others
Operating gross profit	665,434	(1,088,281)	946,256	16,928	790,531
Remarks	Increase of operating gross, a total of 665 million, mainly caused by increase of propertyincomes and bydecrease of fertilizerprice.

III. Cash flows

Table of Review of Cash Flow and Analysis

Table of Review of Cash Flow and Analysis	Table of Review of Cash Flow and Analysis	Table of Review of Cash Flow and Analysis	Table of Review of Cash Flow and Analysis	Table of Review of Cash Flow and Analysis
Unit: NT$K
Opening cash balance	Net cash flow for the year from operating activities	Annual cash flow out	Remaining (shortage) amount of cash	Remedial actions for cashshortage
				Financing plan
1,187,396	(604,256)	27,420	610,560	－
1. Analysis of changes in cash flow for the current year: （1）Net flow out due to operating activities: mainly caused by the advance payment for purchasing materialcash dividends by the invested companies. （2）Net flow out due to investment activities: mainly caused by the increase in purchase of fixed assets by Tai Chung Plant. （3）Net flow in due to financing activities: mainly caused by the short- and long-term lending. 2. Remedial actions for cash shortage and analysis of liquidity: none. 3. Analysis of cash liquidity for the next year: Unit:NT$K Opening cash balance Net cash flow for the year from operating activities Annual cash flow out Remaining (shortage) amount of cash Remedial actions for cashshortage Financing plan 610,560 4,213,161 (3,335,592) 1,488,129 －

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IV. Effects of Significant Capital Expenses on Financial Affairs over the Recent Years

(I) Utilization of significant capital expenses and sources of capital of the Company for the recent years:

Unit: NT$K

					Unit:NT$K
Plan project	Actual or expected capital sources	Actual or expected completiondate	Totalamount ofcapital required	Totalactual payment up to 2011	Estimated utilization for 2014
Construction plan of Taichung Complex	Self-owned capital and bank financing	6/2013~6/2015	12,432,732	10,871,364	533,145

(II) Estimated possible income: estimated production, sales, values and gross profits to be increased

				Unit: NT$K	Unit: NT$K
Year	Project	Production	Sales volume	Sales value	Gross profit
2014-2015	Development plan of the R5 Residence of Nangang Economic and TradingPark	1. 12,795 pings overall sales area 2. 312 parking spots	10,260.44 pings in area and 250 parking spots for sale by the Company.	9,764,730	5,081,018
2013-2015	Construction plan of Taichung Plant		The annual sales of fertilizer and chemicals may be up to 840,000 t after whole-plant operation.	15.89 billion annual revenue	7.6% ROI

V. An Overview of Conversion into Capital Investment

(I) Investment policies, major causes of profits or losses and improvement plans for the recent years:
Reinvestment policy

Coordinating with the enterprise development’s focus on “fertilizer chemical engineering”, “real estate exploitation” and “health undertaking” of the Company and adhere to the operation principle of base stabilization, energy inspiration, innovation and persistence, we will improve our operation quality step by step to present our global operation mode of basing on Taiwan and exploring the world. Taking the international view as the platform of reinvestment policy, for fertilizer industry, we hope to exploit the profitable market of compound fertilizer produced overseas and expand the fertilizer market of such emerging countries as ASEAN, to open up the new stage for fertilizer industry, based on the liquid ammonia and urea of Al-Jubail Fertilizer Company; for health undertaking, we will start from the production of portable water, project sightseeing plant, operate 662 canteen, and develop and research productions on health care and biotech, based on deep ocean water. In future, we will also develop leisure industry

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such as the Partview Hotel, to create Hualien to be the flagship of the health undertaking of the Company.

2. Major causes of profits or losses and improvement plans at re-investment companies

Re-investment company	Major causes of profits or deficits for 2014	Improvement plan
Al-Jubail Fertilizer Company	International prices of products are steady and the plant operation is smooth and the Company continues to makeprofits.	N/A
Taiwan Deep Ocean Water Co., Ltd	1.The operation revenue cannot make up variable cost, as the activation of deep water and salt is relatively low and the fixed cost allocation such as depreciation is relatively high. 2.There is no deep water standard in foreign countries, so marketing is difficult; it takes time to certify the core raw material “deep seawater mineral substance concentrated liquid” making export business unable to go any further. 3.The operation and the financial condition of the Company gets better because its operating revenue in 2014 was NT$172 million, at an increase of 16% than that in 2013, while its net loss before tax tremendously decreased to NT$1,098 million.	1.The management team will gradually adapt the product portfolio strategy and cost structure. 2.Unitl now, China market is always the main target of the Company. From 2015, the sales department of the Company will gradually explore the markets in Southeast Asia, and the sports nutrition products will also be orientated to highlight the advantage of condensed liquid. 3. The operating revenue in 2015 will be in a growing condition, which will speed up the achievement of break-even.
TR ELECTRONIC CHEMICAL CO., LTD.	1. The operation revenue cannot make up variable cost, as the activation of electronic-grade ammonia water is relatively low and the fixed cost allocation such as depreciation is relatively high. 2. Although the electronic-grade nitric acid has reached the grade of semiconductor, most of the sales customers are solar energy manufacturers with relatively low sales gross profit. 3. As 2012 to 2015 is the foundation period of TR ELECTRONIC CHEMICAL CO., LTD., the percentage of personnel management cost in the overall expenses is relatively high.	1. The shareholders of TR ELECTRONIC CHEMICAL CO., LTD. will seek strategic investors through positively external palaver and inject operation capital of the Company through increasing capital with cash. 2. TR ELECTRONIC CHEMICAL CO., LTD. will develop new customers continuously, select sales customers and enhance product gross profit. 3. TR ELECTRONIC CHEMICAL CO., LTD. has reduced the salary of chairman and general manager twice respectively in April and November in 2014, with a pay total reduction range up to 34%. Besides, the salary of other supervisors has been reduced by10%〜25%.

(II) Description of types of investment plans and industries to be evaluated in the next year will be listed as follows by items:

Chemical engineering industry: The main purpose of the investment plan for the three-in-one factory of Miaoli Plant is to promote the whole efficiency of the Company. After adding the cogeneration system, the integration is changed from the phase 3 three-in-one factory of Taichung Plant to the three-in-one factory of Miaoli Plant (sulfuric acid factory, sulfanilic acid factory and potassium sulfate factory), which made the Company improve production capacity under the increasing demand of sulfanilic acid market due to the rapid growth of shale gas development; developed new products (potassium sulfate and ammonium chloride) can be used for the manufacture of sulfer-based compound fertilizer or for export sales by making full use of the steam during production; promote the technology of acid recovery and recycle, to lay the foundation for the chemical engineering and fertilizer industry of the Company.

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Fertilizer industry: As the tillable area of our country is limited, the fertilizer industry tends towards to mature saturation. Our own designed products, technologies, processes and equipment are continuously expanding to overseas market. We are looking forward to improving the production capacity and creating revenue by extending business territory and establishing new base for fertilizer operation.

Burma is located in the core region of Southeast Asia, and its fundamental of economic development is agriculture. There are 85% of the employed population in the country are engaged in farming, with arable land covering 3.5 million hectares. The Government of Burma also stresses agricultural development very much, so they have worked out many preferential policies to encourage foreign capital investment for agricultural development. At present, Burma maintains relatively stable political situation. The Government of Burma welcomes foreign investment, and supports investment plans with the utilization of resources as the main business and develops export-oriented labor intensive manufacturing industry.

As Burma continues to import chemical fertilizer each year to meet its need in agriculture, at present, the Company plans to establish a compound fertilizer factory with annual output of 150,000t locally and improve production capacity according to its market demand. The Company possesses the technology and experiences on fertilizer production for more than 60 years. With excellent quality and outstanding reputation, the Company hope to create the win-win opportunity for both Taiwan and ASEAN and successfully rank among the emerging market of ASEAN, to continuously create profitable achievements for the Company based on this plan.

Health leisure industry: in order to comply with the growth trend of sightseeing tourists and the awareness of citizens on leisure and health maintenance, and promote the asset value of company land, we will develop the Deep Ocean Water Park of Taiwan Fertilizer Co., Ltd. in Hualien plant area, to be the flagship of sightseeing and leisure of Taiwan Fertilizer, combined with the conception of cultural and creative industry and the product competitiveness of deep ocean water. In addition, we will also invest and establish sightseeing hotel at the Partview area, and hope to create more profit on undertaking and promote the land efficiency around Hualien downtown based on this plan.

VI. Risk Management Organization

Risk management organization chart

The Company has strengthened the management of corporate risks in recent years in accordance with the development of the latest internal audits as well as requirements in the standards, including risk detection, evaluation, reporting and treatment, which are very prudent but stringent. The control over risks by the Company is divided into three levels (mechanisms): organizers are “the first mechanism”, who must be responsible for initial detection, evaluation and control and prevention of initial risks. The second mechanism is the President (or Vice President), especially the approval or review or appraisal committee. In addition to the responsibility for feasibility evaluation, they also include evaluation of different risks. The third mechanism is the examination by Legal Affairs and Auditing Office and deliberation by the Board of Directors and the Board of Supervisors. In the Company, for the time being, there has been controller for risks for the purpose of control over risks by all staff members and workers in an overall manner. Level by level precaution method is used as usual other than controlled by one person. This is the most actual risk control method as shown in the table below.

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Significant risk assessment matters	Direct risk control work unit (business organizationunit) (as the firstmechanism)	Risk deliberationand control (President /Vice Presidents) (as the secondmechanism)	Legal Affairs, Auditing Officeand Board of Directorsand Board of Supervisors (asthethird mechanism)
I. Risks in interest rates, exchange rates and finance II. High risk and high leverage investment, capital loans to others, derivative instrument trading, financing investment and other risks	Financial Section Financial Section	Financing and investment deliberation group (Members: General Affairs, Financial Section, Management VP, designators)	Board of Directors and Board of Supervisors: (Risk evaluation and control decision making and final control) Auditing Office: (Risk review, evaluation, supervision, improvement follow-up and reporting)
III. Research and development plans IV. Changes in polices and laws V. Changes in technologies and industry VI. Changes in corporate images VII. Results from investment, re- investment and acquisition	R&D Section Business Plan Section, Legal Affairs R&D Section, Business Plan Section Executive Section, Board of Directors Marketing Section, Business Plan Section Investment Section, Land Development Section, Property Management Section	Research and development and Investment Development Committee (Members: General Affairs, Business Plan Section, Investment Development VP, Financial Section, Organizer and work units concerned, Auditing Office)
Significant risk assessment matters	Direct risk control work unit (business organizationunit) (as the firstmechanism)	Risk deliberationand control (President /Vice Presidents) (as the secondmechanism)	Legal Affairs, Auditing Officeand Board of Directorsand Board of Supervisors (asthethird mechanism)
VIII. Expansion of plants or production IX. Centralizedpurchase or sale	Factory Affair Section Trading Section Marketing Section,Business Section	Production and marketing meeting
X. Transfer of directors’, supervisors’ and majority shareholders’equity XI. Changes in operation rights	Share Affairs, Board of Directors Share Affairs, Board of Directors	Business and Legal Conference (members: General Affairs, Share Affairs, Legal Affairs, Management VP, Business Plan Section, Auditing Office)
XII. Litigation and non-litigation matters XIII. Other operatingmatters	Legal Affairs Business Plan Section
XIV. Personnel’s conduct, morality and compliance	Supervisors at different levels and Executive Section	Personnel Review Committee
XV. SOP and compliance with laws and regulations	Supervisors at different levels	Business Plan Section, AuditingOffice
XVI. Deliberation management by the Board of Directors	Board of Directors	Legal Affairs, Auditing Office
XVII. Significant information management and insider trading prevention	Directors, supervisors, managers and informants	Systems on spokesmen Nondisclosure regulations

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VII. Risk Matters and Evaluation

(I) Effects of Changes in Interest Rates and Exchange Rates as well as Inflation on the Company’s Profits and Losses and Future Solutions
Changes in interest rates (risk management unit: Financial Section)

As of March 31 of 2013 and 2014, the net interest expenditure of the Company was NT$46,195K and 3,445K respectively accounting for 0.26% and 0.08% respective in the ratio of net operating income, but they would not have substantial impacts on the operation and profit making of the Company. In the future, the Company will cater for the changes in the trend of interest rates to actively seek higher income and lower costs so as to minimize risks in interest rates.

Changes in exchange rates (risks controlled by: Financial Section)

As of March 31 of 2014 and 2015, the net exchange loss or profit amount of the Company was NT$23,283K and 13,541K respectively accounting for net operating income ratio as 0.13% and 0.35%, but there would be no substantial impact on operation and profit making of the Company. In the future, the Company will cater for the changes in trends of exchange rates to actively work out polices for risk avoidance so as to reduce risks in exchange.

(II) Policies on High Risk and High Leverage Investments, Capital Loan to Others, Endorsement Guarantee and Derivative Instrument Trading, Major Causes for Profit Making or Deficits and Future Solutions:
High risk and high leverage investment, capital loan to others and trading of derivative instruments: N/A, and the Company has never been engaged in such business.
Endorsed guarantee: As of March 31 of 2015, the balance of endorsed guarantee is NT$140,126K.
(III) Future Research and Development Plans and Estimated Investment in Research and Development
1.The research and development in the next two years will be focused on (1) research and development of biotech fertilizer and biological pesticide, (2) research and development of biotech organic fertilizer, (3) research and development of microbial agents for aquaculture, (4) technical application research and development of fish scale extracted collagen peptide, (5) deep sea water application research and development, (6) development of purification technologies for electronic chemical products, and (7) development of refined fertilizer. In order to achieve a sustainable growth, the Company will continue to strengthen its research and development. It is predicted that the annual total capital investment will be about NT$50 or 60 million, with the summary of research and development plans for the next two years as follows:

(1)Biotech fertilizer, biological pesticides research and development:

By means of cooperation with outside industries and transfer technologies, and in combination of the core technologies of the Company in internal mirrobe fermentation technologies, it is required to establish the fementation batch production technologies in

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antagonistic bacteria beneficial to crops, to establish good crop beneficial antagonistic fermentation production technologies, organic and fertilizer development materials materials, both efficiency and preventing plant diseases and insect pests functioning as "anti-pest biotech fertilizer" of the Company’s biotech fertilizer products, and playing a combination of maximum benefits of and optimal matching fertilization model, expected future annual 1- 2 new products biological pesticides research and listed; the development will be the industry cooperation plans, and investment cooperation development, is expected within three years to complete the products development. The other existing "vitality biotech nutrition agent products" will be continued to deep, sophisticated improved microbes metabolites of output, products values and connotation upgrade. The research and development expense in 2014-2015 biotech fertilizer, biological pesticides is expected to invest about NT$5,000,000.

(2) Research and development of biotech organic fertilizer :

Due to the long-term intensive cultivation for the farmland of Taiwan, farmers habitually use cheap and convenient chemical fertilizer. With the change of agricultural structure and more and more attention paid to environmental protection, Taiwan Fertilizer Co. Ltd. plans to produce organic fertilizer and build the image of Nongyou organic fertilizer to enter both domestic and overseas market of organic fertilizer, combined with the advantaged material supply system and fermentation technology. To improve the quality of organic fertilizer products and acquire effective certification, the formula of process R&D will be continuously improved; various beneficial microorganisms will be introduced and advanced fermentation process will be guided into. It is estimated that about NT$ 15 million will be put into in two years for R & D.

(3) Research and development of microbial agents for aquaculture:

By cooperating with aquaculture companies, we conduct cultivation tests on various aquatic species in different cultivation areas and develop the preparation formulas and application modes of microorganisms applied to different water colors. For a short term, the patent bacterial strain of liquefied Bacillus amyloliquefaciens (Ba-BPD1) technically transformed as well as the special resource of deep ocean water “Kuangbao” will be used for developing new preparation formula for aquaculture and conducting cultivation expanding test. Also, granulous products will be developed specific to the inconvenience of existing liquid products on storage, transportation and utilization. For a medium and long term, “Kuangbao” will be combined with to enter the field of nutrient for aquatic products and artificial seawater. It is estimated that 1-2 new product(s) will be developed and launch and about NT$ 4 million will be put into in two years for R & D.

(4)Research and development of the application of fish scale extracted collagen peptide technologies:

Based on the existing hydrolysis equipment, new technologies will be introduced to improve the clean method of scales and hydrolysis process; and establish the effects of products for health care and skin care, under the condition of not changing equipment. Through improving hydrolysis technology, we hope to get better quality of collagen peptide and re0duce production cost. We will be engaged in this R&D project and it is estimated NT$ 5 million will be put into in two years.

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(5)Research and development of utilization of low temperatures of deep sea water and acquatic culture:

In order to give full play to the advantages of the DSW cultivation used by us, the cultivation objects will be focused on fish and shrimp, as well as large-scale algae. For a short term, the cultivation of fish and shrimp will be based on the core cultivation technology to conduct the parent fish captivity and intermediate breeding cultivation of fish species with high economic value. The cultivation objects will be mainly dominated by white shrimps, batfishes, and Japanese sea basses, and the SOP of cultivation management technology and management system for seafood safety will be built. For a medium and long term, the cultivation technology team for all-round species will be built by continuously expanding cultivation scale and introducing new cultivation species such as shellfishes and mollusks. In addition, to pursue the value-added application of deep ocean water, its cleanliness and character of rich nutrients will be serial-connected and applied to large-scale algae cultivation to present the specific diversified utilization of the cold energy of deep ocean water further. The common edible algae in Taiwan such as Hongjiangli, sarcodia ceylanica and ulva are selected for the short term. Besides researching and developing the sexual reproduction technology of algae by deep tillage, complete production module of cultivation and production system of preliminary processing materials will also be built to develop derivatives with algae as raw material, add feature to the park and provide safety and healthy food materials. For a medium and long term, new algal species will be continuously introduced to enrich cultivation species. We will also cooperate with academic research field to extract and separate effective constituents of algae, and expand and establish indoor algae farm to produce medical-grade algae for raw material, as the indicator of productive technology management. It is estimated that about NT$ 13 million will be put into in two years for R&D.

(6) Development of purification technologies for electronic chemical products:

To meet the demand of electronic-grade chemicals with the development of high-tech industry, for a short term, we plan to improve the maximum utilization of electronic-grade chemical equipment of Miaoli Plant of the factory and recycle electronic-grade ammonium hydroxide effluent for depuration and reuse. For a long term, we will promote industrial-grade products to electronic-grade products by introducing new technologies to the existing acid-base chemical products of the Company, and evaluate the feasibilities of various volume production technologies for electrochemical products. It is estimated that about NT$ 37 million will be put into in two years for this project.

(7) Development of refined fertilizer:

To meet the development of refined agriculture and demand of specific crops with high economic value, for a short term, we will evaluate and research the feasibilities of the manufacturing technologies for high-effect compound fertilizer formula to promote the utilization of fertilizer nitrogen, confirm product efficiency, and develop new-type instant compound fertilizer products and high-effect compound fertilizer. For a medium and long term, we will promote new-type fertilizer, build technology application and conduct volume production. The evaluation will be made through cooperation with academic research to conduct formula research & test and develop new fertilizer products. It is estimated that about NT$ 6 million will be put into in two years.

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2.Leading factors that may affect future success in research and development:
(1)Advanced technologies
(2)Integration of internal resources
(3)Commercial marketing ability and market feedback mechanism
(IV) Effects of Changes in Significant Domestic and Foreign Policies and Laws on the Company’s Financial Affairs and Solutions thereto
1.In order to take care of farmers and to reduce burden of farmers by fertilizer costs, the Government issued subsidy polices on fertilizer, and moreover, Council of Agriculture set up “Fertilizer Price Review Group” to review and deliberate the prices of domestic fertilizer on a monthly basis according to prices of international fertilizer raw materials to standardize ex-work prices of fertilizer manufacturers and suppliers, thus having broken away the long-frozen situation unable to be reasonably presented in respect of the past domestic fertilizer prices, which has positive effects on the Company.
2.According to the regulation related to the upper limit of building volume in Item 3, Article 34 of the Enforcement Rules of Urban Planning Commission in Taiwan Province amended by CPAMI on January 3, 2014 and implemented from July 1, 2015, in urban renewal areas, the building volume shall be no more than, 1.5 times of the legal volume of building site (i.e. the maximum of the prize shall be 50%), or 0.3 times of the legal volume of building site adding its original building volume. In addition, in other areas, the building volume shall be no more than 1.2 times of the legal volume of building site (i.e. the maximum of the prize shall be 20%).

According to the significant change of above decree, we will authorize an architect to transact the building permit for the residual land of D7 Street before June, 2015, Hsinchu Science Park (excepting D7-A) with an area of 4.68 hectare, to meet the old law and protect the rights and interests of the Company.

(V) Effects of Technical Changes and Industrial Changes on the Company’s Financial Affairs and Solutions thereto

1.With the change of agriculture structure and people's concern about environmental protection and health, the Company has planned to establish organic fertilizer pilot plant to produce organic fertilizers. By working with good material supply system and fermentation techniques, the Company reestablishes the image of Farmer's Organic Fertilizer witht the Company's good brand image to expand the market to local and international organic fertilizer. The Company will keep improving formula and introducing various good microbes. Post-fermentation process will also be introduced to promote the quality of organic fertilizer.
2.Under the great influence of the price change in international materials and energy on the Company's production of fertilizer and chemical engineering, the Company has reinforced the supply contract with other corporations to control material sources and the impact caused by price change. The Company continues cooperating with Al-jubail Fertilizer Company, a Saudi Basic Industry Corporation. Besides, it also actively executes downstream products integration and investment plans and energy reinvestment projects to promote operation effects of the whole Company.

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(VI) Effects of Changes in Corporate Images on Business Risk Management and Solutions thereto

The Company was formerly a state-owned business. Since its was transformed into a nongovernmental business on September 1st, 1999, it has been in the process of business transformation, diversified business operation to enhance business performance, It has changed its stereotype image of the Company in public business operation times in the eyes of the public, hence the positive promotion of the corporate image of the Company. However, when the Company is seeking reasonable profits, it still coordinates with its greatest efforts with the policies of the Government for taking care of farmers and downstream chemical industry, so that it can provide fertilizer and chemical products necessary for domestic markets at reasonable prices, work hard at various industrial pollution prevention and control work, and properly take care of employees’ benefits. In 2007, it founded Financial Corporation Taiwan Fertilizer Foundation to take care of farmers and weaker groups, and to look upon corporate social responsibility as the objective of the incorporation so as to attain the goal of “promoting the steady development of operation of the Company”, “guaranteeing the rights and interests of shareholders of the company’ and “fulfilling the corporate social responsibility” as three basic operation targets.

(VII) Prospective Benefits from Acquisition, Possible Risks and Solutions

For the current year, there was no acquisition or plan.

(VIII)Prospective Benefits from Expansion of Plants, Possible Risks and Solutions thereto

The moving of plants to Taichung Port has developed since the Company signed a contract with Port of Taichung, Taiwan International Ports Corporation, Ltd in October, 2006. The construction period of the plants is 8 years from April 2007 to the end of December 2015, and they should be developed by three phases. The first phase is earth filling and geological improvement, construction of dock unloading and storage facilities, material warehousing systems, public systems and other infrastructure as well as the construction works for nitrate and nitrate phosphorus production workshops; the second phase is sulphuric acid ammonium phosphate, ammonium production workshop of new and old nitrophosphates, the relocation project of nitric acid plant; the third phase is the new sulphuric acid, sulfamic acid and phosphate fertilizer factory the original Plant, old Plant will be gradually phased shut down to transfer the relevant production machinery and equipment, and click "new Plant, old Plant" moved treatment principle, to continue the industry overall operation, fertilizer supply business is not interrupted by the development of this program.

The Company boasts sixty years of experience in producing fertilizer, and is quite familiar with manufacturing process technologies for fertilizer. And operation products under this plan are currently operating items produced on production lines:

(1) Chemical products: anhydrous ammonia, urea, phosphoric acid, nitric acid, sulfuric acid, melamine, sulfamic acid and other chemical products.
(2) Fertilizer products: potassium chloride, Single Superphosphate, nitrophosphate compound fertilizer, ammonphosphate compound fertilizer, organic compound fertilizer, biotech

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microbes fertilizer, instant compound fertilizer, biotech nutrition solution, ammonium sulphate and calcium ammonia nitrate and other kinds of fertilizer.

(3) Unloading and storing products: to coordinate with terminal unloading business utilization, and to strive to become qualified unloading and storing enterprise by application for the Administration of Port of Taichung, and to undertake customs clearance services for imported goods of fertilizer industry and other industries.

It is required to coordinate with this Plan. In addition to the screening of global fine processes, it is strictly required that such international manufacturers will provide technical guarantee complying with production standards and patented technologies. Moreover, it is necessary to lay a solid foundation for subsequent success in commercialization in view of years of operating experiences with top production processes in design improvement. After different plants centralize their production at Port of Taichung, it will improve productivity, efficiency, and product portfolio as well as unloading and storing management performance and complementary utilization of raw materials to reduce costs. In particular, manufacturers’ locations are near the leading fertilizer markets such as Taichung, Nantou, Yunlin, Chiayi, and Tainan. Regardless of sale channel management, reduced transportation costs and market integration and competition in marketing have niche.

(IX) Risks in Concentrated Purchasing or Selling and Solutions thereto
The major purchasers from the Company are Al-Jubail Fertilizer Company, Sabic Asia Pacific and Arab Potash Co. Ltd., in which Al-Jubail Fertilizer Company is a company with joint capital investment by the Company and Sabic of Saudi Arabia. The Company takes delivery of urea under cooperation contracts, and Sabic Asia Pacific sells anhydrous ammonia to the Company for and on behalf of companies based in Saudi Arabia. Arab Potash Co. Ltd is one of the most important potassium chloride manufacturers in the world. The abovementioned three companies have years of business relationship with the Company. In addition to emphasis on supply quality and business goodwill of all raw material suppliers, the Company performs judgment of business information, prepares safe inventory and delivery period tracing and recovery. Therefore, there is less actual risk in centralization of purchase of goods.
The major selling clients for the Company are farmers associations in different cities of the province, with decentralized sale of goods, so there is no risk in centralization of sale of goods.
(X) Effects of Directors, Supervisors or Majority Shareholders with Shareholding Exceeding Ten Percent, Great Transfer of or Changes in Equity on the Company, Risks and Solutions thereto: N/A
(XI) Effects of Changes in Operating Rights on the Company, Risks and Solutions: N/A

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(XII) For a litigation or non-litigation event, the company, company director(s), supervisor(s), general manager(s), responsible person(s), major shareholder(s) with a shareholding ratio of 10% or more, and subsidiary company(ies) shall be listed clearly. For a major litigation, non-litigation event or administrative litigation having been judged or still in judgment, of which the result may have significant influence on shareholders’ rights and interests as well as security price, the fact in contention, object amount, start date of litigation, main litigant(s) and disposal by newspaper stop-printing date of the year shall be disclosed.
(1) In order to develop No. 25 land (R4-1) in the Jingmao Section of Nangang District, Taipei City, the Company entered into the agreement on the co-establishment of houses with Huaku Development Co., Ltd. on July 14, 2008 and the co-established residential building (Tianhui Mansion) was completed on February 22, 2013. Both parties specified the transfer of the real estate. According to the invoice issued by the Company uniformly, the mutual transaction house price was NT$767.40145 million and the business tax payable was NT$ 38.374150 million, the total of which was NT$805.778723 million. The Company believed that Huaku Development Co., Ltd. should pay the business tax of this project according to the regulations of the legal taxpayers as stated in Article 15-3 of Law on Business Tax and Co-establishment Agreement. However, Huaku Development Co., Ltd. filed civil lawsuit against the Company for the taxes of NT$38.374150 million. On July 18, 2013, Taipei Court conducted meditation against No. 1162 company affairs in 2013 on July 18, 2013. However, the meditation proved to be a failure, Taipei Court received the No. 102 Chong Su Zi No. 751 case and prepared for opening a court on October 17, 2013. On June 18, 2014, Taipei Court judged that the Company should pay Huaku Development Co., Ltd. NT$ 38.374150 million according to Chong Su Zi No. 751 civil judgment in 2013 after fully analyzing the party that should bear the tax of this project. It was investigated that according to the principle of co-establishment, the Defendant (the Company) obtained 75% of the real estate registry area according to the legal plot ratio (225%) and the Plaintiff (Huaku Development Co., Ltd.) shared 25% (see Page 13 and 15 of the judgment volume). By checking the legal nature, the property right other than the money mutually transferred by both parties had no dispute according to Article 298 of Civil Act. The Plaintiff sold this project to the Defendant after the completion. According to the aforesaid regulations, the Defendant should pay the business tax. Input VAT refers to the business tax paid by the operator when purchasing goods or labor service according to the regulations. This is also specified in Article 14, 1 and Article 15-1 and -3 of Business Tax Law. According to the regulations of Business Tax Law, the payer, i.e., the goods or labor service seller shall be obliged to transfer the lease tax to the buyer. According to the spirit of the business tax, the business tax is collected from the goods or labor service seller for the capacity of bearing land tax and other levies against consumption (refer to Shi Zi No. 668 interpretation cause documents of court of justice). According to the investigation, the agreement signed by and between both parties specified that the business tax shall be borne by the legal tax obligor. However, as for the business tax payment argued by the Plaintiff, the Plaintiff shall be liable for paying the business tax for the real estate transferred according to the aforesaid regulations. However, the Defendant (the buyer) shall be liable for the tax. The Plaintiff claimed that, according to the provisions of Article 15 of the agreement, it charged the business tax of NT$38.374150 million from the Defendant by issuing the invoice. However, the exchange of the real estate co-established by the Company and Huaku Development Co., Ltd. was the exchange with equivalent value and there was no reason to ask the Company to pay the business tax for Huaku Development Co., Ltd. In order to maintain the rights and interests of the Company, the Company entrusted the lawyer Wu Mao-Rong to file a lawsuit

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to the court prior to July 16, 2014. Taiwan's Higher Court prepared Zhong Shang Zi No. 628 case in 2014 and got prepared for the program on September 30, 2014.

(2) Since January 16, 2011, 10 pieces of land on No. 272-2 Fuxing Road, Maoli City and building No. 807, 991 on the same road have been rented to Utech Solar Co., Ltd. for warehouse and office use. Both parties signed a 20 year lease. According to article 5-3 in the lease, from 2013 on, the rent has appreciated (based on the price on No. 272-2 Fuxing Road, Maoli City). The rent has risen from $1.374 million to $1.962896 million (i.e. $588,896 more per month). Although Utech has paid for the rent for May 2013 in the appreciated price, it failed to paid for the difference amount $4,122,272 from June to November 2013. Utech first coordinated with the Company through Maoli Mediation Committee on July 2, 2013. Since the coordination failed, the Company received the result from Mediation Committee on November 28, 2013. According to the judgment, "from 2013 to 2015, the rent will rise by 10% each year," while the current lease indicates that "from 2013 to 2015, the rent will rise by 42.86% each year." The difference in the three years in total is $11.307456 million. To ensure the Company's benefits, the Company has appointed Xiao Jia-Fu as the attorney for the first instance according to Article 19 of Mediation Law. The Company claimed that the results were not established and asked for the payment of the rent difference in June –December 2013 and the delayed interests as well as the overdue liquidated damages. The lawyer Xiao Jia-Pu filed a lawsuit to Taipei Court on December 12, 2013 and the Court accepted it with Su Zi No. 5236 case in 2013. According to the result of the first judgment, the Defendant leased the land in order to take it as the workshop to again commercial interests instead of using it for residential purpose. There is thus no applicable land as specified in 1 of Article 97 of Land Law (the rent of the urban and local houses shall not exceed 10% of the annual interests of the total price applied of the land and the buildings). The Plaintiff requested the Defendant to increase the rent according to Article 5-3 of this agreement, which complies with the real meaning of the signature so it shall be approved. As for the too high liquidated damages paid for the failure in performing this agreement, the Court reduced the amount. The debtor has paid some and the Court reduced the amount of liquidated damages of the debtor by comparing the interests acquired by the creditor. The Court believed that the Plaintiff’s claim for the punishment liquidated damages which is 0.5% of the amount payable are too high but 0.3% would be the proper amount. As a result, Taipei Court judged that the Defendant Yu Cheng-Guang paid the Company NT$ 4.122272 million on December 24, 2014 (the Company finally won the case).
(3) As Keelung Taxation Bureau handled the investigation of house tax in 2010 on July 1, 2010, it was investigated that the No. B phosphate fertilizer warehouse with steel framework in the plant and ahosphoric acid storage tank and sulfuric acid storage tank in steel type were not set with house tax. The Bureau thus requested paying the house taxes of the three buildings and fined penalties, the total amount of which was more than NT$7.47million. After the Company’s application for reexamination, appeal and lawsuit, Keelung Taxation Bureau issued Ji Shui Fa Er Zi No. 1010021016 reexamination decision on September 13, 2012 to reduce the taxes of the three buildings above and decided the tax of the three buildings in 2006-2010 was USD873,582 and the penalty was USD587,532. It was known through Su Zi No. 380 judgment issued by Taipei Higher Administrative Court in 2013 that the house tax and penalty of this case was USD1.101211million, Keelung Plant was established after approval and enjoyed the plant registration certificate issued by Ministry of Economics Affairs (No. 99-667158-00). According to ii of 2 of Article 15 of house tax regulations, the tax for the self-owned houses used for direct production of the plant with

252

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legal registration shall be halved. Both ahosphoric acid storage tank and sulfuric acid storage tank belong to the storage tanks used for the special machinery equipment in the process of fertilizer production and they shall be exempted from the house tax. The Company filed a lawsuit again which was recognized by the Taipei Higher Administrative Court. This case was sent back for judgment but was rejected by the first instant judgment. As the first instant judgment was not made based on the abandonment of the original judgment as made by the Taipei Higher Administrative Court, the Company decided to file a lawsuit in August, 2014 and this was again recognized by the Taipei Higher Administrative Court which decided to abandon the original judgment according to Pan Zi No. 12 judgment on January 15, 2015 and sent it back to Taipei Higher Court for judgment again (the Company won the lawsuit).

(4) Pan Gao Rui-Ying and other 15 plaintiffs appealed on May 27, 2013 at Shilin District Court that they were the heirs of Gao Hong-Gan. The land owned by Gao Hong-Gan, former No. 731-4 San Chong Part, Nangang Town, Taipei County before the land was remapped, has be registered under the property of the Company on February 23, 1955 for “government owned trade. On May 2, 1960, it was registered as “253xpropriation” under the Company’s request. Yet Gao Hong-Gan had passed away on February 8, 1955. Both parties did not agree on the trade and transferring of land ownership. The Company acquired the land without handling inheritance registration after Gao Hong-Gan passed away, so the transferring of ownership was invalid. The appeal for the Company to eliminate the transferring of ownership registration and to return the ownership to Gao Hong-Gan is thus invalid. After the mediation failed, Shilin District Court requested the Company to submit an answer to the complaint No. 1054 2013 in 14 days. The Company appointed Chen Tien-Xin to be the attorney in September 2013. Chen Tien-Xin questioned the request by the plaintiffs because the registration as “governmental trade” or “expropriation” was not done by the defendant (the Company), and Gao Hong-Gan’s right to the land had been terminated after he was compensated by Taipei County Government for land expropriation (Land Law Article No.235), so the plaintiffs cannot deny the validity of expropriation and land registration. Shihlin District Court rejected the Plaintiff’s Su Zi No. 1054 case in 2013 on August 29, 2015 as the Plaintiff claimed that the Defendant did not acquire the land ownership and the district organ did not enjoy the validity of the acquisition order. The land was registered under the Defendant’s name by the ownership transfer through trading. The Plaintiff should be liable for the testification of the facts which benefited themselves but were abnormal. The Plaintiff also doubted the Defendant did not demonstrate the basis based on which the land was acquired. The Court thus transferred the land acquisition data from Executive Yuan and Songshan Land Office, etc. As the ownership of the land has been transferred to the Defendant for more than 50years since 1955, the Plantiff has never doubted that the Defendant is not the owner, letting alone filing a lawsuit against it. The Plaintiff was unable to provide evidences or has no right to ask the Defendant to bear the unfair interests that have not been discovered. …As there is no evidence supporting the Plaintiff’s claim, the request was thus rejected (the Company won the lawsuit). The Plaintiff filed a lawsuit on October 1, 2015 and the Company thus entrusted the lawyer Chen Tianxin to be liable for the second instant judgment of this case.
(5) The declaration of excluding foreign earned income from business income in 2005, 2006, 2007, 2008, and 2009 was rejected by Taxation Bureau, Taipei City. The Company was requested to pay for the difference. Among the, the Company was requested to paid more than $500,000,000 tax for 2008 income, while it is estimated that the Company had to pay

253

Matters on Financial Standing and Operation Result Review and Analysis and Risks

up to $2,000,000,000 tax. The great amount of tax caused a great impact on the Company's profits. Since the Company had paid 20% income tax for Al-Jubail Fertilizer Company according to the law in Saudi Arabia, the Company claimed that it shall be considered deductible items for foreign earned income. Otherwise, the income was double taxed. To protect the Company's right, since the Company received the reassessment letter on June 6, 2012, the Company has expressed that it did not accept the punishment. In June, 2012, the Company appointed Ling Yi-Xin, Fan You-Wei, and Wang Yi-Wen, Deloitte Attorneys to represente the Company to proceed administrative remedy process to Ministry of Financial Affairs. After the reassessment and appeal process, Li Yong-ran was appointed to be the attorney for the case of administrative complaint about foreign earned income tax exclusion. The administrative complaint was submitted on April 24, 2013 to Taipei High Administrative Court. Li emphasized that National Taxation Bureau had violated Substance over Form Principle No.420 and Income Tax Law Article No.3-2. Yet On July 16, 2013, Taipei High Administrative Court rejected the complaint in No.616 case. The Company did not accept the result and filed an appeal on August 13, 2013. The Supreme Court suggested that "Although the appellant claims it had paid for the 20% tax for Al-Jail Fertilizer Co., the tax was paid by Al-Jail instead of the appellant. The original judgment was correct so the appeal was rejected." In addition, "The appellant's claim shall be based on other applicable laws. Was the questionable point on "(foreign) investment profits solved in reassessment? According to the supplementary report for reassessment line 4, point No.3 (p.35), Li Yi-Xin mentioned that 'if it cannot be listed as other income, the income was considered non-substantial (without cash).' It showed that the correct amount for foreign earned income shall deducted $69,552,786 income tax for Al-bail Co." Moreover, the income deducted from the stockholders' tax is also too much. It shall be reduced." "To sum up, the appeal was reasonable." On December 3 2013, case No.744 2014, the judgment was abolished and the case was resolved to be reassessed. In February 2014, the Company appointed Li Yong-ran and Lin Yi-Xin to be attorneys for case No. 7 2014 at Taipei Higher Court. Both parties finally reached an agreement on the court on December 2, 2014. The Company deducted the income tax of Saudi Arabia as borne in 2005 according to the calculation mode of profits distribution on the principle of first in and first out for the incomes of Al-jubail Fertilizer Company. The national taxation bureau checked again the deductible overseas tax of the Company in 2005. The Company’s agent urged the court to send the meditation written records before December 2014 to make account. The overseas business tax in 2006, 2007, 2008 and 2009 was also handled in the same way.

(XIII) Other Significant Risks and Solutions: None

III. Other Significant Matters: None

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Part Eight: Specially Recorded Events

I. Information on Affiliated Companies

(I) Consolidated Operation Report from Affiliates

Organization chart of affiliated companies

Taiwan Fertilizer Co., Ltd

==> picture [408 x 319] intentionally omitted <==

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

Taiwan Fertilizer Taiwan Deep Taichuang Asset TAIFER
biotech Co., Ltd Ocean Water Management and (CAYMAN)
100% Co., Ltd. Development Co., INTERNATIONA
100% Ltd 100% L GROUP CO.,
LTD.
100%
Hasbo Biotech TAIFER
Co., Ltd. INTERNATIONAL
100% (SAMOA) GROUP
CO., LTD
TR ELECTRONIC
100%
CHEMICAL CO.,
LTD.
51%
TAIFER
CHEMICALS
INTERNATIONAL
MONGOLIA
CO.100%
----- End of picture text -----

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Specially Recorded Events

2.Basic information on affiliated companies

Unit: NT$K	Unit: NT$K	Unit: NT$K	Unit: NT$K	Unit: NT$K
Name of company	Date of incorporation	Address	Paid-up capital	Principal business or production projects
Taichuang Asset Management and Development Co., Ltd	September 9, 1999	8/F, No. 88, Section 2, Nanking East Road, Taipei	55,000	Land, housing, building development and leasing business
Taiwan Deep Ocean Water Co., Ltd.	September 25, 2006	No.15, Huadong, Hualien City, Hualien County	950,000	Producing, manufacturing, and selling deep ocean water related bottle water, concentrated solution, cosmetics, and food supplementary products.
Hasbo Biotech Co., L td.	May 16,2007	10/F, No. 88, Section 2, Nanking East Road, Taipei	24,000	Wholesale of soft drinks and cosmetics
Taiwan Fertilizer biotech Co., Ltd	December 19, 2011	10/F, No. 88, Section 2, Nanking East Road, Taipei	100,000	Wholesale and retailing of organic architecture
TAIFER (CAYMAN) INTERNATIONAL GROUP CO., LTD.	February 1, 2011	P.O. Box 32052, Grand Cayman Ky1-1208, Cayman Island, British WestIndies	321,900	Investment and shareholding
TR ELECTRONIC CHEMICAL CO., LTD.	November 3, 2010	P.O. Box 2804, George Town, Grand Cayman, Cayman Island, British WestIndies	680,475	Investment and shareholding
TAIFER INTERNATIONAL (SAMOA)GROUP CO.,LTD	February 25, 2013	TMF Chambers, P. O. Box 3269, Apia, Samoa	42,618	Investment and shareholding

3.Data on the same shareholders supposed to have control or affiliation: None

4.Industry covered by overall affiliated companies’ operation business:

The major industries covered are manufacturing, sale, import and export of all kinds of fertilizer, chemical products and their derivative products as well as development, lease and sale of housing and buildings.

5.Information on directors, supervisors and Presidents of all affiliated companies：

			December 31,2014 Unit: NT$K；Share：%	December 31,2014 Unit: NT$K；Share：%
Name of company	Title	Name or representative	Sharesheld
			Number of shares	Number of shares
Taiwan Deep Ocean Water Co., Ltd.	Chairman of the Board Director (old) Director (old) Director (new) Director (new) Supervisor President(new)	Li Fuxing from TFC Yang Tai from TFC Liu Yizhong from TFC Luo Shiri from TFC (appointed on April 23,2014) Huang Meiling from TFC (appointed on April 23,2014) Fan Xuanyong from TFC HuangLiai	95,000,000	100.00

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Name of company	Title	Name or representative	Sharesheld	Sharesheld
			Number of shares	Number of shares
Hasbo Biotech Co., Ltd.	Chairman of the Board Director (old) Director (old) Director (new) Director (new) Supervisor President	Li Fuxing from TFC Yang Tai from TFC Liu Yizhong from TFC Luo Shiri from TFC Huang Meiling from TFC Fan Xuanyong from TFC Huang Liai	24,000,000	100.00
Taichuang Asset Management and Development Co.,Ltd	Chairman of the Board Director Director Supervisor President	Li Fuxing from TFC Zhang Canglang from TFC Huang Liai from TFC Fan Xuanyong from TFC Li Fuxing	5,500,000	100.00
Taiwan Fertilizer biotech Co., Ltd	Chairman of the Board Director Director (old) Director (new) Supervisor President (old) President (new)	Li Fuxing from TFC Huang Liai from TFC Yang Tai from TFC Liu Guoying from TFC （appointed on April 1,2014） Luo Shiri from TFC Liu Guoying Huang Liai （serve concurrently on September 1,2014）	10,000,000	100.00
TAIFER (CAYMAN) INTERNATIO NAL GROUP CO.,LTD.	Director and legal representative	Li Fuxing from TFC	10,966	100.00
TR ELECTRONIC CHEMICAL CO., LTD.	Chairman of the Board (old) Chairman of the Board (new) Director Director Director (old) Director (old) Director (new) Director (new) Supervisor Supervisor President	Zhou Weixin from TFC Yang Tai from TFC (reelect on April 18,2014) Wu Changlin from TFC Zhao Jianliang Jiang Songhua Liu Yizhong from TFC Wu Shishian Kang Chiwan from TFC （appointed on September 1,2014） Fan Xuanyong from TFC Chen Yincong Zhao Jianliang	10,965,000	51%
TAIFER INTERNATIONA L (SAMOA)GROUP CO.,LTD	Director and legal representative	Li Fuxing from TFC	42,618	100.00

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Specially Recorded Events

6.An overview of operation by all affiliated companies

Unit: NT$K

								Unit: NT$K
Company name	Capital	Total assets	Total liabilities	Net value	Operatin g income	Operating interest	Profit & loss for current period	Earning per share (NT$)
Taiwan Deep Ocean Water Co., Ltd.	950,000	422,472	44,071	378,400	166,419	(1,192)	2,015	0.02
TaichuangAsset Management and Development Co., Ltd	55,000	94,910	19,359	75,551	200,007	(6,822)	1,083	0.20
Taiwan Fertilizer biotech Co., Ltd	100,000	73,394	431	72,962	25,871	(394)	115	0.01
TAIFER (CAYMAN) INTERNATIONA L GROUP CO.,	321,900	68,893	0	68,893	0	0	(99,401)	-
TR ELECTRONIC CHEMICAL CO.,LTD.	680,475	1,153,505	1,018,421	135,084	0	0	(194,905)	-

7.Endorsed guarantee of all affiliated entities, capital lent to others and derivative commodity trading:

Because the net value of TR ELECTRONIC CHEMICAL CO., LTD. decreased, the Board of Directors of the Company made a resolution on March 28, 2014 and agreed to reduce the insured amount for TR ELECTRONIC CHEMICAL CO., LTD. from US$10,000,000 (previous exchange rate = US1 : NT29.889) to US$5,430,000 (equivalent to NT$162,000,000) when its loan contract was renewed in April. However, on March 27, 2015, the Board of Directors of the Company further agreed to reduce the insured amount to US$2,130,000 when its loan contract was renewed.

On October 30, 2014, the Company endorsed Taiwan Deep Ocean Water Co., Ltd. with NT$50,000,000 for one year.

On July 29, 2014, the Board of Directors of the Company agreed to endorse Taizuang Property Management and Development Co., Ltd. with NT$23,500,000.

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(II) Consolidated financial statements of related enterprises

REPRESENTATION LETTER

The combined financial statements of Taiwan Fertilizer Co., Ltd. (TFC) and its affiliates for the year ended December 31, 2014 have been prepared in conformity with the “Criteria Governing Preparation of Affiliation Reports, Combined Business Reports and Combined Financial Statements of Affiliated Enterprises,” the Regulations Governing the Preparation of Financial Reports by Securities Issuers and related regulations.

The accompanying combined financial statements referred to above are free of misrepresentations and omissions.

Very truly yours,

TAIWAN FERTILIZER CO., LTD.

FU HSING LEE Chairman

March 27, 2015

259

Specially Recorded Events

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and Shareholders Taiwan Fertilizer Co., Ltd.

We have reviewed the accompanying combined balance sheet of Taiwan Fertilizer Co., Ltd. (the “Corporation”) and its affiliates as of December 31, 2014 and the related combined statement of income for the year then ended. We conducted our review in accordance with the Guidelines for the Review of the Combined Financial Statements of Affiliates. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the combined financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the combined financial statements of Taiwan Fertilizer Co., Ltd. and its affiliates as of and for the year ended December 31, 2014 referred to in the first paragraph for them to be in conformity with the Criteria Governing Preparation of Affiliation Reports, Combined Business Reports and Combined Financial Statements of Affiliated Enterprises, the Regulations Governing the Preparation of Financial Reports by Securities Issuers and related regulations.

March 27, 2015

Notice to Readers

The accompanying combined financial statements are intended only to present the financial position and results of operations 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 review such combined financial statements are those generally accepted and applied in the Republic of China.

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

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TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED BALANCE SHEET (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Debt investments with no active market - current Notes receivable Accounts receivable (Notes 4 and 8) Other receivables Current tax assets (Notes 4 and 19) Inventories (Notes 4 and 10) Buildings and land held for sale (Notes 4 and 11) Prepayments (Note 30) Other Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4 and 7) Financial assets carried at cost - noncurrent (Notes 4 and 9) Debt investment with no active market - noncurrent (Note 30) Investments accounted for by the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13 and 30) Investment properties (Notes 4 and 14) Intangible assets (Notes 4, 15 and 30) Deferred tax assets (Notes 4 and 24) Long-term prepayments for lease (Notes 16 and 30) Long-term receivables (Note 8) Other Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Notes payable Accounts payable (Note 29) Other payables (Note 18) Current tax liabilities (Note 4) Receipts in advance (Note 11) Long-term liabilities - current portion (Notes 17 and 30) Other Total current liabilities NONCURRENT LIABILITIES Long-term borrowings (Note 17) Provisions - noncurrent (Notes 4 and 19) Deferred tax liabilities (Notes 4 and 24) Deferred revenue - noncurrent (Note 14) Accrued pension liabilities (Notes 4 and 20) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 21) Capital stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retain earnings Other equity Equity attributable to owners of the Corporation NONCONTROLLING INTERESTS Total equity TOTAL		December 31, 2014
		Amount % $ 622,034 1 22,993 - 384,125 1 3,576,716 5 1,061,259 1 409,086 1 2,214,401 3 1,459,774 2 712,227 1 84,745 - 10,547,360 15 106,285 - 558,456 1 75,800 - 10,201,637 14 34,474,682 48 12,816,433 18 489,912 1 314,660 - 1,421,008 2 378,250 1 52,426 - 60,889,549 85 $ 71,436,909 100 $ 2,232,532 3 185,031 - 1,033,735 2 1,356,498 2 67,450 - 1,647,953 3 140,000 - 87,815 - 6,751,014 10 790,000 1 910,976 1 7,151,048 10 2,781,006 4 418,961 1 175,097 - 12,227,088 17 18,978,102 27 9,800,000 14 2,234,334 3 3,133,567 4 33,590,944 47 3,202,974 5 39,927,485 56 430,796 - 52,392,615 73 66,192 - 52,458,807 73 $ 71,436,909 100

The accompanying notes are an integral part of the combined financial statements. (With Deloitte & Touche review report dated March 27, 2015)

261

Specially Recorded Events

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENTS OF INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OPERATING REVENUES (Notes 4, 14 and 22) OPERATING COSTS (Notes 20, 21, 23 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 20 and 23) Marketing General and administrative Research and development Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Share of profits of associates (Notes 4 and 12) Other gains and losses (Note 23) Other income (Note 23) Finance costs Total nonoperating income and expenses INCOME BEFORE INCOME TAX INCOME TAX BENEFIT (Notes 4 and 24) NET INCOME OTHER COMPREHENSIVE INCOME Share of other comprehensive income of associates Unrealized loss on available-for-sale financial assets Exchange differences arising on translation of foreign operations Actuarial loss on defined benefit plans Income tax relating to components of other comprehensive income (Notes 4 and 24) Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		For the Year Ended December 31, 2014 Amount % $ 17,599,136 100 14,753,371 84 2,845,765 16 470,907 2 840,024 5 58,358 - 1,369,289 7 1,476,476 9 1,776,168 10 (485,108) (3) 44,743 - (60,529 ) - 1,275,274 7 2,751,750 16 221,093 1 2,972,843 17 640,086 4 (20,479) - 6,126 - (2,052) - (110,874 ) (1 ) 512,807 3 $ 3,485,650 20 (Continued)

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TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENTS OF INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

NET INCOME ATTRIBUTABLE TO: Shareholders of the parent Noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Shareholders of the parent Noncontrolling interests EARNINGS PER SHARE (Note 25) Basic Diluted		For the Year Ended December 31, 2014
		Amount % $ 3,068,346 17 $ (95,503 ) - $ 3,578,243 20 $ (92,593 ) - $3.13 $3.13

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

(With Deloitte & Touche review report dated March 27, 2015)

(Concluded)

263

Specially Recorded Events

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

The Corporation’s stock has been listed on the Taiwan Stock Exchange since March 24, 1998.

The functional currency of the Corporation is the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying combined financial statements were approved and authorized for issue by the Board of Directors on March 27, 2015

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

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

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

New, Amended and Revised Standards and Interpretations (the“New IFRSs”) Improvements to IFRSs (2009) - amendment to IAS 39 Amendment to IAS 39 “Embedded Derivatives” Improvements to IFRSs (2010) Annual Improvements to IFRSs 2009-2011 Cycle Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters”	Effective Date Announced by IASB (Note)
	January 1, 2009 and January 1, 2010, as appropriate Effective for annual periods ended on or after June 30, 2009 July 1, 2010 and January 1, 2011, as appropriate January 1, 2013 July 1, 2010 (Continued)

264

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New, Amended and Revised Standards and Interpretations (the “New IFRSs”)

Effective Date Announced by IASB (Note)

Amendment to IFRS 1 “Severe Hyperinflation and July 1, 2011 Removal of Fixed Dates for First-time Adopters” Amendment to IFRS 1 “Government Loans” January 1, 2013 Amendment to IFRS 7 “Disclosure - Offsetting Financial January 1, 2013 Assets and Financial Liabilities” Amendment to IFRS 7 “Disclosure - Transfer of Financial July 1, 2011 Assets” IFRS 10 “Consolidated Financial Statements” January 1, 2013 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 January 1, 2013 “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” Amendments to IFRS 10 and IFRS 12 and IAS 27 January 1, 2014 “Investment Entities” IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other July 1, 2012 Comprehensive Income” Amendment to IAS 12 “Deferred Tax: Recovery of January 1, 2012 Underlying Assets” IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and January 1, 2013 Joint Ventures” Amendment to IAS 32 “Offsetting Financial Assets and January 1, 2014 Financial Liabilities” IFRIC 20 “Stripping Costs in Production Phase of a January 1, 2013 Surface Mine” (Concluded)

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

1) IFRS 13 “Fair Value Measurement”

265

Specially Recorded Events

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

2) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

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

Effective Date
Announced by IASB (Note 1)

266

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New IFRSs
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer
Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 27 “Equity Method in Separate
Financial Statements”
Amendment to IAS 36 “Impairment of Assets:
Recoverable Amount Disclosures for Non-financial
Assets”
Amendment to IAS 39 “Novation of Derivatives and
Continuation of Hedge Accounting”
IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
(Concluded)

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

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

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

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Specially Recorded Events

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

The impairment of financial assets

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

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The accompanying combined financial statements have been prepared in accordance with the Regulations Governing the Preparation of Combined Financial Statements of Public Companies and Their Affiliates, the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the associated regulations.

Basis of Preparation

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

Basis of Combination

a. Principles for preparing combined financial statements

The combined financial statements as of and for the year ended December 31, 2014 have included the financial statements of the Corporation, its direct and indirect subsidiaries, and other investees in which the Corporation and its affiliates have combined interests of more than 50%. All significant transactions among the combined entities were eliminated in the combined financial statements.

b. Affiliates included in combined financial statements

Investor
Investee
Main Business
The Corporation
Taifer Chemicals International Inc.
International trade, wholesale of fertilizer, real
estate rental or leasing and gas station
Taifer Biotech Marketing Co., Ltd.
Wholesale and retail sale of cosmetics and
biotechnology services
Taifer (Cayman) International Group
Co., Ltd.
Investment and holding
Taifer (Cayman) International
Group Co., Ltd.
TR Electronic Chemical Co., Ltd.
Investment and holding
TR Electronic Chemical Co.,
Ltd.
TR Electronic Chemical (Kunshan)
Co., Ltd.
Manufacture of nitric acid, hydrofluoric acid,
ammonia, phosphoric acid, oxalic acid, and
ammonia fluoride as well as LCDs (liquid crystal
displays) and IC (integrated circuit) strippers
Taiwan Yes Deep Ocean Water Co.,
Ltd.
Wholesale of drinks, food and grocery
Taiwan Yes Deep Ocean Water
Co., Ltd.
Hasbo Biotech Co., Ltd.
Wholesale of Nonalcoholic Beverages and
Cosmetics
Taifer Chemicals International
Inc.
Taifer International (Samoa) Group
Co., Ltd.
Investment and holding
Taifer International (Samoa)
Group Co., Ltd.
Taifer Chemical International Co., Ltd.
Real estate rental and leasing

% of Ownership
December 31,
2014
Remark
100
100
100
Note 1
51
Note 1
100
100
100
100
100

Note 1: The related information was calculated on the basis of the affiliates’ financial statements as of and for the year ended December 31, 2014, which had been audited by auditors different from those of the Corporation.

c. Affiliates not included in the combined financial statements: None.

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Specially Recorded Events

Foreign Currencies

Exchange differences arising on the settlement of monetary items or on translating monetary items shall be recognised in profit or loss in the period in which they arise.

For the purposes of presenting combined financial statements, the assets and liabilities of the Group’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income.

Classification of Current and Noncurrent Assets and Liabilities

Cash Equivalents

Cash equivalents are 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.

Inventories

Investments Accounted for Using Equity Method

The Group accounted for associates by using the equity method. Under the equity method, investments in associates are initially recognized in the statement of financial position at cost and adjusted thereafter to recognize the Group’s share of profit or loss and other comprehensive income of the associates as well as the distribution received. The Group also recognized its share in the changes in the equity of associates and.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate and jointly controlled entity recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized.

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Property, Plant and Equipment

Depreciation is recognized using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at least once at the end of each reporting period.

Leases

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

Investment Properties

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Specially Recorded Events

Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units that is expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Impairment of Tangible and Intangible Assets Other Than Goodwill

Financial Instruments

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

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a. Financial assets

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

Financial assets are classified into the following categories: Available-for-sale financial assets and loans and receivables.

1) Available-for-sale financial assets

Stocks held by the Group that are traded in an active market are classified as available-for-sale financial assets and are stated at fair value at the end of each reporting period.

2) Loans and receivables

3) Impairment of financial assets

For financial assets carried at amortized cost, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired

273

Specially Recorded Events

individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

4) Derecognition of financial assets

b. Financial liabilities

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

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are

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

Provisions

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

a. Sale of goods

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

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

Revenue from sales of goods is recognized when the Group has transferred to the buyer the significant risks and rewards of the ownership of the goods.

b. Dividend and interest income

275

Specially Recorded Events

Retirement Benefits

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

The retirement benefit obligation recognized in the combined balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

Taxation

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

a. Current tax

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

b. Deferred tax

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

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

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be

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available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

c. Current and deferred tax for the year

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Impairment of Tangible and Intangible Assets Other Than Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets other than goodwill to determine whether there is any indication that those assets have suffered an impairment loss. In the process of evaluating the potential impairment, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of the Group’s industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years. As of December 31, 2014, there were $48,843,548 thousand including in the carrying amounts of tangible and intangible assets other than goodwill

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation

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Specially Recorded Events

requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

As of December 31, 2014, the carrying amount of goodwill was $358,487 thousand on which there had been no impairment loss recognized.

6. CASH AND CASH EQUIVALENTS

	December 31,	December 31,
		2014
Cash on hand	$	4,512
Checking accounts and demand deposits		617,522
	$	622,034

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

	December 31,
	2014
Bank balance	0.02%-0.33%

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT

	December 31,
	2014
Domestic listed shares	$ 106,285
ACCOUNTS RECEIVABLE
	December 31,
	2014
Accounts receivable - sales of goods	$ 1,179,166
Real estate receivable	2,796,682
Less: Allowance for impairment loss	(20,882 )
	$ 3,954,966
Accounts receivable	$ 3,576,716
Long-term Receivables	378,250
	$ 3,954,966

8. ACCOUNTS RECEIVABLE

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The average credit period on sales of goods was 30-180 days. Allowance for impairment loss were based on estimated irrecoverable amounts determined by reference to aging analysis, past default experience of the counterparties and an analysis of their current financial position.

The aging of accounts receivable that were past due but not impaired was as follows:

		December 31,
		2014
Past due	1-30 days	$ 3,428
Past due	31-60 days	223
Past due	over 61 days	111
		$ 3,762

On a certain sold real estate for which there are receivables, the Group had a secondary priority mortgage amounting to $571,600 thousand.

9. FINANCI A L ASSETS CARRIED AT COST

	December 31,
	2014
Noncurrent
Domestic unlisted shares
Eminent II VC Corp	$ 200,000
Top Taiwan V Venture Capital Co., Ltd.	120,000
Eminent Venture Capital Corporation	100,000
Taiwan Stock Exchange Corporation	52,800
TSCBio Ventures Capital Co.	42,000
Visgeneer Inc.	20,989
Green Cellulosity Corporation	15,000
TaiAn Technologies Corporation	7,667
	-
	$ 558,456
Classified according to financial asset measurement categories:
Available-for-sale financial assets	$ 558,456

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Specially Recorded Events

The Corporation sold its entire holding of VIBO Telecom Inc.’s shares in the second quarter of 2014 and recognized a disposal loss of $8,094 thousand.

10. INVENTORIES

	December 31,
	2014
Raw materials	$ 1,431,372
Finished goods	776,306
Merchandise	6,723
	$ 2,214,401

The costs of inventories recognized as cost of goods sold was $13,117,288 thousand for 2014.

The cost of inventories recognized as cost of goods sold for 2014 included a reversal of inventory write-downs amounting to $18,400 thousand. Previous write-downs were reversed as a result of increased selling prices in chemical product markets.

11. BUILDINGS AND LAND HELD FOR SALE/RECEIPTS IN ADVANCE

	December 31,
	2014
Buildings and land held for sale
Nangang R5 Residential Project	$ 1,453,770
Others	6,004
	$ 1,459,774
Receipts in advance
Nangang R5 Residential Project	$ 1,580,199

Buildings and land held for sale mainly referred to investment in and development of residential - commercial complexes on self-owned lots.

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Nangang R5 Residential Project

As of December 31, 2014, the land had been transferred to 45 of the buyers, and the Corporation recognized property revenues of $4,023,449 thousand and related costs of $1,047,992 thousand.

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

a. Investment in associates

Unlisted companies Al-Jubail Bion Tech Inc.	December 31, 2014 $ 10,197,486 4,151 $ 10,201,637

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

	December 31,
	2014
Unlisted companies
Al-Jubail	50.00%
Bion Tech Inc.	22.42%

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

Total assets Total liabilities	December 31, 2014 $ 24,930,444 $ 1,745,186

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Specially Recorded Events

Revenue Profit for the year Other comprehensive income Group’s share of profits and other comprehensive income of associates for the year	For the Year Ended December 31, 2014 $ 12,947,238 $ 3,972,564 $ - $ 1,776,169

b. On March 31, 2011, under the authorization of the Investment Commission of the Ministry of Economic Affairs, the Corporation established TR Electronic Chemical Co., Ltd. (TREC) in the Cayman Islands through a subsidiary, Taifer (Cayman) International Group Co., Ltd. TREC then invested in TR Electronic Chemical (Kunshan) Co., Ltd. (TREC-K), which enabled the Corporation to have a 51% indirect interest in TREC-K. TREC-K manufactures and sells electronic chemicals. Later, under a joint venture agreement between the Corporation and Shiung-Shing Chemical International Trade Corp. (“Shiung-Shing”), another TREC shareholder, Shiung-Shing assigned a manager to handle TREC’s daily business and management. Thus, the Corporation had no control over TREC and TREC-K. As of December 31, 2014, the Corporation investment in TREC-K through TREC was US$10,965 thousand.

13. PROPERTY, PLANT AND EQUIPMENT

Carrying amounts Land Buildings Equipment Transportation equipment Other equipment Property in construction	December 31, 2014 $ 22,013,942 3,286,405 8,031,510 27,317 409,031 706,477 $ 34,474,682

The following property, plant and equipment were depreciated on a straight-line basis over their useful lives:

Building: Leasehold improvements and others	3-15 years
Building: Buildings, warehouses, storage sheds	16-60 years
Equipment: Production equipment	3-15 years
Equipment: Storage tank, power transmission system, etc.	16-40 years
Transportation equipment	3-15 years
Other equipment	3-20 years

Refer to Note 30 for the carrying amount of property, plant and equipment pledged by the Group to secure borrowings granted to the Group.

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14. INVESTMENT PROPERTIES

Cost Balance at January 1, 2014 Additions Disposals Reclassification Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Disposals Depreciation expense Balance at December 31, 2014 Carrying amounts at December 31, 2014	Completed Investment Property $4,201,795 - - - 4,201,795 - - - - $ 4,201,795	Investment Property under Construction $ 452,697 171,045 - 4,428,857 5,052,599 - - - - $ 5,052,599	Undeveloped Investment Property $3,129,727 - (47,444) 1,089,958 4,172,241 (654,962) 44,769 (9 ) (610,202 ) $ 3,562,039	Total $7,784,219 171,045 (47,444) 5,518,815 13,426,635 (654,962) 44,769 (9 ) (610,202 ) $ 12,816,433

a. Land use rights are for 50 years from the date of registration of these rights. When these rights expire or the contract is terminated, the pledgee should cancel its registration for the land use rights and transfer to the Group all the land improvements (including the main building, attached building, parking space and all other attached facilities and improvements such as air-conditioning, and utility fixtures).
b. The land use rights (accounted for as deferred income-noncurrent) amounted to $3,200,889 thousand, which has been treated as royalty revenue (accounted for as operating revenue) amortizable over 50 years from June 13, 2006. As of December 31, 2014, the unamortized balances of the land used rights under above mentioned contract were $2,654,270 thousand.
c. In addition to the land use right, the annual rental payable by the pledgee is 8% of the reference land price announced by the local government, with the calculation starting from the contract date. When the reference land price is adjusted, the annual rental will be revised at the percentage the same as that set on the date of the reference price adjustment. The annual rentals in 2014 was $216,781 thousand.
d. The pledgee should not transfer the land use rights or the ownership of leasehold improvements to a third party. Also prohibited are the placing of the land rights under a trust and the use of the rights as collateral.
e. The pledgee should not pledge liabilities on land use rights and improvements to a third party.

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Specially Recorded Events

The main terms of the FEA were as follows:

a. The Group is responsible for the construction of the lease premises (the “Premises”), and the Hotels should assist the Group in construction-related matters. The Group will shoulder the construction cost. Both parties are responsible for the completion of the premises in six years after signing the FEA (the tentative project completion is set for October 8, 2019).
b. The lease contract is for 20 years from the start of the lease contract, and the lessee has the first option to extend the lease for another 10 years. Upon expiry or termination of this lease agreement, the lessee should turn over the Premises as is to the Corporation.
c. The lessee should pay monthly rentals, calculated at the higher of the guaranteed rentals or revenue-based rentals payable to the Group from the Premises opening date. The guaranteed rental will be increased 1% each year, and the revenue-based rentals are 16% of the gross revenue of the hotel each month.
d. Under this FEA and lease agreement, the lessee should not assign and transfer any of its rights or obligation to a third party.

As of December 31, 2014, the Group had applied for the document review of the urban design to the authorities, and land development will continue upon the authorities’ approval of the documents.

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15. INTANGIBLE ASSETS

	December 31,	December 31,
		2014
Carrying amounts
Patents	$	3,768
Computer software		42,757
Trademark		84,900
Goodwill		358,487
	$	489,912

a. The above items of intangible assets with finite useful lives were depreciated on a straight-line basis over the estimated useful life of the asset:

Patents	5-10	years
Computer software	1-20	years

b. The Group acquired trademark and goodwill were acquired through the acquisition of an additional 50% equity in Taiwan Yes Deep Ocean Water Co., Ltd. As of December 31, 2014, the Group had conducted an impairment test on Taiwan Yes and its subsidiaries, which were considered as a cash-generating unit. The recoverable amount of this cash-generating unit was determined through a value in use calculation which uses cash flow projections based on financial budgets approved by management, and an annual discount rate of 2% per annum for the year ended December 31, 2014. Management believed that any reasonably possible change in the key assumptions on which the recoverable amount was based would not cause the carrying amount of the cash-generating unit to exceed its recoverable amount.

Refer to Note 30 for the carrying amount of intangible assets pledged by the Group to secure borrowings granted to the Group.

16. LONG-TERM PREPAYMENTS FOR LEASE

	December 31,
	2014
Land	$ 1,357,172
Land use rights	63,836
	$ 1,421,008

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Specially Recorded Events

a. The lease term for the land in a special industrial zone is 20 years, and the agreement is renewable until the total lease reaches 50 years. The ownership of the real estate and its improvements constructed with the Corporation’s capital belongs to the Corporation. In principle, the Corporation will return the land to the government on the agreement expiry or upon early termination of the lease agreement.
b. As mentioned above, the Corporation has leased land, developed wests 8 and 9 of the wharf area and constructed warehouse facilities and public roads on behalf of THB. The Corporation used its capital expenses for the construction as rentals in advance. However, once the lease term ends or the agreement is early terminated, all the titles to the facilities and improvements on the leased land should be transferred to THB.

The Corporation uses its expenditures of $1,500,481 thousand for the construction of wests 8 and 9 of Taichung Harbor as rentals until March 20, 2034. The construction had been completed in 2013, and the expenditures were accounted for as long-term prepayments for lease, which should be amortized over its rent-free periods.

Refer to Note 30 for the long-term prepayments for lease pledged by the Group to secure borrowings granted to the Group.

17. BORROWINGS

a. Short-term borrowings

	December 31,	December 31,
		2014
Secured borrowings
Floating rate bank loans	$	254,598
Unsecured loans
Fixed rate credit borrowings		1,710,000
Floating rate credit borrowings		267,934
	$	2,232,532

The effective interest rate for bank loans was from 1.05% to 3.5% per annum as of December 31, 2014.

b. Long-term borrowings

	December 31,
	2014
Secured borrowings
Floating rate bank loans	$ 930,000
Less: Current portion	140,000
	$ 790,000
Interest rate	1.48%
Maturity date	2018.03.18

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Please refer to Note 30 for the borrowings pledged or mortgaged as collaterals.

18. OTHER PAYABLES

	December 31,	December 31,
		2014
Payable for purchase of equipment	$	624,525
Salaries and bonus		170,111
Payable for land value-increment tax		154,762
Employees’ bonus and remuneration to directors and supervisors		113,474
Payable for construction		52,149
Interest payable		35,791
Utilities payable		23,784
Payable for annual leave		21,926
Payable for taxation		11,661
Others		148,315
	$	1,356,498

19. PROVISIONS - NONCURRENT

	December 31,
	2014
Income tax provisions	$ 648,958
Decommissioning liabilities	223,648
Others	38,370
	$ 910,976

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Specially Recorded Events

Income Tax Provisions

In December 2014, the Corporation and the tax authorities reached a settlement, which included the dismissal of the tax administrative relief on the 2005, 2006 and 2008 returns.

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group’s subsidiary in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

Accordingly, the Group recognized expenses of $15,015 thousand in the combined statements of comprehensive income for the year ended December 31, 2014.

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b. Defined benefit plans

The Corporation of the Group adopted the defined benefit plan under the Labor Standards Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Corporation contribute amounts equal to 9% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund the return generated by employees’ pension contribution should not be below the interest rate for a 2-year time deposit with local banks.

Discount rate Expected rate of salary increase Expected return on plan assets	Measurement Date
	December 31, 2014 1.50% 1.00% 1.75%

The overall expected rate of return on plan assets are based on the asset’s historical return trends and the forecast of market which the assets are in for the period of relative obligations existing, and considering the use of the aforementioned plan assets and the impact of lowest gains to make the estimation.

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

	For the Year	For the Year
		Ended
	December 31,
		2014
Current service cost	$	42,918
Interest cost		11,040
Expected return on plan assets		(6,779)
Losses arising from curtailment or settlement		164,928
	$	212,107
An analysis by function
Operating cost	$	178,588
Operating expenses		33,519
	$	212,107

289

Specially Recorded Events

Actuarial losses (net of tax) recognized in other comprehensive income for the year ended December 31, 2014 was losses of $1,703 thousand. The cumulative amounts of actuarial losses recognized in other comprehensive income as of December 31, 2014 was $25,954 thousand.

The amount included in the combined balance sheet arising from the Group’s obligation in respect of its defined benefit plans was as follows:

	December 31,
	2014
Present value of the funded defined benefit obligation	$ (640,962)
Fair value of plan assets	222,001
Net liability arising from defined benefit obligation	$ (418,961 )

Movements in the present value of the defined benefit obligation were as follows:

	For the Year
	Ended
	December 31,
	2014
Opening defined benefit obligation	$ (780,157)
Current service cost	(42,918)
Interest cost	(11,040)
Actuarial losses	(4,817)
Losses on curtailments	169,468
Benefits paid	28,502
Closing defined benefit obligation	$ (640,962 )

Movements in the present value of the plan assets were as follows:

	For the Year
	Ended
	December 31,
	2014
Opening fair value of plan assets	$ 415,356
Expected return on plan assets	6,779
Contributions from the employer	26,651
Benefits paid	(22,255)
Plan assets gains	2,765
Assets distributed on settlements	(207,295 )
Closing fair value of plan assets	$ 222,001

The major categories of plan assets at the end of the reporting period for each category were disclosed based on the information announced by Bureau of Labor Funds, Ministry of Labor:

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	For the Year
	Ended
	December 31,
	2014
Bank deposit	19.12
Domestic debt securities	13.90
Domestic equity securities	30.49
Foreign debt securities	14.46
Foreign equity securities	19.20
Others	2.83

The Group expects to make a contribution of $29,339 thousand to the defined benefit plans during the annual period beginning after 2014.

21. EQUITY

a. Share capital

	December 31,
	2014
Number of shares authorized and issued (in thousands)	980,000
Capital authorized and issued	$ 9,800,000

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

b. Capital surplus

	December 31,	December 31,
		2014
May be used to offset a deficit, distributed as cash dividends, or
transferred to share capital
Donations	$	44,803
Treasury stock transactions		2,187,988
May not be used
Adjustment to capital surplus due to nonproportional investment in
investee’s shares issued for a capital increase		1,543
	$	2,234,334

c. Retained earnings and dividend policy

291

Specially Recorded Events

unappropriated earnings of prior years, should be distributed as follows:

a. Remuneration to directors and supervisors Not more than 2% b. Bonus to employees 3% c. Dividends 95%

The appropriations will be recommended by the board of directors and resolved in the shareholders’ meeting.

For the year ended December 31, 2014, the proposed bonuses to employees was $68,084 thousand and the proposed remunerations to directors and supervisors was $45,399 thousand. The bonus to employees and remuneration to directors and supervisors represented 3% and 2%, respectively, of net income (net of the bonus and remuneration). Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the combined financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the combined financial statements are authorized for issue, the differences are recorded as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing the amount of the share bonus by the fair value of the shares. The fair value of the shares refer to the closing price (after considering the effect of cash and share dividends) of the shares on the day immediately preceding the shareholders’ meeting.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Corporation.

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The appropriations from the 2013 earnings, which included dividends and the bonus to employees and the remuneration to directors and supervisors, were as follows:

Legal reserve Cash dividends	For the Year Ended December 31, 2013
	Appropriation of Earnings Dividends Per Share (NT$) $ 230,841 1,960,000 $ 2.0

The bonus to employees and the remuneration to directors and supervisors for 2012 were as follows:

Amounts approved in shareholders’ meetings Amounts recognized in respective financial statements		For the Year Ended December 31, 2013
		Bonus to Employee Bonus Remuneration to Directors and Supervisors $ 61,895 $ 41,263 61,895 41,263 $ - $ -

The differences between the approved amounts of the bonus to employees and the remuneration to directors and supervisors and the amounts recognized in the financial statements for the year ended December 31, 2013 were primarily due from changes in estimates and were adjusted to profit and loss for the year ended December 31, 2014.

The appropriations of earnings for 2014 had been proposed by the Corporation’s board of directors on March 27, 2015. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	306,834	$ -
Cash dividends		2,156,000	2.2

d. Special reserves appropriated under Rule No. 1010012865 issued by the FSC

293

Specially Recorded Events

The Corporation’s special reserve relating to land reversed on disposal was $18,763 thousand in 2014.

22. OPERATING REVENUES AND COSTS

Operating revenues Sales revenue Rental revenue Property sales Other revenue Less: Sales returns and allowances Net operating revenues Operating costs Cost of goods sold Rental cost Property selling cost Total operating costs Gross profit	For the Year Ended December 31, 2014 $ 12,872,493 703,613 4,023,449 29,751 (30,170 ) 17,599,136 13,117,288 588,091 1,047,992 14,753,371 $ 2,845,765

23. NET PROFIT AND OTHER COMPREHENSIVE INCOME (LOSS) FROM CONTINUING OPERATIONS

a. Other gains and losses

	For the Year
	Ended
	December 31,
	2014
Donation expenses (Note 29)	$ (421,575)
Loss on impairment of financial assets (Note 9)	(49,510)
Net forgien exchange gain	25,827
Loss on disposal of investment	(9,409)
Loss on disposal of property, plant and equipment	(7,639)
Loss on disposal of investment properties	(2,675)
Others	(20,127 )
	$ (485,108 )

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b. Other income

	For the Year
	Ended
	December 31,
	2014
Dividends	$ 23,214
Interest income - bank deposits	2,458
Others	19,071
	$ 44,743
Depreciation and amortization
	For the Year
	Ended
	December 31,
	2014
Summarized by function
Operating costs	$ 644,659
Operating expenses	71,535
Nonoperating expenses	9
	$ 716,203
Employee benefit expense
	For the Year
	Ended
	December 31,
	2014
Short-term employee benefits
Salary	$ 1,073,107
Labor and health insurance	64,105
Others	40,584
	1,177,796
Retirement benefits (Note 20)
Defined contribution plans	15,015
Defined benefit plans	85,005
	100,020
Termination benefits	127,102
Other employee benefits	3,294
	$ 1,408,212
Summarized by function
Operating costs	$ 817,413
Operating expenses	590,799
	$ 1,408,212

c. Depreciation and amortization
d. Employee benefit expense

295

Specially Recorded Events

24. INCOME TAX

a. Income tax recognized in profit or loss
1) The major components of tax benefit (expense) were as follows:

	For the Year
	Ended
	December 31,
	2014
Current tax
Current year	$ (97,747)
Prior periods	341,276
Deferred tax
Current year	(22,436 )
Income tax benefit recognized in profit or loss	$ 221,093

2) A reconciliation of accounting profit and income tax expenses is as follows:

	For the Year	For the Year
		Ended
	December 31,
		2014
Profit before tax from continuing operations	$	2,751,750
Income tax expense calculated at the statutory
rate	$	482,614
Nondeductible expenses in determining taxable
income		72,321
Tax-exempt income		(466,071)
Additional income tax on unappropriated
earnings		11,757
Adjustments for deferred tax		19,562
Adjustments for prior years’ tax		(341,276 )
Income tax expense recognized in profit or loss	$	(221,093 )

The applicable tax rate used by the Corporation and subsidiaries in Taiwan was the corporate tax rate of 17%, the applicable tax rate used by the subsidiaries in Mongolia was 10%, and the applicable tax rate used by the subsidiaries in China is 25%.

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b. Income tax recognized in other comprehensive income

	For the Year
	Ended
	December 31,
	2014
Deferred tax
Current year
Translation of foreign operations	$ (111,223)
Actuarial gains (losses) on the defined benefit plan	349
Total income tax recognized in other comprehensive
income	$ (110,874 )

c. Deferred tax assets and liabilities

Movement of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2014

Deferred Tax Assets Unamortized manufacturing costs Tax losses Defined benefit obligation Impairment loss on assets Deferred estate marketing expense Other Deferred Tax Liabilities Land value increment tax Investment income recognized under the equity method Exchange difference on the translation of foreign operations Other	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 42,353 $ 34,116 $ - 62,700 13,000 - 62,016 8,858 349 56,426 (208) - 41,404 (17,344) - 42,245 (31,253 ) - $ 307,144 $ 7,169 $ 349 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 6,420,466 $ - $ - 246,536 28,247 - 29,134 - 111,223 - 1,358 - $ 6,696,136 $ 29,605 $ 111,223	Others $ - - - - - - $ - Others $ - 314,084 - - $ 314,084	Closing Balance $ 76,469 75,700 71,223 56,218 24,060 10,992 $ 314,662 Closing Balance $ 6,420,466 588,867 140,357 1,358
			$ 7,151,048

297

Specially Recorded Events

d. Integrated income tax

	December 31,	December 31,
		2014
Unappropriated earnings generated on and after January
1, 1998	$	3,202,974
Imputation credit accounts	$	888,952

The creditable ratios for the distribution of the 2014 earnings were 20.97% (expected ratio).

e. Income tax assessments

Please refer to Note 19 for the tax authorities’ assessments.

25. EARNINGS PER SHARE

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

Net Profit for This Year

			For the Year
			Ended
			December 31,
			2014
Earnings	used in the computation	of basic earnings per share	$ 3,068,346
Earnings	used in the computation	of diluted earnings per share	$ 3,068,346

Number of Shares

Number of Shares
	Unit: In Thousands
	For the Year
	Ended
	December 31,
	2014
Weighted average number of common shares used in the
computation of basic earnings per share	980,000
Effect of dilutive potential common shares:
Bonus issue to employee	1,736
Weighted average number of common shares used in the
computation of diluted earnings per share	981,736

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26. OPERATING LEASE AGREEMENTS

The Group as Lessor

Operating leases relate to the investment property owned by the Group with lease terms between 1 to 50 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have a bargain purchase option to acquire the property at the expiry of the lease period.

The future minimum lease payments of non-cancellable operating lease were as follows (not include the royalty the Corporation received for the land use right):

Not later than 1 year Later than 1 year and not later than 5 years later than 5 years	December 31, 2014 $ 385,486 1,341,169 8,484,748 $ 10,211,403

27. CAPITAL MANAGEMENT

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

28. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value

The Group’s management believes the carrying amounts of financial assets and financial liabilities recognized in the combined financial statements approximate their fair values or their fair values cannot be reliably measured.

299

Specially Recorded Events

2) Fair value measurements recognized in the combined balance sheets

a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014

Available-for-sale financial assets Domestic quoted stocks	Level 1 $ 106,285	Level 2 $ -	Level 3 $ -	Total $ 106,285

There were no transfers between Level 1 and 2 in the current and prior periods.

b. Categories of financial instruments

	December 31,
	2014
Financial assets
Loans and receivables (1)	$ 6,121,177
Available-for-sale financial assets (2)	664,741
Financial liabilities
Amortized cost (3)	5,737,796

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, and trade and other receivables.
2) The balances included the carrying amount of available-for-sale financial assets measured at cost.
3) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, long-term loans, trade and other payables.

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c. Financial risk management objectives and policies

The Group’s Corporate Treasury function is resposible for the financial plans, capital allocation and risk management, and coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (mainly including currency risk and interest rate risk), credit risk and liquidity risk

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

a) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

	December 31,
	2014
Assets
USD
	$ 15,258
Liabilities
USD	16,126

Sensitivity analysis

The Group was mainly exposed to USD.

The following are the details of the Group’s sensitivity to a 10% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. For the year ended December 31, 2014, for a 10% strengthening/weakening of New Taiwan dollars against U.S. dollars, there would be an decrease/increase of $2,747 thousand on pre-tax profit. The effect of exchange rate changes was mainly attributable to the exposure outstanding on USD receivables and payables, which were not hedged at the end of the reporting period.

301

Specially Recorded Events

b) Interest rate risk

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

	December 31,	December 31,
		2014
Fair value interest rate risk
Financial assets	$	207,527
Financial liabilities		1,710,000
Cash flow interest rate risk
Financial assets		542,764
Financial liabilities		1,452,532
Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and nonderivative instruments at the end of the reporting period.

If interest rates had been 100 basis point higher/lower and all other variables were held constant, the Group’s pre-tax profit for the year ended December 31, 2014 would decrease/increase by $9,098 thousand.

2) Credit risk

Credit risk represents the potential loss that would be incurred by the Corporation if the counter-parties breach contracts. Financial instruments with positive fair values at the

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balance sheet date are evaluated for credit risk. The counter-parties to the foregoing financial instruments are reputable financial institutions and business organizations. Management does not expect the Corporation’s exposure to default by those parties to be material.

On some properties sold in installments, the Group had the secondary priority mortgage rights to ensure the protection of the Group’s interests.

3) Liquidity risk

Liquidity and interest risk rate tables

To the extent that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2014

On Demand or Less than 1 Month Nonderivative financial liabilities Noninterest bearing $ 273,107 Fixed interest rate assets 1,310,870 Floating interest rate assets - $ 1,583,977	1-3 Months $ 543,014 400,725 244,920 $ 1,188,659	3 Months to 1 Year $ 1,759,142 - 434,168 $ 2,193,310	1 Year to 5 Years $ - - 813,991
			$ 813,991

303

Specially Recorded Events

Financing facilities

Unsecured bank facility Amount used Amount unused Secured bank facility Amount used Amount unused Unsecured bank overdraft facility Amount used Amount unused	December 31, 2014 $ 1,806,074 14,201,291 $ 16,007,365 $ 1,356,458 - $ 1,356,458 - 650,000 $ 650,000

29. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its affiliates, which are related parties of the Corporation, have been eliminated on combination and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

a. Purchases of goods

Purchase of Goods For the Year Ended December 31 2014

Associates $ 2,680,906

The related-party transactions were conducted under normal terms.

Payables to Related Parties For the Year Ended December 31 2014

Associates

$ 163,760

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b. Compensation of key management personnel

For 2014, the compensation to directors and other key management personnel was as follows:

	For the Year	For the Year
	Ended December
		31, 2014
Short-term employee benefits	$	75,214
Post-employment benefits		8,433
	$	83,647

30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets have been pledged or mortgaged as collaterals for bank loans.

	December 31, 2014	December 31, 2014
Property, plant and equipment	$	596,543
Pledge deposits		29,800
Long-term prepayments for lease		63,836
Intangible assets		1,402
Prepayments for lease		1,374
	$	692,955

31. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. As of December 31, 2014, the Corporation had unused letters of credits of US$8,949 thousand.
b. As of December 31, 2014, the Corporation had guarantee notes payable for its debt of $18,606,088 thousand, which was not reflected in the combined financial statements.
c. Huaku Development Co., Ltd. (“Huaku”) filed an appeal with the Taipei District Civil Court (the “Court”) for the Corporation to pay a co-building trade business tax of $38,370 thousand. The Court ruled that the Corporation should make this payment. The Corporation brought this case to a higher court; as of December 31, 2014, this case was still pending. The Corporation accrued a possible loss of $38,370 thousand for this case in 2012 financial statements.
d. On June 25, 2013, the shareholders resolved that, in order to enhance the long-term business relationship with Saudi Arabian Basic Industries Corporation as well as to maintain the relationship with the Kingdom of Saudi Arabia (“Saudi Arabia”), the Corporation shall donate its share of Al-Jubail’s profit, with US$50,000 thousand as the donation limit, to the government or organizations in Saudi Arabia.

In October 2013, the Corporation and Al-Jubail signed a Memorandum of Understanding (MOU); the main contents of the MOU are summarized as follows:

305

Specially Recorded Events

1) The Corporation agreed to donate US$42,000 thousand by way of six equal semiannual installments of US$7,000 thousand each, to the government or a nonprofit organization in Saudi Arabia. The first donation should be made by October 31, 2013.
2) The donation will be funded from the dividends of Al-Jubail that have been declared and are to be distributed to the Corporation. Al-Jubail will keep the above funds in a separate account in its name in a local bank. As administrator of the donations, Al-Jubail should designate the recipient of the donation.

In October 2013, the Corporation donated $209,440 thousand (US$7,000 thousand), part of its share of Al-Jubail’s profit, as the first donation installment. The Corporation donated $208,635 thousand (US$7,000 thousand) in June 2014 and $212,940 thousand (US$7,000 thousand) in December 2014 as the second and third donation installments.

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

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

December 31, 2014

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	15,258	31.65	$ 482,916
Financial liabilities
Monetary items
USD		16,126	31.65	510,388

33. SEPARATELY DISCLOSED ITEMS

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Corporation and its investees:
1) Financings provided: None
2) Endorsements/guarantees provided: Table 1
3) Marketable securities held (excluding investment in subsidiaries, associates and jointly controlled entities): Table 2
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None

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

35. SEGMENT INFORMATION

307

Specially Recorded Events

a. Segment revenues and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment.

Fertilizer and chemical Construction Others Share of the profits of associates Other gains and losses Other income Finance costs Profit before tax (continuing operations)		For the Year Ended December 31, 2014	For the Year Ended December 31, 2014
		Segment Revenues $ 12,447,124 4,727,062 424,950 $ 17,599,136	Segment Income $ (1,532,734) 3,085,750 (76,540 ) 1,476,476 1,776,168 (485,108) 44,743 (60,529 ) $ 2,751,750

Segment revenue reported was generated from external customers. There were no intersegment sales in 2014.

b. Segment total assets

Fertilizer and chemical Construction Others Segment total liabilities Fertilizer and chemical Construction Others	December 31, 2014 $ 57,025,722 13,706,964 704,223 $ 71,436,909 December 31, 2014 $ 14,181,625 4,597,639 198,838 $ 18,978,102

c. Segment total liabilities
d. Geographical information

The Group operates in two principal geographical areas - Taiwan and China.

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

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Taiwan China	Revenue from External Customers For the Year Ended December 31, 2014 $ 17,510,273 88,863 $ 17,599,136	Non-current Assets

		December 31, 2014 $ 58,460,756 995,342 $ 59,456,098

Non-current assets exclude non-current assets classified as financial instruments, deferred tax assets and post-employment benefit assets.

e. Information about major customers

The Corporation and its affiliates had no sales to a single customer that were at least 10% of total sales in 2014.

36. AFFILIATES

a. Information on affiliates is as follows:

Name of Affiliate	Relationship with the Corporation	Nature of Business	Shareholding or Capital Contribution Ratio
Taifer Chemicals International Inc. Taifer (Cayman) International Group Co., Ltd. Taifer Biotech Co., Ltd. TR Electronic Chemical Co., Ltd.	Direct subsidiary Direct subsidiary Direct subsidiary Indirect equity-method investee through Taifer (Cayman) International Group Co., Ltd.	International trade; wholesale of fertilizer, tobacco, liquor, beverage, forage, machinery, electrical equipment, etc.; development, operation and management of residential and factory buildings; special zone development; investment in and construction of public works, development of new towns and districts; agent services on regional district requisition and land adjustment; real estate rental or leasing, and gas station Investment and holding Wholesale and retail of products for organic agricul ture Investment and holding	100% 100% 100% 51%

(Continued)

309

Specially Recorded Events

Name of Affiliate	Relationship with the Corporation	Nature of Business	Shareholding or Capital Contribution Ratio
TR Electronic Chemical (Kunshan) Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Hasbo Biotech Co., Ltd. Taifer International (Samoa) Group Co., Ltd. Taifer Chemical International Co., Ltd.	Indirect equity-method investee in which the Corporation has an investment through Taifer (Cayman) International Group Co., Ltd. and TR Electronic Chemical Co., Ltd. Direct subsidiary Indirect equity-method investee through Taiwan Yes Deep Ocean Water Co., Ltd. Indirect equity-method investee through Taifer Chemicals International Inc. Indirect equity-method investee in which the Corporation has an investment through Taifer Chemicals International Inc. and Taifer International (Samoa) Group Co.,Ltd.	Manufacture of nitric acid, hydrofluoric acid, ammonia, phosphoric acid, oxalic acid, ammonia fluoride as well as LCDs (liquid crystal displays) and IC (integrated circuit) strippers 1) Wholesale of drinks, food and grocery and other articles for daily use; tobacco and liquor; glass and pottery; hygiene products; fertilizers and other chemical products; and cosmetics; and 2) International trade Wholesale of drinks and cosmetics Investment and holding Real estate rental or leasing	51% 100% 100% 100% 100%

(Concluded)

b. Increases, decreases, or changes in the affiliates included in the current combined financial statements: Please refer to Note 4.
c. The names and shareholding or capital contribution ratios of affiliates not listed in the current combined financial statements and the reasons they are not included in the combined statements: None.
d. The adjustment method and treatment adopted if the opening and closing dates of the affiliates’ accounting year are different from those of the Corporation: None.
e. An explanation of any differences in accounting policies between the affiliates and the Corporation. The method and substance of adjustments adopted in the event of any non-conformity with the Generally Accepted Accounting Principles of the Republic of China: None.
f. Special operational risks of overseas affiliates: None.

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g. Statutory or contractual restrictions on distribution of earnings by the various affiliates: None.
h. Amortization methods and period for consolidated borrowings (loans): None.
i Marketable securities issued by the Corporation and held by the affiliates: None.
j Other matters of significance or explanations that would contribute to the fair presentation of the combined financial statements of the affiliates: None.

311

Financial Summary

Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	No No No
Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent		No No No
Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries		No Yes Yes
Maximum Collateral/ Guarantee Amounts Allowable (Note 2)		$ 26,196,308 26,196,308 26,196,308
Ratio of Accumulated Amount of Collateral to Net Equity of the Latest Financial Statement		0.31 0.04 0.01
Value of Collaterals Property, Plant, or Equipment		$ - - -
Ending Used Balance		$ 162,438 23,500 -
Ending Balance		$ 162,438 (US$ 5,430 thousand) 23,500 50,000
Maximum Balance for the Period		$ 298,890 (US$ 10,000 thousand) 30,000 50,000
Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 1)		$ 162,482 (Note 3) 26,154 63,193
Endorsee/Guarantee	Nature of Relationship	Indirect equity-method investee in which the Corporation provided endorsement and guarantee according to the percentage of ownership Subsidiary Subsidiary
	Name	TR Electronic Chemical Co., Ltd. Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd.
	Endorser/ Guarantor	Taiwan Fertilizer Co., Ltd. (the “Corporation”)
	No.	0

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	Note	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2
December 31, 2014	Market Value or Net Asset Value	$ 12,124 129,282 144,849 203,006 45,146 923,897 32,502 13,537 106,285
	Percentage of Ownership	6.71 9.76 10.00 18.50 19.75 2.00 10.42 16.67 0.40
	Carrying Value	$ 15,000 120,000 100,000 200,000 42,000 52,800 20,989 7,667 106,285
	Shares or Units (Thousands)	1,500 12,000 10,000 20,000 4,200 12,568 2,855 741 9,202
	Financial Statement Account	Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Available-for-sale financial assets - noncurrent
Relationship with the Holding Company		- - - - - - - - -
Marketable Securities Type/ Name and Issuer		Common stocks Ding-Tang Top Taiwan V Venture Capital Co., Ltd. Eminent Venture Capital Corporation Eminent II VC Corp TSCBioVentures Capital Co. Taiwan Stock Exchange Corporation Visgeneer Inc. TaiAn Technologies Corporation China Petrochemical Development Corporation
Holding Company Name		Taiwan Fertilizer Co., Ltd.

313

Financial Summary

Note	Note	-
Notes/Accounts Receivable (Payable)	% to Total	43
	Ending Balance	$ (163,760)
Abnormal Transaction	Payment Terms	30 days
	Unit Price	Determined under the considerations of international market price and production cost
Transaction Details	Payment Terms	Same as those for third parties
	% to Total	18
	Amount	$ 2,680,906
	Purchase (Sale)	Purchase
Nature of Relationship		Equity-method investee
Related Party		AI-Jabail Fertilizer Company
Company Name		Taiwan Fertilizer Co., Ltd.

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Allowance for Impairment Loss	Allowance for Impairment Loss	$ -
Amounts Received	in Subsequent Period	$ -
Overdue	Actions Taken	-
	Amount	$ -
Turnover Rate		-
Ending Balance		Other receivable $ 144,641
Relationship		Jointly controlled entity
Related Party		TR Electronic Chemical Co., Ltd.
Company Name		Taiwan Fertilizer Co., Ltd.

315

Financial Summary

Percentage of Transaction Amount to Consolidated Operating Revenue or Total Assets	Percentage of Transaction Amount to Consolidated Operating Revenue or Total Assets	- - - -	- - -
Transaction Details	Transaction Terms	Based on regular terms Based on regular terms Based on regular terms Based on regular terms	Based on regular terms Based on regular terms Based on regular terms
	Amount	$ 1,430 10,525 1,235 6,165	25,565 45,841 12,736
	Account	Sales revenue Rental revenue Other revenue Rental revenue	Accounts receivable Sales revenue Account payable - related party
Flow of Transaction (Note)		1 1 1 1	2 2 2
Counter-party		Taiwan Yes Deep Ocean Water Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer Chemicals International Inc.	Hasbo Biotech Co., Ltd. Hasbo Biotech Co., Ltd. Taifer Biotech Co., Ltd.
Company Name		Taiwan Fertilizer Co., Ltd.	Taiwan Yes Deep Ocean Water Co., Ltd.
Number		0	1

316

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Note	Note	Associate Subsidiary Subsidiary Associate Subsidiary Subsidiary Jointly controlled entity Subsidiary Subsidiary Subsidiary
Investment (Loss) Income		$ 1,777,659 1,083 (29,845) (1,490) (99,401) 115 (99,401) (13,471) 6,500 6,533
Net (Loss) Income of the Investee		$ 3,979,208 1,083 2,015 (6,646) (99,401) 115 (194,905) (13,471) 6,500 6,533
Balance as of December 31, 2014	Carrying Value	$10,197,486 70,418 957,813 4,151 68,893 70,695 68,893 (103,530) 46,619 46,354
	Percentage of Ownership	50.00 100.00 100.00 22.42 100.00 100.00 51.00 100.00 100.00 100.00
	Shares/Units (Thousands)	6,715 units 5,500 95,000 4,167 10,966 units 10,000 - 24,000 - -
Investment Amount	December 31, 2013	$ 3,050,000 101,300 974,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	December 31, 2014	$ 3,050,000 126,300 1,224,235 50,004 321,900 100,000 321,962 240,000 42,618 41,077
	Main Businesses and Products	Manufacture of urea, 2-EH (2-ethyl hexanol), and DOP (dioctyl phthalate) International trade; wholesale of fertilizer, tobacco, liquor, beverage, forage, machinery, electrical equipment, etc.; development, operation and management of residential buildings and factory buildings; special zone development; investment in and construction of public works; development of new towns and districts; agent services on regional district requisition; land adjustment; and real estate rental or leasing a) Wholesale of drinks, food and grocery and other articles for daily use; tobacco and liquor; glass and pottery; hygiene products; fertilizers and other chemical products; and cosmetics; and b) International trade Manufacture of biopesticides, microbial fertilizers, animal feed additives and probiotics Investment and holding Wholesale and retail of products for organic agriculture Investment and holding Wholesale of Nonalcoholic Beverages and Cosmetics Investment and holding Real estate rental and leasing
	Location	Kingdom of Saudi Arabia Taiwan Taiwan Taiwan Cayman Islands Taiwan Cayman Islands Taiwan Samoa Mongolia
	Investee	Al-Jubail Fertilizer Company Taifer Chemicals International Inc. Taiwan Yes Deep Ocean Water Co., Ltd. Bion Tech Inc. Taifer (Cayman) International Group Co., Ltd. Taifer Biotech Co., Ltd. TR Electronic Chemical Co., Ltd. Hasbo Biotech Co., Ltd. Taifer International (Samoa) Group Co., Ltd. Taifer Chemical International Co., Ltd.
	Investor	Taiwan Fertilizer Co., Ltd. Taifer (Cayman) International Group Co., Ltd. Taiwan Yes Deep Ocean Water Co., Ltd. Taifer Chemicals International Inc. Taifer International (Samoa) Group Co., Ltd.

317

Financial Summary

Accumulated Inward Remittance of Earnings as of December 31, 2014	Accumulated Inward Remittance of Earnings as of December 31, 2014	US$ -	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$347,042 (US$10,965) (Note 3) NT$347,042 (US$10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.	Accumulated Investment in Mainland China as of December 31, 2014 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment NT$347,042 (US$10,965) (Note 3) NT$347,042 (US$10,965) (Note 3) NT$31,435,569 (Note 2) Note 1: The amount was based on the financial statements reviewed by the auditors for the same year. Note 2: The limit is based on the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission under the Ministry of Economic Affairs; the amount is 60% of shareholders’ equity or of consolidated shareholders’ equity. Note 3: The foreign currency amounts of original investment amount and carrying value were translated into New Taiwan dollars at the exchange rate as of December 31, 2014. Note 4: The foreign currency amount of investment gain/loss was translated into New Taiwan dollars at an average exchange rate for the year ended December 31, 2014.
Carrying Value as of December 31, 2014		US$ 2,177 (NT$ 68,893) (Note 3)
Investment Gain (Loss)		(US$ (3,280) (NT$ (99,401)) (Note 4)
% Ownership of Direct or Indirect Investment		51
Net Income (Loss) of the Investment		US$ (6,431) (NT$ (194,905)) (Note 3)
Accumulated Outflow of Investment from Taiwan as of December 31, 2014		US$ 10,965 (NT$ 347,042) (Note 3)
			Limit on Investment	NT$31,435,569 (Note 2)
Investment Flows	Inflow	US$ -
	Outflow	US$ -
	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	US$ 10,965 (NT$ 347,042 (Note 3)
			Investment Amounts Authorized by Investment Commission, MOEA	NT$347,042 (US$10,965) (Note 3)
	Investment Type	The investor companies were incorporated in Mainland China by the Company which was incorporated in the area other than Taiwan and Mainland China in order to invest in Mainland China.
	Total Amount of Paid-in Capital	US$ 21,500 (NT$ 680,475) (Note 3)
			Accumulated Investment in Mainland China as of December 31, 2014	NT$347,042 (US$10,965) (Note 3)
	Main Businesses and Products	Manufacture of nitric acid, hydrofluoric acid, ammonia, phosphoric acid, oxalic acid, ammonia fluoride and LCD and IC Stripper
	Investee Company Name	TR Electronic Chemical (Kunshan) Ltd.

318

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(III) Relationship Report: None

II. Conditions for Fulfilling Private Placement Negotiable Securities for recent years and up to the date of publication of the annual report: None
III. Conditions for holding or disposition of the Company’s shares by subsidiaries for the recent years and up to the date of publication of the annual report: None
IV. Other Necessary Supplementary Statements: None
Part Nine: Matters for Significant Effects on Shareholders’ Equityor Securities Prices as Set out in Paragraph 2, Clause 2 of Article 36 of Securities Trading Law for the current years and up to the publication of the annual report: None

319

Specially Recorded Events

Part 3 note 「 Continuing education/training of directors and supervisors in 2014 」

Title	Name	Date	Date	Host by	Training title	Duration	note
		From	To
Chairman	Li, Fuxing	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Hu,Xinghua	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Li, Canglang	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Lin, Jianrong	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Li, Shiyu	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Cai, Changhai	11/25/2014	11/25/2014	S&F institute	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Director	Hsu, Chinlien	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Supervisor	Wu, Yuanren	11/18/2014	11/25/2014	S&F institute	Studies Course of Directors and supervisors - Taipei classes	12	Have participated
		11/13/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Supervisor	Chen, Zailai	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated
Supervisor	Cai, Linglan	11/25/2014	11/25/2014	TCGA	Obligations and responsibilities of the company、directors and supervisors under Securities and Exchange Act	3	Have participated

320

Taiwan Fertilizer Co., Ltd

Chairman: Li Fuxing

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使用環保再生紙與大豆油墨印製，致力於珍惜資源與環境保護。

AI assistant

TFC — Annual Report 2014

51902_rns_2015-07-09_13e6a350-e09b-41fe-8661-6d235f1c1843.pdf

I. Spokesman of TFC:

II. Address and Telephone Number of Headquarter and all Plants:

Headquarter

III. Stock Transfer Office :

IV. Certified Accountants for the Financial Statements of the Recent Year:

VI. Website of Taiwan Fertilizer Co., Ltd.: www.taifer.com.tw

Annual Report for 2014

Table Of Contents

Part one ： Letter to Shareholders

Operation overview in 2014:

Operation plan in 2015:

Future development strategy :

Part Two: Company Profile

I. Incorporation Date: May 1st, 1946

II. Company History:

Part Three: Corporate Governance Report

I. Organization System

(I) Corporation Organization

(II)Affairs in charge for each major departments

II.Information on Directors, Supervisors, President, Vice Presidents, and Management Team

(I)Information on Directors and Supervisors

Information on Directors and Supervisors (I)

Form 1: Key Shareholders of Corporate Shareholders

Form 2: Key Shareholders as Corporations: None

Information on Directors and Supervisors (II)

(II) Information on the President, Vice Presidents and Management Team

(III)Remuneration paid to directors, supervisors, president and vice presidents for the recent years

Remuneration Scale Table

II. Remuneration for Supervisors (Summary of ways for coordinative disclosure of names)

III. Remuneration for the President and Vice Presidents (Summary of ways for coordinative disclosure of names)

Remuneration Scale Table

III.Corporate Governance Conditions

(I) Operation of the Board of Directors

(III) Conditions for Corporate Governance and Operation and Difference and Causes of Governance Practice Rules on Listed Companies

(V)Performance of Social Responsibilities:

(VI) Conditions for performing good faith management by the Company and actions taken

Article 5 (Responsible unit in charge of the handling of material inside information)

Article 6 (Confidentiality firewall operations - Personnel)

4.What written material is delivered.

5.Any other relevant details.

Article 16 (Internal controls)

(IX) Status of the Execution of the Internal Control System

2.Major resolutions of the Board of Directors for 2014 and as at the publication date hereof

IV. Information on Accountant Fees

(I) Information of Fees to CPA and Scale Table

Information about Fees to Accountants

(I) Information on transfer of shares:

(II) Information about stock pledge :

VIII. Information Disclosing the Spouse, Kinship Within the Second Degree andRelationship between any of the Top Ten Shareholders in Percentage:

IX. Percentage Number of Shares and Consolidate Percentage of the Company, Directors, Supervisor, Managers and the Businesses that are Controlled by the Company Directly or Indirectly on the Invested Company

Part Four: Capital Overview

I. Capital and Shares

(I) Source of Capital Stock

Information for shelf registration: N.A.

(II) Structure of Shareholders

(III) Shareholding Distribution Status

1.Common stocks

2.Preferred stocks: None.

(IV) List of Major Shareholders

(V) Market Price, Net Value, Earnings, Dividends Per Share of the Latest Fiscal Years, and Related Information

(VI) Company’s Dividend Policy and Implementation

(VII) Effect of the uncompensated rationed shares deliberated at this meeting of shareholders on the Company’s business performance and earnings per share: N.A.

(VIII) Dividends for Employees and Remuneration for Directors and Supervisors

(IX) Buyback of the Shares of the Company

II. Corporate Bonds: None.

III. Preferred Stocks: None.

IV. Overseas Depositary Receipts: None

V. Employee Stock Options: None.

VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

VII. Financing Plans and Implementation: N.A.

Part Five: Operation Highlights

I. Business Activities

(I) Business Scope

◆ Major products of the Company

(II) Industry overview

1. Macro-economic environment

(4) Deep ocean water (DOW)

TFC Annual Report 2014