U-MING — AGM Information 2017

Jul 19, 2017

==> picture [35 x 35] intentionally omitted <==

U-MING MARINE TRANSPORT CORP.

Minutes of 2017 Shareholders’ Meeting

Time: 9:00 a.m., June 13, 2017

Place: Taipei Hero House’s Auditorium (No. 20, Changsha Street, Section 1, Taipei, Taiwan)

Total number of outstanding shares: 845,055,712 shares

Total shares represented by presence of shareholders: 504,933,441 shares (59.75%) Attendee Directors: HSU Shu-Tong

CHANG Tsai-Hsiung LEE Kun-Yen ONG Choo Kiat CHU Shao-Hua (Independent Director) LIU Chorng-Jian (Independent Director)

Attendee Supervisors: CHANG Tzu-Pong, HSU Shu-Ping

Chairman: HSU Shu-Tong, Chairman of the Board of Directors Recorder: Alex Chen

Important Resolutions

I. Matters To Be Reported

1. 2016 Business Report

2. 2016 Financial Statements

3. Supervisor’s Review Report on the 2016 Financial Statements

II. Matters To Be Ratified

1. The 2016 Business Report and Financial Statements

Explanation:

• (1) The supervisor’s review report is hereby issued after reviewing the 2016 financial statements (including the business report and the independent auditor’s report issued by CPA Li-Wen Kuo and CPA Ching-Pin Shih of Deloitte & Touche; please refer to the attachment) without any nonconformity identified.

• (2) Please approve.

Resolved that:

Shareholders who are present represented 504,933,441 votes in total (including electronic votes). 497,002,596 votes (including electronic votes) ratify the motion, accounting to 98.43% of total votes；100,203 votes (including electronic votes) against the motion；5,592,868 votes (including electronic votes) abstained. The motion is ratified.

1

2. The proposal for 2016 Deficit Compensation

Explanation:

• (1) Please refer to the 2016 Deficit Compensation proposed in accordancewith Article 27 of the Company’s Articles of Incorporation as follows:

	NT$
Unappropriated retained earnings of previous year	8,645,793,038
Less: Investment adjusted retained earnings by using
equity method	(1,361,953)
Less: 2016 actuarial gain & losses appropriated
retained earnings	(8,484,726)
Less: Retired treasury stock debit to retained earnings	(237,851,824)
Adjusted unappropriated retained earnings	8,398,094,535
Less: 2016 net losses	(878,353,346)
Add: reversal of special reserve by self-appropriated	337,185,643
Unappropriated retained earnings after offsetting
deficits	7,856,926,832

• (2) Please approve.

Resolved that:

Shareholders who are present represented 504,933,441 votes in total (including electronic votes). 497,579,125 votes (including electronic votes) ratify the motion, accounting to 98.54% of total votes；175,674 votes (including electronic votes) against the motion；4,940,868 votes (including electronic votes) abstained. The motion is ratified.

III. Matters to Be Discussed

1. To approve the proposal for distribution by cash from legal reserve

Explanation:

• (1) In accordance with article 241 of the Company Act, “Where a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders' meeting as required in the preceding Article, distribute its legal reserve and the following capital reserve, in whole or in part, by issuing new shares which shall be distributable as dividend shares to its original shareholders in proportion to the number of shares being held by each of them or by cash; where legal reserve is distributed by issuing new shares or by cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.”

2

• (2) It is proposed to distribute legal reserve, NT$633,791,784, by cash, which is NT$0.75 per share.

• (3) Upon the approval of the annual meeting of shareholders, it is proposed that the Board be authorized to resolve to adjust the amount per share based on the actual shares outstanding number on the dividend date for the legal reserve distribution by cash if there is an amendment of the number of shares outstanding before the date. The distribution of earnings is calculated to the dollar (round up to the dollar). The total amount of the odd shares will be booked as the other income of the Company. It is proposed that the Board authorized the Chairman to fix the record date of ex-cash dividend after the approved by the year 2017 annual shareholders’ meeting.

• (4) The legal reserve distribution will be distributed from the reserve during 1998 to 2009, and then from the reserve after 2010 if insufficient.

Resolved that:

Shareholders who are present represented 504,933,441 votes in total (including electronic votes). 497,668,405 votes (including electronic votes) ratify the motion, accounting to 98.56% of total votes；124,710 votes (including electronic votes) against the motion；4,902,552 votes (including electronic votes) abstained. The motion hereby is accepted as submitted.

2. To approve the amendment to the company bylaws on “Procedures for the Acquisition and Disposal of Assets”

Explanation:

• (1) According to official letter No. 1060001296 from Financial Supervisory Commission R.O.C.(Taiwan), it is proposed to amend the Company’s “Procedures for the acquisition and disposal of assets”. (Please refer to P. 28 to P. 35of the Meeting Handbook for the details.)

• (2) The proposal is hereby presented for referendum.

Resolved that:

Shareholders who are present represented 504,933,441 votes in total (including electronic votes). 497,646,468 votes (including electronic votes) ratify the motion, accounting to 98.56% of total votes；127,330 votes (including electronic votes) against the motion；4,921,869 votes (including electronic votes) abstained. The motion hereby is accepted as submitted.

IV.Extempore Motion: None

V. Meeting Adjourned

3

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders U-Ming Marine Transport Corporation

Opinion

We have audited the accompanying consolidated financial statements of U-Ming Marine Transport Corporation and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance 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 and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2016 are stated as follows:

4

Impairment of transportation equipment

According to IAS 36, the Group should periodically perform impairment assessment on assets. As the nature of the business of the Group pertains to marine transportation, the transportation equipment is material to its financial statements. Also, the estimates and assumptions adopted by the management for the assessment of impairment on the equipment thereof directly impact the recognition of impairment loss in the financial statements. As a result, impairment assessment of the transportation equipment is deemed to be a key audit matter. Refer to Note 5 to the financial statements for disclosure on impairment assessment of transportation equipment.

The main audit procedures we have performed in respect of the key audit matter stated above were as follows:

1. Understood and tested the design and implement of the key controls over the impairment assessment of property, plant and equipment.

2. Obtained and understood the calculation table of impairment assessment of transportation equipment.

3. Assessed and consulted with internal our specialist the reasonableness of accounting estimates used in the impairment assessment, such as the identification of cash-generating units, the confirmation of fair value of transportation equipment by obtaining supporting documents, and the discount rate and future cash flow used in determining the recoverable amount in discount cash flow method.

4. Tested the calculation of impairment loss according to the table provided by the management.

Income Tax

Tax credit for the overseas subsidiary’s earnings, which was deemed after-tax, used in the income tax returns was applied by U-Ming Marine Transport Corporation. The grant of tax credit depended on the decision of tax authority in accordance with tax law in different jurisdictions. Due to the uncertainty involved in the final decision of the tax authority of which the result may cause significant impact on the amount of current tax and deferred tax recognized in financial statements, the recognition of the tax credit has been considered as a key audit matter.

The main audit procedures we have performed in respect of the key audit matter stated above were as follows:

1. Obtained and understood the calculation, relevant accounting estimates, and income tax law applied.

2. Assessed the reasonableness of income tax related accounting estimates, including application of income tax law, obtained the application certificates of income tax law issued by tax authorities and tracked the final assessment result of income tax returns of prior years.

3. Obtained the resource documents for calculating income tax, including the final assessments result of income tax returns of prior years, tax certificates, financial reports, and earnings distribution document, and recalculated the amount of income tax.

Other Matter

We have also audited the parent company only financial statements of U-Ming Marine Transport Corporation as of and for the years ended December 31, 2016 and 2015 on which we have issued an unmodified opinion.

5

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance 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 and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the supervisors, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

6

1. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Li-Wen Kuo and Ching-Pin Shih.

Deloitte & Touche Taipei, Taiwan Republic of China

March 6, 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated 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 consolidated financial statements shall prevail.

7

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Trade receivables from unrelated parties Trade receivables from related parties Other receivables Fuel inventory Other current assets Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Investments accounted for using equity method Property, plant and equipment Deferred tax assets Prepayment for equipment Refundable deposits Long-term receivable - related parties Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings Short-term bills payable Financial liabilities at fair value through profit or loss - current Trade payables Other payables Current tax liabilities Current portion of long-term borrowings and bonds payable Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Bonds payable Bank loans Deferred tax liabilities Deferred revenue - non-current Net defined benefit liabilities - non-current Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Common share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2016 Amount % $ 13,540,718 23 237,569 1 8,250,475 14 331,103 1 54,545 - 171,096 - 261,993 1 184,423 - 23,031,922 40 134 - 892,943 1 2,447,985 4 28,315,931 49 36,226 - 2,390,657 4 98,973 - 894,230 2 35,077,079 60 $ 58,109,001 100 $ 3,100,000 5 2,357,157 4 119,978 - 199,243 1 661,745 1 103,920 - 5,132,241 9 153,307 - 11,827,591 20 - - 20,839,714 36 401,639 1 231,413 - 258,163 1 21,730,929 38 33,558,520 58 8,450,557 14 115,140 - 7,060,448 12 337,186 1 7,519,741 13 14,917,375 26 1,067,409 2 - - 24,550,481 42 $ 58,109,001 100		2015
				Amount % $ 16,375,872 26 1,014,670 2 8,692,432 14 350,000 - 81,852 - 120,869 - 350,969 1 249,425 - 27,236,089 43 125 - 892,943 1 1,977,723 3 30,968,544 49 107,525 - 1,543,005 3 107,154 - 884,448 1 36,481,467 57 $ 63,717,556 100 $ 7,130,000 11 2,395,020 4 161,665 - 94,806 - 786,544 1 181,542 1 4,581,707 7 286,797 1 15,618,081 25 992,420 2 18,447,976 29 470,727 1 262,107 - 339,391 - 20,512,621 32 36,130,702 57 8,580,167 13 225,410 - 6,978,008 11 337,186 1 9,573,288 15 16,888,482 27 2,370,488 4 (477,693) (1) 27,586,854 43 $ 63,717,556 100

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

8

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE Freight revenue Other operating revenue Total operating revenue OPERATING COSTS Freight cost GROSS PROFIT (LOSS) OPERATING EXPENSES PROFIT (LOSS) FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Financial costs Interest income Dividend income Other income Gain (loss) on disposal of property, plant and equipment, net Gain on sale of investments, net Net gain (loss) on foreign currency exchange Other losses Valuation loss on financial instruments, net Impairment loss Share of the profit or loss of associates and joint ventures Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (BENEFIT) NET PROFIT (LOSS) FOR THE YEAR		2016 Amount % $ 6,391,062 98 126,335 2 6,517,397 100 6,716,524 103 (199,127) (3) 267,862 4 (466,989) (7) (535,133) (8) 248,866 4 150,878 2 25,209 - (215,258) (3) 257,322 4 121,243 2 (7,340) - (357,916) (6) (24,673) - (49,377) (1) (386,179) (6) (853,168) (13) 25,186 1 (878,354) (14)		2015
				Amount % $ 7,733,341 98 190,747 2 7,924,088 100 7,544,723 95 379,365 5 314,266 4 65,099 1 (461,525) (6) 294,851 4 296,684 4 107,932 1 192,882 3 967,332 12 (453,926) (6) (5,185) - (318,693) (4) (62,386) (1) 102,246 1 660,212 8 725,311 9 (99,086) (1) 824,397 10 (Continued)

9

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Share of the other comprehensive loss of associates using the equity method Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Company TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company EARNINGS (LOSSES) PER SHARE Basic Diluted		2016 Amount % $ (8,484) - (931,291) (14) (364,282) (6) (7,506) - (1,311,563) (20) $ (2,189,917) (34) $ (878,354) (13) $ (2,189,917) (34) $ (1.04) $ (1.04)		2015
				Amount % $ 4,672 - 1,873,370 24 (975,537) (12) (61,108) (1) 841,397 11 $ 1,665,794 21 $ 824,397 10 $ 1,665,794 21 $ 0.96 $ 0.96
				$
				$
				$

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

10

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Common Share Capital Capital Surplus BALANCE AT JANUARY 1, 2015 $ 8,580,167 $ 225,368 Appropriation of 2014 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - - Change from investments in associates and joint ventures accounted for using equity method - 44 Net profit for the year ended December 31, 2015 - - Other comprehensive income for the year ended December 31, 2015, net of income tax - - Total comprehensive income for the year ended December 31, 2015 - - Buy-back of ordinary shares - - Dividends claimed after over five years by stockholders - (2) BALANCE AT DECEMBER 31, 2015 8,580,167 225,410 Appropriation of 2015 earnings Legal reserve - - Cash dividends distributed by the Company - - Change from investments in associates and joint ventures accounted for using equity method - (29 ) Net loss for the year ended December 31, 2016 - - Other comprehensive income for the year ended December 31, 2016, net of income tax - - Total comprehensive income for the year ended December 31, 2016 - - Cancelation of treasury shares (129,610 ) (110,232 ) Dividends claimed after over five years by stockholders - (9) BALANCE AT DECEMBER 31, 2016 $ 8,450,557 $ 115,140		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 6,769,696 $ 1,195,583 $ 9,981,770 208,312 - (208,312 ) - (858,397 ) 858,397 - - (1,887,636 ) - - - - - 824,397 - - 4,672 - - 829,069 - - - - - - 6,978,008 337,186 9,573,288 82,440 - (82,440 ) - - (845,056 ) - - (1,362 ) - - (878,354 ) - - (8,484) - - (886,838) - - (237,851 ) - - - $ 7,060,448 $ 337,186 $ 7,519,741			Other Equity		Total Treasury Shares $ 1,533,763 $ - - - - - - - - - - - 836,725 - 836,725 - - (477,693 ) - - 2,370,488 (477,693 ) - - - - - - - - (1,303,079) - (1,303,079) - - 477,693 - - $ 1,067,409 $ -	Total Equity $ 28,286,347 - - (1,887,636 ) 44 824,397 841,397 1,665,794 (477,693 ) (2) 27,586,854 - (845,056 ) (1,391 ) (878,354 ) (1,311,563) (2,189,917) - (9) $ 24,550,481
				Exchange Unrealized Gain Differences on (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ 31,558 $ 1,446,353 - - - - - - - - - - 1,873,493 (981,319) 1,873,493 (981,319) - - - - 1,905,051 465,034 - - - - - - - - (904,708) (398,105) (904,708) (398,105) - - - - $ 1,000,343 $ 66,929	Revaluation Increment $ 55,852 - - - - - (55,399) (55,399) - - 453 - - - - (320) (320) - - $ 133	Cash Flow Hedges $ - - - - - - (50) (50) - - (50 ) - - - - 54 54 - - $ 4

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

11

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax Adjustments for: Depreciation expenses Finance costs Dividend income Unrealized (gain) loss on foreign currency exchange Interest income Loss (gain) on disposal of property, plant and equipment, net Net loss (gain) on financial assets and liabilities at fair value through profit or loss Share of the profit of associates and joint ventures Other non-cash items Impairment loss recognized on available-for-sale financial assets Recognition (reversal) of provision for doubtful accounts Impairment loss recognized on transportation equipment Gain on disposal of investment, net Changes in operating assets and liabilities Financial assets held for trading Trade receivables Other receivables Fuel inventory Other current assets Financial liabilities held for trading Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Increase in prepayment for equipment Proceeds from disposal of property, plant and equipment Acquisition of associates Purchase of property, plant and equipment Increase in financing provided - related parties Purchase of available-for-sale financial assets	2016 $ (853,168) 2,249,488 535,133 (301,374) (276,251) (248,866) 215,258 100,594 49,377 (26,113) 24,673 (1,191) - - 676,507 48,562 (16,337) 53,148 66,121 (41,687) 104,437 (121,760) (133,490) (89,712) 2,013,349 214,976 301,374 (539,007) (100,597) 1,890,095 (1,689,932) 726,667 (480,000) (208,475) (75,496) (18,351)	2015 $ 725,311 2,278,587 461,525 (498,757) 509,935 (294,851) (192,882) (381,334) (102,246) (122,282) 46,042 9,383 16,343 (267,305) 695,852 157,146 (15,198) 51,468 (6,035) 137,469 (41,213) (83,807) 154,988 (33,333) 3,204,806 381,218 498,757 (440,581) (279,051) 3,365,149 (4,719,574) 314,708 (760,000) (1,683,251) (59,352) (2,942,876) (Continued)

12

U-MING MARINE TRANSPORT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Decrease in refundable deposits Proceeds on sale of available-for-sale financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of short-term borrowings Repayment of bond payables Dividends paid to owners of the Company (Repayments) proceeds from short-term bills payable Decrease in obligation under capital lease Payments for buy-back ordinary shares Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2016 $ 8,038 - (1,737,549) 11,849,158 (8,126,618) (4,530,000) (1,000,000) (845,065) (37,863) - - (2,690,388) (297,312) (2,835,154) 16,375,872 $ 13,540,718	2015 $ 15,696 3,074,266 (6,760,383) 8,708,213 (4,980,736) (450,000) - (1,887,638) 63,020 (753,610) (477,693) 221,556 495,408 (2,678,270) 19,054,142 $ 16,375,872

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

(Concluded)

13

U-MING MARINE TRANSPORT CORPORATION

INDIVIDUAL BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Trade receivables from unrelated parties Trade receivables from related parties Other receivables Fuel inventory Other current assets Total current assets NON-CURRENT ASSETS Financial assets measured at cost - non-current Investments accounted for using equity method Property, plant and equipment Deferred tax assets Prepayment for equipment Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings Short-term bills payable Trade payables Other payables from unrelated parties Other payables from related parties Current tax liabilities Current portion of long-term borrowings and bonds payable Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Bonds payable Bank loans Deferred tax liabilities Deferred revenue - non-current Net defined benefit liabilities - non-current Total non-current liabilities Total liabilities EQUITY Common share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2016 Amount % $ 20,190 - 177,265 - 1,493,193 3 11,016 - 41,500 - 78,207 - 15,622 - 85,619 - 1,922,612 3 344,296 1 52,499,295 94 978,474 2 36,226 - 2,970 - 33,533 - 53,894,794 97 $ 55,817,406 100 $ 3,100,000 6 2,298,194 4 45,888 - 330,737 1 12,494,906 22 103,518 - 2,992,704 5 23,900 - 21,389,847 38 - - 9,304,281 17 401,639 1 - - 171,158 - 9,877,078 18 31,266,925 56 8,450,557 15 115,140 - 7,060,448 13 337,186 1 7,519,741 13 14,917,375 27 1,067,409 2 - - 24,550,481 44 $ 55,817,406 100		2015
				Amount % $ 12,683 - 601,310 1 1,577,977 3 14,822 - 82,158 - 54,246 - 30,890 - 85,255 - 2,459,341 4 344,296 1 57,170,150 93 1,219,423 2 107,525 - - - 24,933 - 58,866,327 96 $ 61,325,668 100 $ 7,130,000 12 2,248,617 4 36,349 - 370,844 1 14,122,893 23 181,406 - 2,574,736 4 24,201 - 26,689,046 44 992,420 1 5,359,587 9 470,727 1 520 - 226,514 - 7,049,768 11 33,738,814 55 8,580,167 14 225,410 - 6,978,008 11 337,186 1 9,573,288 16 16,888,482 28 2,370,488 4 (477,693) (1) 27,586,854 45 $ 61,325,668 100

14

U-MING MARINE TRANSPORT CORPORATION

INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FREIGHT REVENUE FREIGHT COSTS GROSS PROFIT OPERATING EXPENSES LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Financial costs Share of the profit or loss of subsidiaries, associates and joint ventures Interest income Dividend income Other income Gain on disposal of property, plant and equipment, net Gain on sale of investments, net Net gain (loss) on foreign currency exchange Other losses Valuation loss on financial instruments, net Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (BENEFIT) NET PROFIT (LOSS) FOR THE YEAR		2016 Amount % $ 1,190,126 100 1,088,884 92 101,242 8 188,395 16 (87,153) (8) (351,264) (29) (604,153) (51) 292 - 139,956 12 34,063 3 978 - 299,477 25 123,193 10 (7,486) - ( 424,046) (36) (788,990) (66) (876,143) (74) 2,211 - (878,354) (74)		2015
				Amount % $ 1,387,973 100 1,252,806 91 135,167 9 208,342 15 (73,175) (6) (315,932) (23) 639,243 46 300 - 284,165 21 29,953 2 357 - 750,008 54 (484,590) (35) (2,155) - (127,821) (9) 773,528 56 700,353 50 (124,044) (9) 824,397 59 (Continued)

15

U-MING MARINE TRANSPORT CORPORATION

INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of the other comprehensive income of subsidiaries, associates and joint ventures using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Share of the other comprehensive income of subsidiaries, associates and joint ventures using the equity method Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR EARNINGS (LOSSES) PER SHARE Basic Diluted		2016	% (1) - (78) (7) (24) (110) (184)		2015
		Amount $ (7,219) (1,265) (932,060) (84,784) (286,235) (1,311,563) $ (2,189,917) $ (1.04) $ (1.04)			Amount % $ (5,814) - 10,486 1 1,873,370 135 (192,775) (14) (843,870) (61) 841,397 61 $ 1,665,794 120 $ 0.96 $ 0.96 (Concluded)
					$

16

U-MING MARINE TRANSPORT CORPORATION INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Common Share Capital Capital Surplus BALANCE AT JANUARY 1, 2015 $ 8,580,167 $ 225,368 Appropriation of 2014 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - - Change from investments in associates and joint ventures accounted for using equity method - 44 Net profit for the year ended December 31, 2015 - - Other comprehensive income for the year ended December 31, 2015, net of income tax - - Total comprehensive income for the year ended December 31, 2015 - - Buy-back of ordinary shares - - Dividends claimed after over five years by stockholders - (2) BALANCE AT DECEMBER 31, 2015 8,580,167 225,410 Appropriation of 2015 earnings Legal reserve - - Cash dividends distributed by the Company - - Change from investments in associates and joint ventures accounted for using equity method - (29 ) Net loss for the year ended December 31, 2016 - - Other comprehensive income for the year ended December 31, 2016, net of income tax - - Total comprehensive income for the year ended December 31, 2016 - - Cancelation of treasury shares (129,610 ) (110,232 ) Dividends claimed after over five years by stockholders - (9) BALANCE AT DECEMBER 31, 2016 $ 8,450,557 $ 115,140		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 6,769,696 $ 1,195,583 $ 9,981,770 208,312 - (208,312 ) - (858,397 ) 858,397 - - (1,887,636 ) - - - - - 824,397 - - 4,672 - - 829,069 - - - - - - 6,978,008 337,186 9,573,288 82,440 - (82,440 ) - - (845,056 ) - - (1,362 ) - - (878,354 ) - - (8,484) - - (886,838) - - (237,851 ) - - - $ 7,060,448 $ 337,186 $ 7,519,741			Other Equity		Total Treasury Shares $ 1,533,763 $ - - - - - - - - - - - 836,725 - 836,725 - - (477,693 ) - - 2,370,488 (477,693 ) - - - - - - - - (1,303,079) - (1,303,079) - - 477,693 - - $ 1,067,409 $ -	Total Equity $ 28,286,347 - - (1,887,636 ) 44 824,397 841,397 1,665,794 (477,693 ) (2) 27,586,854 - (845,056 ) (1,391 ) (878,354 ) (1,311,563) (2,189,917) - (9) $ 24,550,481
				Exchange Unrealized Gain Differences on (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ 31,558 $ 1,446,353 - - - - - - - - - - 1,873,493 (981,319) 1,873,493 (981,319) - - - - 1,905,051 465,034 - - - - - - - - (904,708) (398,105) (904,708) (398,105) - - - - $ 1,000,343 $ 66,929	Revaluation Increment $ 55,852 - - - - - (55,399) (55,399) - - 453 - - - - (320) (320) - - $ 133	Cash Flow Hedges $ - - - - - - (50) (50) - - (50 ) - - - - 54 54 - - $ 4

17

U-MING MARINE TRANSPORT CORPORATION

INDIVIDUAL STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax Adjustments for: Share of the profit or loss of subsidiaries, associates and joint ventures Finance costs Unrealized (gain) loss on foreign currency exchange Depreciation expenses Dividend income Net loss (gain) on financial assets and liabilities at fair value through profit or loss Loss (gain) on disposal of property, plant and equipment, net Interest income Changes in operating assets and liabilities Financial assets held for trading Trade receivables Other receivables Fuel inventory Other current assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Dividend received from subsidiaries Acquisition of associates Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Decrease (increase) in refundable deposits Increase in prepayment for equipment Net cash used in investing activities	2016 $ (876,143) 604,153 351,264 (247,219) 193,256 (139,956) 124,569 (978) (292) 299,476 44,464 (23,758) 8,080 100 9,539 (30,669) (301) (62,575) 253,010 89 139,956 (354,869) (77,888) (39,702) 3,325,751 (480,000) 115,233 (59,894) (8,600) (2,970) 2,889,520	2015 $ 700,353 (639,243) 315,932 540,354 215,609 (284,165) (622,187) (357) (300) 750,008 18,000 (24,951) 19,925 (22,451) (1,976) (74,109) 5,512 (28,946) 867,008 584 284,165 (293,533) (254,028) 604,196 2,672,896 (760,000) - (100,945) 8,751 - 1,820,702 (Continued)

18

U-MING MARINE TRANSPORT CORPORATION

INDIVIDUAL STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of short-term borrowings Decrease in other payables from related parties Repayment of bond payables Dividends paid Proceeds from short-term bills payable Payments for buy-back ordinary shares Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2016 $ 10,749,958 (5,880,000) (4,530,000) (1,386,750) (1,000,000) (845,065) 49,577 - (2,842,280) (31) 7,507 12,683 $ 20,190	2015 $ 4,880,000 (3,619,965) (450,000) (984,750) - (1,887,638) 109,531 (477,693) (2,430,515) 146 (5,471) 18,154 $ 12,683

(Concluded)

19