台灣土地開發股份有限公司 | 抓住未來提前實現台開黃金五十年€¦ ·...

2 Dare To Dream, Brave In Implementation And Happy To Share

ContentI Letter to Shareholders

1. 2015OperationReport

2. 2016OperationPlan

3. FutureDevelopmentStrategies

4. InfluencefromExternalCompetition,RegulationsandMacro-operatingEnvironment

5. Conclusion

II Company Profile1. DateofEstablishment

2. CompanyHistory

III Corporate Governance Report1. Organization

2. Directors,SupervisorsandManagementTeam

3. ImplementationofCorporateGovernance

4. InformationofFeestoCPA

5. InformationonAccountantChange

6. TheChairman,PresidentandFinancialorAccountingManageroftheCompanywhohadWorkedfortheIndependentAuditorortheRelatedPartyinthePastYear

7. StateofChangestoShareholdingsHeldbyDirectors,Supervisors,PresidentsandMajorShareholders

8. InformationDisclosingtheSpouse,KinshipWithintheSecondDegreeandRelationshipbetweenanyoftheTopTenShareholders

9. TheShareholdingoftheCompany,Director,Supervisor,PresidentandtheBusinessthatisControlledbytheCompanyDirectlyorIndirectlyontheInvestedCompany

IV Capital Raised1. CapitalandShares

2. CorporateBonds

3. PreferredStocks

4. DepositoryReceipts

5. EmployeeStockOptions

6. NewSharestoEmployeeswithRestrictedRights

7. StatusofNewSharesIssuanceinConnectionwithMergersandAcquisitions

8. FinancingPlansandImplementation

005

011

015

045

3

V Operational Highlights1. BusinessScope

2. MarketandSalesOverview

3. EmployeeInformation

4. ExpenditureonEnvironmentalProtection

5. LaborRelations

6. ImportantContracts

VI Financial Information1. Condensedbalancesheet,incomestatementandauditors'opinionsforthelastfiveyears

2. FinancialAnalysisoftheLastFiveYears

3. 2015Supervisors’Report

4. 2015FinancialStatement

5. 2015ConsolidatedFinancialStatement

VII Review of Financial Conditions, Operating Results, and Risk Management1. FinancialCondition

2. FinancialPerformance

3. CashFlow

4. EffectofMajorCapitalExpendituresin2015onFinancialOperations

5. 2015InvestmentPolicy,MainCausesforProfitsorLosses,ImprovementPlansandtheInvestmentPlansfortheComingYear

6. RiskManagement

7. OtherImportantMatters

VIII Special Disclosures1. SummaryofAffiliatedCompanies

2. PrivatePlacementofSecuritiesinYears2015topresent

3. TheSharesintheCompanyHeldorDisposedbySubsidiariesinYears2015topresent

4. OtherSupplementaryMatters

5. MattersthatHaveSignificantlyAffectedShareholders'EquityandPricesofSecuritiesPursuanttoItem2,Subparagraph2,Article36ofSecuritiesExchangeLawinYears2015topresent

053

067

171

177

I. Letter to Shareholders

1. 2015 Operation Report

2. 2016 Operation Plan

3. Future Development Strategies

4. Influence from External Competition, Regulations and Macro-operating Environment

5. Conclusion


　　Thanks to the concerted efforts of our employees, Taiwan Land Development Corporation (TLDC) achieved exceptional performance as a group on many fronts in 2015, including the sale of industrial park projects, enhancing the value of assets, launch of new development projects, and the operation of Kinmen Wind Lion Plaza. The Group reported consolidated revenues of NT$592 million in 2015, mainly from the service-related income of Taichung City Precision Machinery Innovation Technology Park and Guanghua LOHAS Creative Park. Another contributor came from the appreciation of invested real estate applying the fair market approach. The Group has been profitable for nine years in a row since 2007. In 2015, Group enjoyed continuous and steady growth in profits, reporting earnings per share of NT$2.92. The innovation that TLDC has been able to realize in branding and cultural creativity contributes to increasingly diverse and valued architecture. The Group is honored to be a recipient of National Golden Quality Award and a leader in Taiwan’s architecture and cultural creative LOHAS industry.

　　In 2016, the Group will continue to focus on the sales at Taichung City Precision Machinery Innovation Technology Park, Kaohsiung Ganshan Benjhou Industrial Park, and Guanghua LOHAS Creative Park as its main source of profitability. The stable revenue growth of Kinmen Wind Lion God Shopping Street will also contribute to profit. Adhering to the TLDC business tenets of “dare to dream, brave in implementation and happy to share”, the Group has been constantly applying “green, intelligent, and cultural creativity” into local communities, developing product characteristics, and bringing in cultural creative, leisure and tourism, and medical cosmetics businesses to drive investment, boost productivity, and increase employment opportunities while advancing local developments and invigorating assets. The Group’s business divisions will increase their efforts on leisure real estate development and peripheral businesses, which coincide with the Group’s core belief of sustainable management. The Group’s tourism business is taking shape, with established locations in Hualien and Kinmen. The Group has also formed alliance with the Starwood Group with the plan to launch Le Méridien Hotel in Hsinchu, Sheraton Hotel and Aloft Hotel in Kinmen and Aloft Hotel, Westin Hotel and Element Hotel in Hualien. The Group will also expand its IOT (Internet of things) O2O (online to offline or offline to online) operations to make the most of virtual and physical channel synergies. Through the key technologies of IOT, the Group purports to stay on top of everything throughout the business process to boost product sales, while offering excellent after-sale services and carrying out O2O operations.

　　In addition, none of land and building assets owned by the Group are situated in the red alert areas with high liquefaction failure potential according to the data published by Central Geological Survey under the Ministry of Economic Affairs earlier in 2016. The Group’s Hsinpu Eco-community project in Hsinchu, Shuangxi Yiyuan Building in Taipei City, land at Tainan Yujing District, and land at Kaohsiung Meinong District are not in soil liquefaction areas. Nor are Yongde Building, Chengde Building and TLDC Building in Taipei City, Zhanchian Building in Tainan City, and Sanming Building in Kaohsiung built by the Group situated in areas with high liquefaction failure potential.

　　Below we present our 2015 business report, including implementation results of the business plan, budget implementation, financial highlights and profitability, research and development status, and an outline of our 2016 business plan, including business policies for the year, business objectives and important production and marketing policies as described below:

1. 2015 Operation Report (1) Operating results of plan implementation

A. Income from agency fees and engineering management fees for Taichung City Precision Machinery Innovation Technology Park and Hualien Guanghua LOHAS Creative Park amounted to NT$400 million.

B. Continued innovative development of land assets incorporating new elements helped promote local development and boost asset values.

C. Kinmen Wind Lion God Shopping Street recently brought in Kimberly Duty Free Shop, 86 Shop and Pu Pot, which together with Studio A, Starbucks Coffee, Chii Lih Coral, and Golden Lion Cinemax already in business generated steady profit growth.

D. Hsinchu Hsinpu Eco-community project has received construction permit for Camellia Hot Spring Villa and entered an agreement with Starwood Group to collaborate in the development and operation of Le Méridien Hot Spring Hotel. The overall planning of a leisure farm on the north side has also been completed. The 4th Hsinpu Hot Spring Camellia Season held during the New Year of 2016 continued to receive wide acclaim.

E. The Hualien Cultural Clubhouse in Hualien Guanghua LOHAS Creative Park is scheduled for completion in 2016. The Clubhouse will bring in the first IMAX cinema in Hualien-Taitung area. The Huilan Bay Sunrise Villa project has received construction permit; the project has started pre-sale in August 2015 and engaged Centaline Property to look for buyers in Hong Kong.

7

I LETTER TO SHAREHOLDERS

(2) Budget Implementation

　　In accordance with the Regulations Governing the Publication of Financial Forecasts of Public Companies, TDLC is not required to make a financial forecast in 2015; this part is thus omitted.

(3) Financial Status and Profitability Unit: NT$, thousands; %

Item 2015 2014

Financial Status

Operating revenue 592,069 1,791,486

Operating profit 461,653 1,730,425

Operating Net profit or loss -376,842 957,109

Net income 2,039,605 5,312,015

Profitability

ROA (%) 7.21 21.81

ROE (%) 12.29 40.20

Issued capital ratio (%)Operating income -5.19 14.09

Income before income tax 30.29 80.40

Net profit ratio (％ ) 344.48 296.51

EPS (NT$) - Retroactive adjustment 2.92 7.39

　　Sales revenue for 2015 was $592,069,000, consisting mainly of recognition of $405,908,000 in revenue for agency business of industrial park development. After deducting cost of sales in the amount of NT$130,416,000 and operating expenses in the amount of NT$838,495,000, and adding non-operating income of NT$2,575,988,000, TDLC reports a net income of NT$2,039,605,000 for the year.

(4) Research and Development

　　In line with the trends for the future, the Group adopts the development strategies of "cultural creativity, technological innovation, international standards" and embraces the teaching of Laozi "The best of men is like water" and the teaching of Sun Tzu "Just as water retains no constant shape, there are no constant conditions in warfare" in the Art of War as corporate core values to respond swiftly and effectively in the ever changing market and fulfill its corporate social responsibility. Constructing three parallel business lines evolving respectively around the theme of green, intelligent, and cultural creativity, the Group builds a profit-sharing business model by actively engaging in dialogue with domestic life insurance company, foreign fund and investment companies and domestic and foreign investors about cooperation. Our green business encompasses everything related to environmental protection, sustainable living, organic LOHAS, energy-savings, and carbon reduction. Our intelligent business covers areas ranging from high tech and digitization such as the Internet of Things (IOT), Big Data, to continuing care and smart homes. The cultural creative business includes arts and cultural exhibitions and performances, arts dealership, cultural exchange, arts auction, and the operation of arts villages, along with other related fields.

2. 2016 Operation Plan (1) Business Policy

A. Value-oriented development strategies: The Group adds value to the land and space through cultural creativity and technological innovation by integrating art as part of life and creating a sustainable healthy LOHAS living space.

B. Sustainable development of O2O with future source of value in the cloud: Our next-step development will focus on turning IOT into an industry, applying it in the learning aspect of everyday life and implementing it in the creativity aspect.

C. Consolidation of the development of Kinmen as the border trade center: Kinmen’s visa-on-arrival policy, increased duty-free shopping quota for people going to Mainland China through Kinmen and the relaxation of Xiamen as a free trade zone have contributed to a steady growth in bilateral trade with China. Kinmen Wind Lion God Shopping Street imports large quantities of goods for sale in Xiamen and significant increases bilateral trade with Xiamen and the West Coast Zone, which help boost the status of Kinmen as a border trade center.

D. Core values of sustainable enterprise: Embracing “green, intelligent, and cultural creativity” as core beliefs, we infuse land with new value, create a unique brand image, communicating our corporate philosophy and


committing to the construction of high-quality LOHAS spaces for living.

E. Specialization within the Group: We pursue after the overall rationalization of the Group and further enhancement of enterprise synergy through interaction and cooperation of all employees within the Group, diversifying our talent pool to meet human resources needs at different business locations and improving our asset management and Internet technology knowhow.

(2) Operation (Sales) Goals

A. The land of Taichung City Precision Machinery Innovation Technology Park, Kaohsiung Ganshan Benjhou Industrial Park, and Future Industry Division of the Guanghua LOHAS Creative Park is to be sold to generate more business revenue.

B. Self-owned assets will continue to be used flexibly to integrate “green, intelligent, and cultural creativity”into the local living environment and develop product characteristics to create benefits.

C. The shops and mall at Kinmen Wind Lion God Shopping Street have commenced operations with hypermart, cinema and duty-free shops as its anchor stores. The Group’s own offshore duty-free shop is scheduled to open this year and is expected to generate more revenue and profit.

D. The Hsinchu Hsinpu Eco-community project has obtained construction permit for Camellia Hot Spring Villa (Villa 3) and will soon commence the construction work. The new villa will target first customers at the top of the pyramid. The project’s collaboration with the Starwood Group to develop and operate Le Méridien Hot Spring Hotel in the project complex continues with the application of construction permit. The development plan for a leisure farm on the north side of project complex is now under review by the Council of Agriculture.

E. The Huilan Bay Sunrise Villa project in Hualien offers 35,000 pings in total sales area for phase 1. The project has started pre-sale in August 2015 and engaged Centaline Property to look for buyers in Hong Kong area. The Hualien Cultural Square in the project complex will bring in the first IMAX cinema in Hualien-Taitung area, which is scheduled to complete construction this year and start operation in 2017.

F. Nantou Caotun Eco-Complex project is still in the process of applying for construction permit for a Zen Clubhouse, while continuing to embark on the development of hot spring wells.

G. Taichung Dakeng Development project has completed the environmental impact evaluation and submitted its water conservation plan; both the development plan and the application for a miscellaneous permit will continue.

H. The Group will seek new development projects, including industrial park development and investment projects under the Act for Promotion of Private Participation in Infrastructure Projects.

(3) Important Production and Marketing Policies

A. Develop land activation strategies to diversify the utilization of land.

B. Develop three parallel business lines evolving respectively around the theme of green, intelligent and cultural creativity.

C. Enhance our corporate image and create brand recognition.

D. Create adds value for our products and enhances our competitiveness by integrating cultural creativity, technological innovation and international standards.

E. Embrace the core value of “The best of men is like water”, manifest the central ideas and value consensus of “step beyond imagination, realize dreams.”

3. Future Development Strategies 　　The Group will continue to evolve from spatial planning and design and creation of a LOHAS environment into

the era of total value. While working on increasing simultaneously the values of land and building assets on it, the Group will make the most of physical space to create virtual value and attract more members, while offering tailor-made merchandise and turning cloud into new valuable space through systematic management and development of Big Data. The Group embraces the concepts of green building with “construction traceability”, and drives online and offline revenue and sales through IOT to greatly enhance the value of digital marketing.

　　The Group takes upon itself an important mission for the future. That is, to increase the “happiness level” of people in Taiwan. The Group plans to achieve it by integrating leisure, living, creation and survival (work) while

9

I LETTER TO SHAREHOLDERS

endeavoring to preserve rich cultural and humanistic elements in all of its works. The Group advocates greater emphasis on way of life than on monetary value in its works, which is the essence and core of leisure industry and the Group’s development focus in recent years. In the future, all businesses will incorporate the elements of interest and curiosity for learning new things will be a major path leading to the creation of new business. The Group also takes upon itself improving the living environment of mankind as its corporate social responsibility. Adhering to the corporate culture of “happiness, sharing and innovation”, the Group will invite people sharing the same ideas and beliefs to join the efforts of pursuing a more organic, simple, eco-friendly, and wonderful life, finding new values and a way out for the future of Taiwan with sustainable operation.

4. Influence from External Competition, Regulations and Macro-operating Environment

(1) External Competition

A. Industrial park agency business: There is a pressing demand for industrial land in Taiwan. As land acquisition has to be based on market value and involves complex environmental feasibility study process, which makes land acquisition and development difficult, those facts have turned the Group’s industrial land assets into valuable assets.

B. Diversification: As Taiwan attracts more foreign visitors and the life style of people in Taiwan changes, it becomes necessary for the Group to transform its business pattern and diversify its businesses to spread operational risks, capitalize on business opportunities, and develop land value more effectively. By developing new markets through new products, TLDC focuses mainly on two business areas – leisure real estate development and e-commerce in the efforts to create more profit streams while putting the core corporate beliefs of “green, intelligent and cultural creativity” into practice.

(2) Regulatory Environment

A. The new “Consolidated Income Tax System for House and Land” recently promulgated by the Ministry of Finance increases the tax rate for sale of housing. The amended Article 5 of the House Tax Act limits the number of self-use houses which enjoy favorable property tax rate to 3 and stipulates that local governments may establish differential tax rates based on the number of houses owned by the owner, which will increase the tax burden for owners of houses not for self use. Both moves by the government are expected to adversely impact the sale and prices of real estate in the market. That was why our Central Bank cut interest rates by 0.125% three times in a row in September and December 2015 and March 2016 and relaxes the “selective credit control” of real estate loan to mitigate the impact of consolidated housing and land tax on the real estate market.

B. The Spatial Planning Act (Presidential Order No. Hua-Zong-Yi-Yi-Zi-10400154511 promulgated on January 6, 2016 mainly demarcates the functional zoning of national land, establishes use permit system that newly established (or expanded) urban plans or development projects shall be limited to those located in “rural-urban development areas” and the areas shall be demarcated following comprehensive review of spatial planning where change of zoning for individual projects are not allowed. This new measure will change significantly the urban expansion mode in the past and switch to compact development where urban development that used to focus on the periphery of a city will be reverted back to the renewal of urban center.

(3) Macro-operating Environment

　　Taiwan’s GDP growth was merely 0.75% last year. By the forecast of a number of domestic and foreign institutions, Taiwan may experience negative growth for exports in 2016, which typically account for more than 70% of GDP. As the government launches several policies and measures aimed at stabilizing housing prices, the number of real estate transactions in six municipalities for February 2016 as published by the local land administration bureau has declined significantly. Howeverwith scarcity of available landand consistently high material costs, plus the recent interest rate cuts by the Central Bank and relaxation of restrictions on real estate loans, the real estate markets in different areas will continue to fluctuate narrowly in the short run, but the room for lower housing prices is limited in the long run. In particular as the land prices in regions other than the metropolitan areas along the west corridor, such as Hsinchu, Hualien and Kinmen have climbed steadily every year, those market trends are particularly favorable to TLDC that holds a considerable amount of land assets and is embarking on several hotel and resort development projects in those areas. Based on the latest assessed land value and land price adjustment, the land assets owned by the Group across the country report nearly 18% growth in assessed land value, surpassing the nationwide average growth of 6.7%. The Group’s land assets in Hualien enjoy the highest growth of 36% in assessed land value. In the future, through sharing


strategy, the Group will offer the opportunity for long-term holding of real estate for investment purpose that is poised to lead to greater profits.

5. Conclusion 　　The Group’s future lies in “innovation” and building a space is our character and value as exemplified in our

works of transforming old industrial zones into LOHAS parks. Our efforts in the next phase will focus on waters. The Huilan Bay project is our defining work in the current stage. As cultural creation cannot rely on imagination alone, success largely relies on going beyond imagination. Trends for the future reside in sharing, combining physical and virtual and creating cultural value with technology. TLDC will continue to observe the “law of nature” in transforming the environment and creating carefree space for people and our environment in total harmony with the Great Nature and other creatures on earth. TLDC has turned in some concrete achievements in the past eight years. By leveraging our experiences and traceability data, we aspire to build cultural and creative space and capitalize our professional advantages to offer all-round, quality living services that better meet the needs of people. For this, we ask for continued support and encouragement from our shareholders.

Chairman: President: Accounting Manager:

Chiu, Fu-Sheng Chiu, Fu-Sheng Chen, Wen-Ling　　

II. Company profile

1. Date of Establishment

2. Company History


1. Date of Establishment: June 30, 19642. Company History

1964.06 Establishment of the Company. Originally named "Taiwan Land Development Co." with authorized capital of NT$150 million specializing in land development business initially.

1972.07 Set up of Trust Department. Company was renamed as "Taiwan Development and Trust Co. (TDTC)" while stepping into the financial services industry.

1999.01 Completed privatization to become a listed company in accordance with government policies.

2005.08 TLDC dissolved its trust department in compliance with the Trust Enterprise Act and transferred its trust business to Jih Sun International Bank.

2005.12 Renamed as Taiwan Land Development Corporation

2006.03 Change of the listed category to construction and engineering stock.

2006.05 Establishment of the subsidiary, "Taiwan Innovation Co. (TIC),".

2008.07The chairman of TDLC has been appointed by the government since the Company was privatized in 1999. In the 15th-term directors and supervisors meeting, the first TLDC chairman from the private sector was elected, which marks a new era for the Company as it becomes a bona fide private company.

2008.11 Released a brand-new Corporation Identity System and announced the "Love and Green for Taiwan, claiming the mainstream of future life style through internationalization of future architecture."

2009.07Subsidiary "Taiwan Innovation Development Co. (TIDC)" passed the comprehensive review of the public tendering of the "Kinmen Commerce Recreation Center Build-Operate-Transfer (BOT) Project," which was organized by the Kinmen County government, and became the best applicant.

2009.08The Company collaborated with Professor Ken Sakamura, the father of Japanese computerized architecture TRON on "uhome" smart technology houses, and the "uhome" sensor network experience hall was established on level B2 of the Taiwan Land Development Financial Building.

2009.10Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan Commerce Development Corporation" to manage the development, property management, import trade business for Kinmen Commerce Recreation Center.

2009.11 Affiliate "Taiwan Commerce Development Corporation" officially signed the contract for the "Kinmen Commerce Recreation Center BOT" with the Kinmen County government.

2009.12The Company set up ARKI Galleria" on level B1 of the Taiwan Land Development Financial Building, providing the community of cultural creative artists and the general public with a space for exhibition, reading, talks and general art experience.

2009.12 Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan Envirotech Development Corporation, "an information technology company specializing in green environmental architecture and construction.

2010.06Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan City Development Corporation," which is in charge of the integration of urban renewal business and providing management services for construction projects of "Taiwan Envirotech Corporation."

2010.06The "Kaikai Kiki Gallery Taipei" was established on the first floor of the Taiwan Land Development Financial Building. The gallery was operated by the world renowned Japanese artist Takashi Murakami and features works of internationally renowned artists, with a view to providing a platform for Taiwanese artists' international exposure.

2010.08Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Hualien Culture Clubhouse Corporation," which is in charge of the development of boutique hotels in the style of Hakka fortified earth buildings at the Hualien Guanghua LOHAS Creative Park.

2010.09Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Hualien Ocean Forum Corporation," which is in charge of the development of the international forum and conference center at Hualien Guanghua LOHAS Creative Park. TLDC also established the first affiliated company in mainland China, the "Taikai Xiamen Trading Corporation" in Xiamen.

2010.11Affiliates "Taiwan Envirotech Corporation" and "Taiwan Envirotech Development Corporation" merged and renamed as "Taiwan Envirotech Development Corporation." The new entity specializes in managing IT and construction technology businesses.

2011.01 Groundbreaking of the duty-free shopping center under Phase 1 of the "Kinmen Commerce Recreation Center BOT" project.

2011.01 Establishment of the subsidiary "Hsinchu Hill Garden Corporation," responsible for developing the Hsinchu Hsinpu Eco-community.

13

II COMPANY PROFILE

2012.05Company participated in the bid for “Taichung Shengang Fengzhou Industrial Park Phase 2 Establishment, Planning, Development, Lease/Sales and Management Plan＂ project organized by Taichung City Government and was selected the winner for the project.

2012.10 Company established a subsidiary “Taiwan Midtown Development Corporation＂ to engage in land development business in Taiwan area.

2012.11 Subsidiary "Taiwan Innovation Development Co. (TIDC)" established “Taiwan Talent Development Corporation＂ to offer manpower training, employment and entrepreneurship services.

2014.04 The Kinmen Golden Lion Cinemax held its grand opening.

2014.07 The Kinmen Wind Lion Plaza held its grand opening.

2014.08 A subsidiary “Taiwan LanYang Development Corporation＂ was established to develop business in Yilan area.

2014.09 The Hualien Huilan Lohas Village project was granted construction permit.

2014.12 Hsinchu Hsinpu Eco-community project has completed the hot spring construction and opened for public use.

2014.12 TLDC brought in Starwood Hotels & Resorts and signed an agreement with the company for operations and management of Hsinchu Starwood and Kinmen Sheraton.

2014.12 TDLC's Wind Lion Plaza signed a strategic alliance agreement with Xiamen Bank, becoming the first Taiwanese merchant in Kinmen area to enter strategic alliance with Xiamen Bank.

2015.01 TDLC hosted the fourth "Hsinpu Hot Spring Camellia Festival" at the Hsinpu Eco-community Park, and offered visitors the chance to enjoy the hot springs for the first time, which was well-received.

2015.02The first Apple Flagship Store in the offshore islands of Taiwan, Studio A in Kinmen Wind Lion God Shopping Street held a grand opening. As Kinmen draws more international brands, the synergistic effect of O2O becomes more prominent.

2015.03 Internationally acclaimed architect Japanese architect Kengo Kuma designed the Kinmen Wind Lion God Museum.

2015.03 Hualien Huilan Bay Lohas Village is on exhibition at the National Building Museum in Washington D.C., the only architecture in Taiwan selected for exhibition.

2015.10 Hualien Huilan Bay Clubhouse is completed and Huilan Bay Sunrise Villa breaks ground and starts pre-sale of membership. The project also forms an alliance with Hong Kong Centaline Property to target buyers in Hong Kong.

2015.10TDLC Kinmen Wind Lion God Shopping Street wins the National Architecture Golden Quality Award in planning and design category and construction quality category. It is also the first mall in Taiwan that is granted the "Gold Intelligent Building Mark" by the Ministry of the Interior.

2015.11 Taiwan Land Development Corporation Group has partnered with IMAX for the planning and implementation of the "first IMAX movie theater in eastern Taiwan," which is slated to open in 2017.

2016.01 Taiwan Land Development Corporation Group's Xinpu Smart Ecological Park has been pre-certified with an international LEED platinum rating.

2016.01 Kinmen Wind Lion Plaza was recognized in the 2nd edition of China's City Complex "Golden Complex Award" as the winner of "Best Case Award"

2016.04TDLC and ROC Association of Ultrarunners co-organized 2016 Hualien Huilan Bay Wind Lion Cup Ultramarathon. Close to 1,000 runners joined the tournament, including well-known Japanese long-distance runner Hara Yoshkazu, also the holder of Asian ultramarathon record.

III.

Corporate Governance Report

1. Organization

2. Directors, Supervisors and Management Team

3. Implementation of Corporate Governance

4. Information of Fees to CPA

5. Information on Accountant Change

6. The Chairman, President and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the Past Year

7. State of Changes to Shareholdings Held by Directors, Supervisors, Presidents and Major Shareholders

8. Information disclosing the spouse, kinship within second degree and relationship between any of the top ten shareholders

9. The Shareholding of the Company, Director, Supervisor, President and the Business that is Controlled by the Company Directly or Indirectly on the Invested Company


1. Organization (1) Organizational Chart

Shareholders’ meeting

Board of Directors (Chairman, Vice Chairman, Directors)

Board Office

PresidentPresident’s Office

Vice PresidentVice President’s office

Audit Office

Supervisors

Planning Department

Pro-Construction

Planning Department

Construction Department

Finance Department

Accounting Section

Operation Section

Investment Section

General Administration Department

Administration Section

Procurement Section

Finance Section

Public Affairs Department

Operation Planning Meeting

Consultants

17

III CORPORATE GOVERNANCE REPORT

(2) Major Corporate Functions

Department Functions

Audit Office ‧Responsible for audit operations and provide periodic reports to the Board of Directors and supervisors.

Planning Department

‧ The Operation Section is responsible for operations ranging from administering industry activities commissioned by government agencies in industrial districts; establishing revitalization strategies for unused land in industrial parks as well as executing project operations; integration of related operations for cases contracted under the government's Act for Promotion of Private Participation and fulfillment and management of project implementation; land development commissioned by government agencies or private enterprises, urban land consolidation, joint construction, BOT cases, new rural projects and urban renewal.

‧ The Investment Section is responsible for the Company's management policies (including management vision, goals, guidelines, operational planning and business reports, etc); industrial trends, collection of information on the macro environment, product positioning, drafting development strategies of Company assets; investment worthiness of new businesses and feasibility assessment, editing and compiling investment or project briefing for subsidiary companies within the Group; feasibility study and investment development of business real estate investment plans; financial planning, relationships building with financial institutions and capital raising and management.

Pre-Construction Planning Department

‧ Responsible for regulatory review during development phase; making provisional financial calculations and investment analysis during development phase; applying for construction permit following development; capacity value creation; construction planning; landscape planning; space design; communication with and coordination of construction planning team.

Construction Department

‧ Responsible for construction project budgeting, construction schedule, progress valuation review and cost control during the construction phase; project contracting, procurement of materials, construction quality audit and control of the progress of project construction; application for building occupation permit; planning for greenhouses, green landscaping, tree banks and construction materials for buildings involving green energy and reduced carbon footprint; communication with and supervision of contractors.

Finance Department ‧ Accounting Section is responsible for establishing and controlling the Company's accounting system, budget drafting, accounts processing, settlement, and the review and audit of various expenditures.

General Administration Department

‧ The Administration Section is responsible for legal affairs; utilization and management of human resources, talent cultivating and career planning; establishment of talent pool; Company Seal/Imprimatur, documentation, document management; compiling Group administrative regulations, systems and operating procedures; editing and producing annual reports; administrative management of re-invested companies; filing, maintenance and management of Company's owned assets (excluding business operation or trial operation) as well as invisible asset; maintenance of IT software and hardware equipments and information security management; planning and developing management systems; disposal and maintenance/management of assets from loans receivable.

‧ The Procurement Section is responsible for comprehensive procurement and bidding activities within the Group; auditing of bidding costs; establishment of database for construction materials and vendors; administrative management, procurement of assets and equipment as well as maintenance, enterprise service, etc.

‧The Finance Division is in charge of cashier operations for the Company.

Public Affairs Department ‧ Responsible for conducting public affairs activities associated with Legislative Yuan, government agencies, the media, landowners, juridical persons and domestic and foreign investors.


2. Directors, Supervisors and Management Team (1) Information on directors and supervisors

A. Information on directors and supervisors (1) May 1,2016

Title Nationality or place of registration

Name Elected Date

Term (Years)

Date First Elected

Shareholding when Elected Current Shareholding Spouse & Minor

Shareholding Shareholding by nominee arrangement

Experience (Education) Positions Held at Company or Other Companies

Executives, Directors or Supervisors who are spouses or within two

degrees of kinship

Shares (million shares)

Percentage(%)


Percentage(%) Shares Percentage

(%) Shares Percentage(%) Title Name Relation

Chairman Republic of China

Hung Sheng Investment Co., Ltd.

07/01/2014 3 years 07/01/2011 5,370 0.82

6.197 0.85 - - - - - - - - -

Representative: Chiu, Fu-Sheng 37.310 5.14

‧ Chairman, ERA Digital Media Co., Ltd. ‧ Founder, ERA Group ‧ Graduate, Fu Hsing Kang College

‧CEO and General Manager of the Company ‧Chairman, Taiwan Innovation Development Corporation ‧Chairman, Taiwan Envirotech Development Corporation ‧Chairman, Taiwan Commerce Development Corporation‧Chairman, Hsinchu Hill Garden Corporation ‧Chairman, Hualien Ocean Forum Corporation ‧Chairman, Hualien Culture Clubhouse Corporation ‧Chairman, Taiwan City Development Corporation ‧Chairman, Taikai Xiamen Trading Corporation ‧Chairman, Nanguo House Corporation ‧Chairman, Wind Lion Plaza Shopping Center Corporation ‧Chairman, Taiwan Mid-Town Development Corporation ‧Chairman, Taiwan Wind Lion Travel Service Corporation‧Chairman, Dufry TCDC Ltd.‧Chairman, Kinmen Forum Corporation ‧Chairman, Taiwan Manpower Development Corporation‧Director, Taiwan LanYang Development Corporation‧Director, Hung Sheng Investment Co., Ltd.

- - -

Vice Chairman

Republic of China Lian, Tai-Sheng 07/01/2014 3 years 07/01/2011 22.169 3.38 25.659 3.53

‧ Chairman, ERA Communications Inc. ‧ Chairman, Hualien Cable TV Co., Ltd. ‧ Chairman, Cashbox Party World Co.,

Ltd. ‧ Chairman, Tung Tai Cable TV Co., Ltd. ‧President, Satellite Television ‧Broadcasting Association R.O.C. ‧Graduate, ROCMA

‧Vice CEO of the Company ‧Vice Chairman, Taiwan Innovation Development Corporation ‧Director, , Taiwan Envirotech Development Corporation‧Director, Taiwan Commerce Development Corporation ‧Director, Hsinchu Hill Garden Corporation ‧Director, Hualien Ocean Forum Corporation ‧Director, Hualien Culture Clubhouse Corporation ‧Director, Taiwan City Development Corporation ‧Director, Nanguo House Corporation ‧Director, Wind Lion Plaza Shopping Center Corporation‧Director, Taiwan Mid-Town Development Corporation ‧Director, Dufry TCDC Ltd.‧Director, Taiwan Manpower Development Corporation ‧Chairman, ERA Communications Inc. ‧Chairman, Hualien Cable TV Co., Ltd. ‧Chairman, Cashbox Party World Co., Ltd. ‧Director, Zhong Du International Corporation ‧Chairman, ERA Global Culture Corporation ‧Director, Tung Tai Cable TV Co., Ltd. ‧Director, Tung Chia Development Co., Ltd. ‧Director, Chia An Development Co., Ltd. ‧Chairman, Hongtu Investment Co., Ltd.‧Chairman, Yuming Investment Co., Ltd.

- - -

Director British Virgin Islands

Shih Tuo Investment Co., Ltd.

07/01/2014 3 years 07/01/2011 4.568 0.70 5.171 0.72 - - - - - - - - -

Director Republic of China


07/01/2014 3 years 07/01/2011 5.370 0.82

6.197 0.85 - - - - - - - - -

Representative: Kow, Fu-Lin (Note)

0.034 0.00‧ Senior Engineer, Pacific Engineers &

Constructors, Ltd ‧ M.S. in Civil Engineering, Ohio State

University, U.S.A.

‧ Director, Taiwan Envirotech Development Corporation ‧ Senior Engineer, Pacific Engineers & Constructors, Ltd ‧ Supervisor, ERA Cultural Creative Enterprise - - -


Cheng, Ming-Chieh 07/01/2014 3 years 07/01/2011 0 0.00 0 0.00

‧ Director, iBIZ Technology Corp.‧ M.S. in Computer Science, Fordham

University, U.S.A.

‧ Director, iBIZ Technology Corp.‧ Director, ERA Network Enterprise Co. ‧ Director, ERA Global Culture Corporation

- - -



07/01/2014 3 years 07/01/2011 5.370 0.82

6.197 0.85 - - - - - - - - -

Representative: Cheng, Chi-Li 0.467 0.06

‧ Assistant VP, Leasing and Sales, Wei Hsin Real Estate Consulting

‧ Accounting & Statistics, College of Management, Shih Chien University

‧ Vice President of the Company ‧ Director, Taiwan Envirotech Development Corporation ‧Director, Hsinchu Hill Garden Corporation‧Director, Hualien Ocean Forum Corporation ‧Director, Hualien Culture Clubhouse Corporation ‧Director, Taiwan City Development Corporation‧Director, Taiwan LanYang Development Corporation‧Director, Taiwan Wind Lion Travel Service Corporation

- - -

19


2. Directors, Supervisors and Management Team (1) Information on directors and supervisors

A. Information on directors and supervisors (1) May 1,2016


Name Elected Date

Term (Years)

Date First Elected





degrees of kinship


Percentage(%)




Chairman Republic of China


07/01/2014 3 years 07/01/2011 5,370 0.82

6.197 0.85 - - - - - - - - -

Representative: Chiu, Fu-Sheng 37.310 5.14

‧ Chairman, ERA Digital Media Co., Ltd. ‧ Founder, ERA Group ‧ Graduate, Fu Hsing Kang College

‧CEO and General Manager of the Company ‧Chairman, Taiwan Innovation Development Corporation ‧Chairman, Taiwan Envirotech Development Corporation ‧Chairman, Taiwan Commerce Development Corporation‧Chairman, Hsinchu Hill Garden Corporation ‧Chairman, Hualien Ocean Forum Corporation ‧Chairman, Hualien Culture Clubhouse Corporation ‧Chairman, Taiwan City Development Corporation ‧Chairman, Taikai Xiamen Trading Corporation ‧Chairman, Nanguo House Corporation ‧Chairman, Wind Lion Plaza Shopping Center Corporation ‧Chairman, Taiwan Mid-Town Development Corporation ‧Chairman, Taiwan Wind Lion Travel Service Corporation‧Chairman, Dufry TCDC Ltd.‧Chairman, Kinmen Forum Corporation ‧Chairman, Taiwan Manpower Development Corporation‧Director, Taiwan LanYang Development Corporation‧Director, Hung Sheng Investment Co., Ltd.

- - -

Vice Chairman

Republic of China Lian, Tai-Sheng 07/01/2014 3 years 07/01/2011 22.169 3.38 25.659 3.53

‧ Chairman, ERA Communications Inc. ‧ Chairman, Hualien Cable TV Co., Ltd. ‧ Chairman, Cashbox Party World Co.,

Ltd. ‧ Chairman, Tung Tai Cable TV Co., Ltd. ‧President, Satellite Television ‧Broadcasting Association R.O.C. ‧Graduate, ROCMA

‧Vice CEO of the Company ‧Vice Chairman, Taiwan Innovation Development Corporation ‧Director, , Taiwan Envirotech Development Corporation‧Director, Taiwan Commerce Development Corporation ‧Director, Hsinchu Hill Garden Corporation ‧Director, Hualien Ocean Forum Corporation ‧Director, Hualien Culture Clubhouse Corporation ‧Director, Taiwan City Development Corporation ‧Director, Nanguo House Corporation ‧Director, Wind Lion Plaza Shopping Center Corporation‧Director, Taiwan Mid-Town Development Corporation ‧Director, Dufry TCDC Ltd.‧Director, Taiwan Manpower Development Corporation ‧Chairman, ERA Communications Inc. ‧Chairman, Hualien Cable TV Co., Ltd. ‧Chairman, Cashbox Party World Co., Ltd. ‧Director, Zhong Du International Corporation ‧Chairman, ERA Global Culture Corporation ‧Director, Tung Tai Cable TV Co., Ltd. ‧Director, Tung Chia Development Co., Ltd. ‧Director, Chia An Development Co., Ltd. ‧Chairman, Hongtu Investment Co., Ltd.‧Chairman, Yuming Investment Co., Ltd.

- - -

Director British Virgin Islands

Shih Tuo Investment Co., Ltd.

07/01/2014 3 years 07/01/2011 4.568 0.70 5.171 0.72 - - - - - - - - -



07/01/2014 3 years 07/01/2011 5.370 0.82

6.197 0.85 - - - - - - - - -

Representative: Kow, Fu-Lin (Note)

0.034 0.00‧ Senior Engineer, Pacific Engineers &

Constructors, Ltd ‧ M.S. in Civil Engineering, Ohio State

University, U.S.A.

‧ Director, Taiwan Envirotech Development Corporation ‧ Senior Engineer, Pacific Engineers & Constructors, Ltd ‧ Supervisor, ERA Cultural Creative Enterprise - - -


Cheng, Ming-Chieh 07/01/2014 3 years 07/01/2011 0 0.00 0 0.00

‧ Director, iBIZ Technology Corp.‧ M.S. in Computer Science, Fordham

University, U.S.A.

‧ Director, iBIZ Technology Corp.‧ Director, ERA Network Enterprise Co. ‧ Director, ERA Global Culture Corporation

- - -



07/01/2014 3 years 07/01/2011 5.370 0.82

6.197 0.85 - - - - - - - - -

Representative: Cheng, Chi-Li 0.467 0.06

‧ Assistant VP, Leasing and Sales, Wei Hsin Real Estate Consulting

‧ Accounting & Statistics, College of Management, Shih Chien University

‧ Vice President of the Company ‧ Director, Taiwan Envirotech Development Corporation ‧Director, Hsinchu Hill Garden Corporation‧Director, Hualien Ocean Forum Corporation ‧Director, Hualien Culture Clubhouse Corporation ‧Director, Taiwan City Development Corporation‧Director, Taiwan LanYang Development Corporation‧Director, Taiwan Wind Lion Travel Service Corporation

- - -



Name Elected Date

Term (Years)

Date First Elected





degrees of kinship


Percentage(%)




Supervisor Republic of China Lin, Hung-Min 07/01/2014 3 years 07/01/2011 0 0.00 0 0.00

‧ Assistant VP, Finance Dept., Hualien Cable TV Co., Ltd.

‧ Banking & Finance, Tamkang University

‧ Assistant VP, Finance Dept., Hualien Cable TV Co., Ltd. ‧ Director, Holiday Entertainment Co., Ltd. ‧Director, Dahe Media Co.,Ltd‧ Supervisor, Satellite Entertainment Communication Co., Ltd.‧ Supervisor, Taiwan Innovation Development Corporation ‧ Supervisor, Taiwan Envirotech Development Corporation ‧ Supervisor, Taiwan Commerce Development Corporation ‧ Supervisor, Taiwan City Development Corporation ‧ Supervisor, Taiwan Mid-Town Development Corporation ‧ Supervisor, Dufry TCDC Ltd.‧ Supervisor, Taiwan Manpower Development Corporation

- - -

Supervisor Republic of China

Nienshin Investment Co., Ltd.

07/01/2014 3 years 07/01/2008 4.551 0.69

5.251 0.72 - - - - - - - - -

Representative: Hui-Ling Yeh 0.177 0.02 ‧ Director, Nienshin Investment Co., Ltd.

‧ Senior high school graduate

‧ Director, Nienshin Investment Co., Ltd. ‧ Supervisor, Taiwan Innovation Development Corporation‧ Supervisor, Hsinchu Hill Garden Corporation ‧ Supervisor, Hualien Ocean Forum Corporation ‧ Supervisor, Hualien Culture Clubhouse Corporation‧ Supervisor, Taikai Xiamen Trading Corporation‧ Supervisor, Nanguowoo Corporation‧ Supervisor, Wind Lion Plaza Shopping Center‧ Supervisor, Taiwan Wind Lion Travel Services Corporation‧ Supervisor,, Taiwan LanYang Development Corporation‧Supervisor, Chairman, Kinmen Forum Corporation

- - -


Dahe Media Co.,Ltd 07/01/2014 3 years 07/01/2014 4.246 0.65 4.899 0.67

Note: The corporate director Kuanshen Investment Co., Ltd. resigned on December 10, 2014.

Table 1: Major corporate shareholders

May 1,2016

Name of corporate shareholders Main shareholders of corporate shareholders

Hung Sheng Investment Co., Ltd. Chiu, Fu-Sheng (60.17%)

Shih Tuo Investment Co., Ltd. Harmony Forward Limited, registered in British Virgin Islands (100%)

Nienshin Investment Co., Ltd. Yeh, Hui-Ling (99.9%)

Dahe Media Co.,Ltd ERA Communications Inc. (100%)

Table 2: Main shareholders of corporate shareholders in Table 1

Name of corporate shareholder Main shareholders of corporate shareholders

ERA Communications Inc. Tongjia Development Co., Ltd. (17.27%)Jiaan Development Co., Ltd. (17.27%)

21



Name Elected Date

Term (Years)

Date First Elected





degrees of kinship


Percentage(%)




Supervisor Republic of China Lin, Hung-Min 07/01/2014 3 years 07/01/2011 0 0.00 0 0.00

‧ Assistant VP, Finance Dept., Hualien Cable TV Co., Ltd.

‧ Banking & Finance, Tamkang University

‧ Assistant VP, Finance Dept., Hualien Cable TV Co., Ltd. ‧ Director, Holiday Entertainment Co., Ltd. ‧Director, Dahe Media Co.,Ltd‧ Supervisor, Satellite Entertainment Communication Co., Ltd.‧ Supervisor, Taiwan Innovation Development Corporation ‧ Supervisor, Taiwan Envirotech Development Corporation ‧ Supervisor, Taiwan Commerce Development Corporation ‧ Supervisor, Taiwan City Development Corporation ‧ Supervisor, Taiwan Mid-Town Development Corporation ‧ Supervisor, Dufry TCDC Ltd.‧ Supervisor, Taiwan Manpower Development Corporation

- - -


Nienshin Investment Co., Ltd.

07/01/2014 3 years 07/01/2008 4.551 0.69

5.251 0.72 - - - - - - - - -

Representative: Hui-Ling Yeh 0.177 0.02 ‧ Director, Nienshin Investment Co., Ltd.

‧ Senior high school graduate

‧ Director, Nienshin Investment Co., Ltd. ‧ Supervisor, Taiwan Innovation Development Corporation‧ Supervisor, Hsinchu Hill Garden Corporation ‧ Supervisor, Hualien Ocean Forum Corporation ‧ Supervisor, Hualien Culture Clubhouse Corporation‧ Supervisor, Taikai Xiamen Trading Corporation‧ Supervisor, Nanguowoo Corporation‧ Supervisor, Wind Lion Plaza Shopping Center‧ Supervisor, Taiwan Wind Lion Travel Services Corporation‧ Supervisor,, Taiwan LanYang Development Corporation‧Supervisor, Chairman, Kinmen Forum Corporation

- - -


Dahe Media Co.,Ltd 07/01/2014 3 years 07/01/2014 4.246 0.65 4.899 0.67


B. Information on directors and supervisors (2)

　　　　Criteria

Name 　　　　　　

Has at least 5 years of work experience and meet one of the following professional

qualifications Meet the independence criteria (Note 2)

Number of Other Public Companies in Which the Individual is Concurrently

Serving as an

Independent Director

An Instructor or Higher

Position in a Department

of Commerce, Law, Finance, Accounting,

or Other Academic

Department Related to

the Business Needs of the Company in a Public or

Private Junior College,

College or University

A judge, public prosecutor,

attorney, accountant,

or other professional or technical specialist

related to the needs of the

Company who has passed a national

examination and received a certificate therefore

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

Hung Sheng Investment Co., Ltd. Representative: Chiu, Fu-Sheng

ü ü ü ü ü ü ü -

Lian, Tai-Sheng ü ü ü ü ü ü ü ü -

Shih Tuo Investment Co., Ltd. ü ü ü ü ü ü ü ü ü ü -

Hung Sheng Investment Co., Ltd. Representative: Kow, Fu-Lin

ü ü ü ü ü ü ü ü -

Cheng, Ming-Chieh ü ü ü ü ü ü ü ü ü ü ü -

Hung Sheng Investment Co., Ltd. Representative: Cheng, Chi-Li

ü ü ü ü ü ü ü -

Lin, Hung-Min ü ü ü ü ü ü ü ü ü -

Nienshin Investment Co., Ltd. Representative: Yeh, Hui-Ling

ü ü ü ü ü ü ü ü -

Dahe Media Co.,Ltd ü ü ü ü ü ü ü ü ü ü

(2) Information of President, Vice Presidents, Assistant Presidents, and Branch Supervisors May 1, 2016; Unit: shares; %

Title Nationality Name Date Elected Current Shareholding Spouse & Minor Shareholding Shareholding by nominee

arrangement Experience (Education) Positions Held at Other Companies

Presidents who are Spouse or within two degrees of kinship

Shares Percentage Shares Percentage Shares Percentage Title Name Relation

Vice President Republic of China Cheng Chi-Li 01/01/2015 467,046 0.06% 0 0% 0 0%

Accounting & Statistics, College of Management, Shih Chien University

‧ Director of the Company ‧ Director, Taiwan Envirotech

Development Corporation ‧ Director, Hsinchu Hill Garden

Corporation‧ Director, Hualien Ocean Forum

Corporation ‧ Director, Hualien Culture Clubhouse

Corporation ‧ Director, Taiwan City Development

Corporation‧ Director, Taiwan LanYang

Development Corporation‧ Director, Taiwan Wind Lion Travel

Service Corporation

Vice President Republic of China

Guo, Zong-Xiong 05/01/2014 638,365 0.06% 0 0% 0 0% Master of Law, Ming

Chuan University ‧ President, Taiwan Commerce

Development Corp.

Special assistant, Board of Directors Office

Republic of China Lin,Chien-chih 04/01/2016 30,000 0% 0 0% 0 0% Department of Drama,

Chinese Culture University

Manager, Pro- Construction Planning Department

Republic of China

Lin, Hsiang -Pin 04/01/2016 262,190 0.04% 0 0% 0 0%

Master of Media Space Design, Ming Chuan University

‧ Professional technician, Taiwan Envirotech Development Corporation - - -

23


Note: Please tick 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"ü".

(a) Not an employee of the Company or any of its affiliates.

(b) 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.

(c) 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.

(d) 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.

(e) 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 five in holdings.

(f) Not a director, supervisor, president, 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.

(g) Not a professional individual who, or an owner, partner, director, supervisor, or president 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.

(h) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

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

(j) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

(2) Information of President, Vice Presidents, Assistant Presidents, and Branch Supervisors May 1, 2016; Unit: shares; %


arrangement Experience (Education) Positions Held at Other Companies

Presidents who are Spouse or within two degrees of kinship


Vice President Republic of China Cheng Chi-Li 01/01/2015 467,046 0.06% 0 0% 0 0%

Accounting & Statistics, College of Management, Shih Chien University

‧ Director of the Company ‧ Director, Taiwan Envirotech

Development Corporation ‧ Director, Hsinchu Hill Garden

Corporation‧ Director, Hualien Ocean Forum

Corporation ‧ Director, Hualien Culture Clubhouse

Corporation ‧ Director, Taiwan City Development

Corporation‧ Director, Taiwan LanYang

Development Corporation‧ Director, Taiwan Wind Lion Travel

Service Corporation

Vice President Republic of China

Guo, Zong-Xiong 05/01/2014 638,365 0.06% 0 0% 0 0% Master of Law, Ming

Chuan University ‧ President, Taiwan Commerce

Development Corp.

Special assistant, Board of Directors Office

Republic of China Lin,Chien-chih 04/01/2016 30,000 0% 0 0% 0 0% Department of Drama,

Chinese Culture University

Manager, Pro- Construction Planning Department

Republic of China

Lin, Hsiang -Pin 04/01/2016 262,190 0.04% 0 0% 0 0%

Master of Media Space Design, Ming Chuan University

‧ Professional technician, Taiwan Envirotech Development Corporation - - -



arrangement Experience (Education) Positions Held at Other CompaniesPresidents who are Spouse or within two degrees of kinship


Assistant VP, Public Affairs Department

Republic of China Lan, Chi-Jen 08/12/2011 333,284 0.05% 0 0% 0 0%

Dept. of Food Science, National Pingtung University of Science and Technology

‧ Vice President, Wind Lion Plaza Co., Ltd. - - -

Manager, Public Affairs Department

Republic of China Smart Chiang 01/01/2011 715,823 0.10% 0 0% 0 0% Dept. of Journalism, Shih

Hsin University ‧ Assistant Vice President, Taikai

Xiamen Trading Corporation - - -


Republic of China Edward Wu 11/01/2011 726,011 0.10% 0 0% 0 0%

Dept. of Industrial Engineering, Feng Chia University

- - -

Manager, Planning Department.

Republic of China

Mao, Zhao-Kai 11/01/2014 653,977 0.09% 0 0% 0 0%

Master of Industrial Engineering, Feng Chia University and National Taiwan University

‧ Manager, Taiwan Innovation Development Corporation

Assistant Vice President, Accounting Section, Finance Department

Republic of China

Chen, Wan-Ling 10/01/2008 284,366 0.04% 0 0% 0 0% Dept. of Accounting, Shih

Chien University ‧ Manager, Finance Section,

Taiwan Innovation Development Corporation

- - -

Assistant Vice President, Board of Directors Office

Republic of China Rocky Lo 11/01/2010 103,892 0.01% 0 0% 0 0% College of Law, National

Taiwan University - - -

Manager, Administration Section of General Administration Department

Republic of China Ben Lin 11/01/2010 390,512 0.05% 3,674 0% 0 0%

Master of Business Administration, Fu Jen Catholic University

‧ Manager, Administration Section, Taiwan Innovation Development Corporation

‧ Vice President, Taiwan Manpower Development Corporation

- - -

Manager, Finance Section of General Administration Department

Republic of China

Peng, Hua-Hui 11/01/2014 129,500 0.02% 0 0% 0 0%

Current student at Department of Commerce, National Open University

‧ Manager, Finance Section, Taiwan Innovation Development Corporation

Manager, Procurement Section of General Administration Department

Republic of China

Lin,Cheng-Chih 01/04/2016 96,000 0.01% 0 0% 0 0%

Master of Department of Civil Engineering, National Central University

- - -

(3) Remuneration to Directors, Supervisors, President and Vice President in 2015

A. Remuneration to directors 　 Unit: NT$

Title Name

Remuneration for Chairman Ratio of total compensation

(A+B+C+D) to net income (%)

Remuneration to concurrent employees Ratio of total compensation (A+B+C+D+E+

F+G) to net income (%)

Compensation paid to

president and VP from reinvested companies other than subsidiary

Compensation(A) Severance pay(B) Bonus to supervisors(C) Project implementation Expenses(D)

Salary, bonus and allowance(E) Severance pay(F) Profit sharing-employee bonus(G) Exercisable employee

stock options(H)Restricted stock units

(I)

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company All companies in the financial statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statementsCash bonus

Employee bonus-in

stock

Cash bonus

Employee bonus-in

stock

Chairman Hung Sheng Investment Co., Ltd. Representative: Chiu, Fu-Sheng

19,750,000 19,750,000 — — 14,552,079 14,552,079 2,208,000 2,928,000 1.79% 1.82% 2,990,000 2,990,000 54,000 54,000 7,421,560 — 7,421,560 — — — — — 2.30% 2.34% —

Vice Chairman Lian, Tai-Sheng

Director Shih Tuo Investment Co., Ltd.

Director Hung Sheng Investment Co., Ltd. Representative: Kow, Fu-Lin

Director Cheng, Ming-Chieh

Director Hung Sheng Investment Co., Ltd. Representative: Cheng, Chi-Li

Note 1: The Chairman is provided with 2 cars (monthly rental: NT$110,000) and a driver (monthly salary: NT$63,000). Note 2: The Company's actual severance pay and pension payout for 2015 was allocated from the severance pay and pension payout.

25



arrangement Experience (Education) Positions Held at Other CompaniesPresidents who are Spouse or within two degrees of kinship


Assistant VP, Public Affairs Department

Republic of China Lan, Chi-Jen 08/12/2011 333,284 0.05% 0 0% 0 0%

Dept. of Food Science, National Pingtung University of Science and Technology

‧ Vice President, Wind Lion Plaza Co., Ltd. - - -


Republic of China Smart Chiang 01/01/2011 715,823 0.10% 0 0% 0 0% Dept. of Journalism, Shih

Hsin University ‧ Assistant Vice President, Taikai

Xiamen Trading Corporation - - -


Republic of China Edward Wu 11/01/2011 726,011 0.10% 0 0% 0 0%

Dept. of Industrial Engineering, Feng Chia University

- - -

Manager, Planning Department.

Republic of China

Mao, Zhao-Kai 11/01/2014 653,977 0.09% 0 0% 0 0%

Master of Industrial Engineering, Feng Chia University and National Taiwan University

‧ Manager, Taiwan Innovation Development Corporation

Assistant Vice President, Accounting Section, Finance Department

Republic of China

Chen, Wan-Ling 10/01/2008 284,366 0.04% 0 0% 0 0% Dept. of Accounting, Shih

Chien University ‧ Manager, Finance Section,


- - -

Assistant Vice President, Board of Directors Office

Republic of China Rocky Lo 11/01/2010 103,892 0.01% 0 0% 0 0% College of Law, National

Taiwan University - - -

Manager, Administration Section of General Administration Department

Republic of China Ben Lin 11/01/2010 390,512 0.05% 3,674 0% 0 0%

Master of Business Administration, Fu Jen Catholic University

‧ Manager, Administration Section, Taiwan Innovation Development Corporation

‧ Vice President, Taiwan Manpower Development Corporation

- - -

Manager, Finance Section of General Administration Department

Republic of China

Peng, Hua-Hui 11/01/2014 129,500 0.02% 0 0% 0 0%

Current student at Department of Commerce, National Open University

‧ Manager, Finance Section, Taiwan Innovation Development Corporation

Manager, Procurement Section of General Administration Department

Republic of China

Lin,Cheng-Chih 01/04/2016 96,000 0.01% 0 0% 0 0%

Master of Department of Civil Engineering, National Central University

- - -

(3) Remuneration to Directors, Supervisors, President and Vice President in 2015

A. Remuneration to directors 　 Unit: NT$

Title Name

Remuneration for Chairman Ratio of total compensation


Remuneration to concurrent employees Ratio of total compensation (A+B+C+D+E+

F+G) to net income (%)



Compensation(A) Severance pay(B) Bonus to supervisors(C) Project implementation Expenses(D)

Salary, bonus and allowance(E) Severance pay(F) Profit sharing-employee bonus(G) Exercisable employee

stock options(H)Restricted stock units

(I)

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements


The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statementsCash bonus

Employee bonus-in

stock

Cash bonus

Employee bonus-in

stock

Chairman Hung Sheng Investment Co., Ltd. Representative: Chiu, Fu-Sheng

19,750,000 19,750,000 — — 14,552,079 14,552,079 2,208,000 2,928,000 1.79% 1.82% 2,990,000 2,990,000 54,000 54,000 7,421,560 — 7,421,560 — — — — — 2.30% 2.34% —

Vice Chairman Lian, Tai-Sheng

Director Shih Tuo Investment Co., Ltd.


Director Cheng, Ming-Chieh


Note 1: The Chairman is provided with 2 cars (monthly rental: NT$110,000) and a driver (monthly salary: NT$63,000). Note 2: The Company's actual severance pay and pension payout for 2015 was allocated from the severance pay and pension payout.


Remuneration scale table

Remuneration scale applicable to the Company's directors

Names of Directors

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)

The company All companies

in the I financial statements

The company All companies

in the J financial statements

Below NT$2,000,000

NT$2,000,000 ～ NT$5,000,000 (exclusive)

Shih Tuo Investment Co., Ltd., Kow, Fu-

Lin, Cheng Ming-Chieh, Cheng,

Chi-Li


Lin, Cheng Ming-Chieh, Cheng,

Chi-Li


Lin, Cheng Ming-Chieh,


Lin, Cheng Ming-Chieh,

NT$5,000,000 ～ NT$10,000,000 (exclusive) Cheng, Chi-Li Cheng, Chi-Li

NT$10,000,000 ～ NT$15,000,000 (exclusive) Lian, Tai-Sheng Lian, Tai-Sheng Lian, Tai-Sheng Lian, Tai-Sheng,

NT$15,000,000 ～ NT$30,000,000 (exclusive) Chiu, Fu-Sheng Chiu, Fu-Sheng Chiu, Fu-Sheng Chiu, Fu-Sheng

NT$30,000,000 ～ NT$50,000,000 (exclusive)

NT$50,000,000 ～ NT$100,000,000 (exclusive)

NT$100,000,000 or above

Total 36,510,079 37,230,079 46,975,639 47,695,639

B. Remuneration to supervisors Unit: NT$

Title Name

Remuneration for Supervisor Ratio of total remuneration

(A+B+C) to net income (%)



Compensation(A) Bonus to supervisors(B) Project implementation Expenses(C)

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies in the

financial statements

The company

All companies

in the financial

statements

Supervisor

Nienshin Investment Co., Ltd. Representative: Yeh, Hui-Ling — — 7,276,040 7,276,040 1,080,000 1,800,000 0.41% 0.44% —

Supervisor Lin, Hung-Min

Supervisor Dahe Media Co.,Ltd


Bracket

Names of supervisors

Total of (A+B+C)

The company All companies in the D financial statements

Below NT$2,000,000 Yeh Hui-Ling, Lin Hung-Min, Dahe Media Co.,Ltd

Yeh Hui-Ling, Lin Hung-Min, Dahe Media Co.,Ltd

NT$2,000,000 ～ NT$5,000,000 (exclusive)

NT$5,000,000 ～ NT$10,000,000 (exclusive)

NT$10,000,000 ～ NT$15,000,000 (exclusive)

NT$15,000,000 ～ NT$30,000,000 (exclusive)

NT$30,000,000 ～ NT$50,000,000 (exclusive)

NT$50,000,000 ～ NT$100,000,000 (exclusive)

NT$100,000,000 or above

Total 8,356,040 9,076,040

27


C. Remuneration to president and vice presidents 　 Unit: NT$

Title Name

Salary(A) Severance pay(B) Bonus and allowance(C) Profit sharing-employee bonus(D)

Ratio of total compensation


Exercisable employee stock

options

Restricted stock units Compensation

paid to president

and VP from reinvested companies other than subsidiary

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company All companies in the financial

statementsThe

company

All companies

in the financial

statements

The company

All companies

in the financial

statements

The company

All companies

in the financial

statementsEmployee bonus-in

cash

Employee bonus-in

stock

Employee bonus-in

cash

Employee bonus-in

stock

Vice President

Cheng, Chi-Li

5,255,484 5,255,484 264,600 264,600 1,470,000 1,470,000 1,768,078 — 1,768,078 — 0. 43% 0.43% — — — — —

Vice President

Guo, Zong-Xiong

Vice President

Chen, Tang-Sheng

Vice President

Alex Shen

Note 1: Vice President Chen, Tang-Sheng retired on March 1, 2015. Vice President Alex Shen resigned on April 30, 2015. Note 2: VP is provided with a car (monthly rental: NT$19,500) and a driver (monthly salary: NT$36,000). Note 3: The Company's actual severance pay and pension payout for 2015 was appropriated from the severance and pension fund.


Bracket Names of President and VPs

The company All companies in the financial statements(E)

Below NT$2,000,000 Chen Tang-Sheng, Alex Shen

Chen Tang-Sheng, Alex Shen

NT$2,000,000 ～ NT$5,000,000 (exclusive) Cheng Chi-Li,Guo Zong-Xiong

Cheng Chi-Li,Guo Zong-Xiong

NT$5,000,000 ～ NT$10,000,000 (exclusive)

NT$10,000,000 ～ NT$15,000,000 (exclusive)

NT$15,000,000 ～ NT$30,000,000 (exclusive)

NT$30,000,000 ～ NT$50,000,000 (exclusive)

NT$50,000,000 ～ NT$100,000,000 (exclusive)

NT$100,000,000 or above

Total 8,758,162 8,758,162


D. Names of the presidents who were distributed employee dividend and the distribution May 1,2016

Title Name Employee bonus-in

stock

Employee bonus-in

cash Total

Raito of total amount to net income (%)

Executive officers

CEO Chiu, Fu-Sheng

0 13,740,000 13,740,000 0.67%

Vice CEO Lian, Tai-Sheng

Vice President Cheng, Chi-Li

Vice President Guo, Zong-Xiong

Special assistant, Board of Directors Office Lin,Chien-chih

Manager, Pro-Construction Planning Department Lin, Hsiang-Pin

Manager,Operation Department Nien, Quan-Yi

Assistant Vice President, Public Affairs Department Lan, Chi-Jen

Manager, Public Affairs Department Smart Chiang

Manager, Public Affairs Department Edward Wu

Manager, Planning Department Mao, Zhao-Kai

Manager, Planning Department Li, Dun-Ren

Manager, Planning Department Ge, Pi-Ye

Manager, Finance Section, Finace Department Peng, Hua-Hui

Assistant Vice President, Accounting Section, Finance Department Chen, Wan-Ling

Assistant Vice President, Board of Directors Office Rocky Lo

Manager, Procurement Section, General Administration Department Lin,Cheng-Chih

Manager, General Administration Department Ben Lin,

(4) Comparison of remuneration for directors, supervisors, president, and vice presidents in the most recent two fiscal years, remuneration policy, standards and package for directors, supervisors, president, and vice presidents, procedure for determining remuneration and correlation with business performance and future risks.

The ratio of total remuneration paid by the company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, president, and vice presidents of the company, to the net income.

Ratio of total remuneration to net income (%)

Year Title


2015 2014 2015 2014

Director 2.30 0.58 2.34 0.60

Supervisor 0.41 0.06 0.44 0.07

President, vice president 0.43 0.11 0.43 0.11

Description:

A. Remuneration to directors and supervisors includes two parts: Fixed transportation expenses associated with attending board meetings as well as remuneration to directors and supervisors. Transportation expenses are determined based on industry standards. Profit distribution as remuneration for directors and supervisors is determined by the Company's Articles of Incorporation as follows: at the time of allocating surplus profits (if any), as much as 2% of the surplus may be allocated as remuneration to directors and supervisors, with the exact percentage of the current year subject to Board approval within the range specified above. After the operating performance for the year and the extent of participation and contribution of the directors and supervisors have been taken into consideration, the Remuneration Committee will make a recommendation to the Board, which in turn will submit the proposal to the Annual Shareholders' Meeting for approval before payments for the remuneration may be made, and no risks are expected in the future.

29


B. Remuneration to President and VP includes salary, bonus and employee dividend, which are determined by the level of responsibilities of the position and performance.

C. The percentage of remuneration to directors and supervisors for 2015 is the same as that of 2014. For 2015, remuneration to directors, supervisors, President and vice presidents is higher than that of 2014 in terms of the proportion to net profit mainly due to the proposed revision to the Articles of Incorporation of the Company approved by the board of directors (pending submission at the shareholders' meeting) in accordance with the amendment to the Company Act promulgated on May 20, 2105. One percent of profit shall each be allocated as remuneration to directors and supervisors as well as employee compensation according to the profit of the current year, after deduction of cumulative losses.

3. Implementation of Corporate Governance (1) Board of Directors

A total of 12 (A) meetings of the board of directors were held in 2015. The attendance was as follows:

Title Name Attendance in person( Ｂ )

Attendance by proxy

Attendance rate (%)

【Ｂ / Ａ】Notes

Chairman and Director

Hung Sheng Investment Co., Ltd. Representative: Chiu, Fu-Sheng

12 0 100% Re-elected on 06/24/2014 (17therm), A=12

Vice Chairman and Director Lian, Tai-Sheng 0 10 0%

Attended the following board meetings by proxy: 17th term 10rd board meeting on 03/25/201517th term 11th board meeting on 04/28/201517th term 12th board meeting on 05/27/201517th term 13th board meeting on 06/24/201517th term 14th board meeting on 07/24/201517th term 15nd board meeting on 08/26/201517th term 16rd board meeting on 09/21/201517th term 17th board meeting on 10/28/201517th term 18th board meeting on 11/23/201517th term 19th board meeting on 12/22/2015A=12





Director Cheng, Ming-Chieh 12 0 100% Re-elected on 06/24/2014 (17therm), A=12

Director Shih Tuo Investment Co., Ltd. 12 0 100% Re-elected on 06/24/2014 (17therm), A=12

Other matters recorded: The functions and the implementation of Board of Directors which in accordance with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies were quite well.

(2) Status of Audit Committee or Attendance of Supervisors for Board Meeting

A. The Company has not established an Audit Committee.

B. Attendance of supervisors for board meeting: A total of 12 (A) meetings of the board of directors were held in 2015. The attendance of supervisors was as follows:

Title Name Attendance in person (B) By proxy

Attendance rate (%)

[B/A]Notes

Supervisor Nienshin Investment Co., Ltd. Representative: Yeh, Hui-Ling

12 0 100％ Re-elected on 06/24/2014 (17th term) A=12

Supervisor Lin, Hung-Min 12 0 100% Re-elected on 06/24/2014 (17th term) A=12

Supervisor Dahe Media Co.,Ltd 12 0 100% Re-elected on 06/24/2014 (17th term) A=12


(3) Corporate Governance Execution Status and Deviations from Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.

Assessment Item

Implementation status Discrepancy with industry standards in governance

practices and reasons

Yes No Brief description

1. Does the Company abide by the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies when establishing and disclosing its corporate governance code of conduct?

ü The Company has been valuing shareholders’ equity. Although there is no Corporate Governance Code of Conduct in place at present but the internal control system and individual guidelines have encompassed the spirit of corporate governance. The compilation will be considered taking into account circumstances in the future.

None

2. Shareholding Structure & Shareholders' Rights

(1) Doe the Company have the internal operating procedure for handling shareholders’ suggestions, questions, disputes, or legal action in place and abide by it?

(2) Does the Company possess a list of major shareholders and a list of ultimate owners of these major shareholders

(3) Does the Company have a risk management mechanism and "firewall" against its affiliates in place or implement it?

(4) Does the Company have internal regulations in place to prevent its people from trading securities based on information yet to be public on the market?

ü

ü

ü

ü

(1) The Company has a spokesperson to take shareholders’ advice address their concern at any time. Although there are no related operating guidelines in place, there are specialists to address shareholders’ advice and issues with related control available.

(2) The Company gains access to the list of major shareholders and ultimate controllers of major shareholders through the register of shareholders provided by the shareholder services agency.

(3) In order to maintain a sound financial relationship with affiliated enterprises, the Company formulated its own "Guidelines for conducting financial business with affiliated enterprises" in accordance with Article 17 of the Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies, the purpose of which is to achieve risk control and the establishment of firewalls.

(4) The Company already included “prevention against insider trading” in its internal control system entitled as required by law and periodically communicates laws and regulations to related staff.

None

None

None

None

3. Composition and Responsibilities of the Board of Directors

(1) Does the Board of Directors establish and consolidate the diversification policy for its composition?

(2) Besides the Remuneration Committee and the Audit Committee set up according to law, does the Company have other types of functional committees in place that it spontaneously set up?

(3) Does the Company have Board of Directors performance assessment guidelines and assessment methods in place and perform the assessments periodically on a yearly basis?

ü

ü

ü

(1) Members of the Board of Directors include professionals in different fields, communication, engineering, finance, and accounting, etc. Not only professional capabilities of the members but also their moral behavior and leadership are important considerations.

(2) Besides the Remuneration Committee, the Company holds labor management meetings and has other functional committees such as Labor Safety and Health Group, Sexual Harassment Prevention Committee, and Employee Benefits Committee in place.

(3) There are no Board of Directors Performance Assessment Guidelines available at the Company but members’ attendance in meeting is being evaluated according to the names and number of members present in, on leave of absence, or absent from the meetings applying the Board of Directors Meeting Rules.

None

None

None

(4) Does the Company evaluate CPAs' independence regularly?

ü (4) The Company has appointed PwC Taiwan to inspect and certify financial statements and the Board of Directors precisely follows the requirements in Article 29 of the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies when evaluating the independence of hired CPAs each year. The Company’s CPAs have not been remaining the same without change for seven consecutive years and are not found with discipline or punishment records in the past five years according to the data released by the Securities and Futures Bureau, Financial Supervisory Commission. In addition, they are formally and substantially impartial and express their opinions in a just way in accordance with the Communique 10 of the Code of Professional Ethics for CPAs.

None

4. Does the Company have a communication channel in place with stakeholders and set up a stakeholders only section on its website to properly address stakeholders’ concerns such important corporate social responsibilities?

ü The Company maintains an effective communication and coordination channel, through dedicated departments, with various parties of interest, including banks, other debtors, proprietors, vendors, consumers and company employees, and the Company provides sufficient information and respects, maintains and protects the legitimate interests of these entities. The Company also has a stakeholders’ only section on its website.

None

31


Assessment Item




5. Does the Company hire professional stock agencies to take care of shareholders’ meetings-related affairs?

ü The Company has authorized SinoPac Securities to take care of the said affairs.

None

6. Information Disclosure (1) Does the Company set up a

corporate website to disclose information regarding the Company's financials, business and corporate governance status

(2) Does the Company adopt other ways to disclose information (e.g., maintaining an English-language website, appointing responsible people to handle information collection and disclosure, appointing spokespersons, webcasting investors conference)?

ü

ü

(1) The Company has created a website in both Chinese and English at: www.tldc.com.tw for the dissemination of information such as financial business and corporate governance.

(2) Departments collect relevant information in accordance with their authorities and disclose it in the Market Observation Post System, corporate website and annual report; the Company has also designated a spokesperson and an acting spokesperson. There is also an Investor Relations section on the corporate website, providing information on the Company's business operation status, briefings given at institutional investor presentations, shareholders Q&A, and the status of corporate governance operations.

None

None

7. Does the Company have other important information to facilitate better understanding of the its corporate governance practices (including without limitation employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors' and supervisors' training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

ü (1) Employee rights and interests: The Company recruits talents via better remuneration and work environment, and arranges self-education and training opportunities for employees. The Company also takes measures to ensure the rights of employees guaranteed by the Labor Standards Act.

(2) Employee wellness: The Company cares about employees' physical and psychological well-being, and supports various activities associated with employee welfare, such as travel subsidy and club subsidy. With the establishment of an employee welfare committee, the labor-management meeting and the sexual harassment prevention committee, the Company maintains a good relationship with the employees.

(3) Investor relations: The Company has engaged a professional shareholder services agency and established a spokesperson system as the point of contact between the Company and shareholders. With respect to information transparency, the "Investor Services" section on the Company's website provides shareholders with the Company's operating status and other business information to provide shareholders and investors with the most up-to-date and effective advisory services. These channels serve as an important bridge for communication between the Company and investors.

(4) Supplier relations: The Company's "Guidelines for engaging technical services organizations to provide technical services" and "Guidelines for construction project tendering" are established to provide a set of criteria for commissioning technical services and construction project tendering, the purpose of which is to create maximum value for the Company and to maintain good relations with suppliers.

None

None

None

None


Assessment Item




(5) Stakeholder rights: The Company maintains an effective communication channel with banks, other debtors, employees, consumers, suppliers, the community and parties of interest, and the Company respects, maintains and protects their legitimate interests. The Company also provides sufficient information to banks and other debtors so that they will be able to make judgment and determine the course of action regarding the Company’s operation and financial position. Meanwhile, the “Stakeholders＂ section is set up on the Company’s website to provide stakeholders with timely, rapid, and effective consultation services.

(6) Directors and supervisors' training records: The directors and supervisors of the Company have the appropriate professional background and practical management experience. During the current fiscal year, directors Cheng Ming-Chieh and Yu, Ling-Chang participated in the 3-hour seminar on "Tax Planning from the Perspective of Corporate Governance – Technical Investment and Utilization of the Business Mergers And Acquisitions Act＂; Cheng, Chi-Li attended seminars entitled “Capital Market and Corporate Governance＂ and “Workshop on Compliance with Stock Option Transaction Laws among Internal Staff of Listed Companies＂, six hours in total; Kow, Fu-Lin participated in seminars entitled “Tax Planning from the Perspective of Corporate Governance – Technical Investment and Utilization of the Business Mergers And Acquisitions Act＂, “How to Create Sustainable Opportunities with Green Energy＂, and “Examining Company’s Business Secrets and Systematic Governance against Competition from the Perspective of Corporate Governance＂, nine hours in total.

(7) The implementation of risk management policies and risk evaluation measures: The Company is neither a securities firm, an investment trust or consulting enterprise, nor a futures commission merchant, so this is not applicable.

(8) The implementation of customer relations policies: A The Company has designated dedicated sections on

the corporate website for various services provided and contact e-mail information, providing customers with prompt, convenient and comprehensive business information and access to grievance channel. In addition to handling cases, follow-ups and complaints about services rendered, the Company will also use the cases as materials for employee training purposes.

B In compliance with the competent authority's requirements on "standard contract," the Company has clearly established the terms of the contract. Customers are informed of all fees with which they are charged and any use of customer information by outsourced operations when they enter into the agreement with the Company.

(9) Purchasing insurance for directors and supervisors; The Company submitted the proposal for obtaining insurance coverage for director and supervisor liability at the 2009 annual shareholders' and received the necessary approval. The Board of Directors has been authorized to follow up on the purchase of the approved insurance coverage.

(10) Major internal information management operating procedures: Following public announcement of material information in compliance with the law, the Company shall inform all presidents and directors of the matter immediately via short messages.

None.

None.

None.

None.

None.

None.

8. Has the Company implemented a self-evaluation report for corporate governance or authorized any other professional organization to conduct such an evaluation? (If yes, please indicate opinions of the Board of Directors, the evaluation results, major deficiencies or suggestions, and improvements)

ü The Company already completed self-evaluation of corporate governance for 2014 through the operating platform "Corporate Governance Accreditation" on the website of the Securities and Futures Institute. The Company also has its own internal self assessment and will report to the Board of Directors each year results of the internal self assessment.

None.

33


(4) Remuneration Committee:

A. Profile of Remuneration Committee members

Position

Criteria

Name

Has at least 5 years of work experience and meet one of the following professional

qualifications Meet the independence criteria

Number of other public companies in which the committee

member also serves as a

remuneration committee member

Notes

An instructor or higher

position in the department

of commerce, law, finance, accounting

or other department related to

the business needs of the Company in a public or

private junior college or university

A judge, public prosecutor,

attorney, accountant,

or other professional or technical specialist

related to the needs of the

Company who has passed a national

examination and received a certificate therefore

Having work experience

in commerce,

law, finance, or accounting

or a profession necessary

for the business

of the Company

1 2 3 4 5 6 7 8

Others Hsieh, Chin-Ho ü ü ü ü ü ü ü ü ü

Others Christina Liu ü ü ü ü ü ü ü ü ü

Others Lee Hong-yuan ü ü ü ü ü ü ü ü ü

(a) Not an employee of the Company or any of its affiliates. (b) Not a director or supervisor of the Company or any of its affiliates The same does not apply if the person is an

independent director of the Company or its parent company, or any subsidiary in which the Company holds, directly and indirectly, more than 50% of the voting shares.

(c) 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.

(d) Not a spouse, relative within second degree of kinship, or lineal relative within third degree of kinship of any of the persons in the preceding three paragraphs.

(e) 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 five in holdings.

(f) Not a director, supervisor, president, 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.

(g) Not a professional or an owner, partner, director, supervisor, managerial officer or a spouse of the abovementioned who provides commercial, legal, financial, accounting services or consultation to the Company or an affiliate of the Company.

(h) Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.

B. Operation of Remuneration Committee

(a) The Company’s Remuneration Committee consists of 3 members.

(b) Term of the incumbent committee members: July 1, 2014 ~ June 30, 2017. The Remuneration Committee has met Four as of March 31, 2016 and the titles and attendance records of the committee members are as follows:

Title Name Attendance in person( Ｂ )

Attendance by proxy

Attendance rate (%)(%)

( Ｂ / Ａ )Notes

Convenor Hsieh, Chin-Ho 4 0 100 A=4

Member Christina Liu 4 0 100 A=4

Member Lee Hong-yuan 4 0 100 Inaugurated on 09/25/2014;A=4

Other matters recorded: None.


(5) Performance of Corporate Social Responsibility

Assessment Item

Implementation status Discrepancies with corporate

social responsibility

codes of practice of listed companies and

their causes


1. Exercising Corporate Governance (1) Does the company have the

corporate social responsibility policy or system in place and examine its performance?

(2) Does the Company hold social responsibility educational trainings regularly?

(3) Does the company have exclusively (or concurrently) dedicated units to be in charge of proposing and enforcing corporate social responsibilities and let the Board of Directors entrust the high-ranking management with the implementation and the latter will report to the Board of Directors on the implementation status?

(4) Does the company have a reasonable remuneration policy in place that combines the employee performance evaluation system with the corporate social responsibility policy and also have an explicit and effective reward and discipline system in place?

ü

ü

ü

ü (1) Although a corporate social responsibility policy or system is yet to be established, the Company's corporate philosophy is based on technological innovation, cultural creativity and sustainability of the environment. Concrete actions are taken to fulfill its responsibility to society and to give back to the community. Land is given new value, an ideal way of life is being created, and harmony and mutual prosperity with the environment is emphasized. Related policies will be established in the future depending on the circumstances.

(2) The Company holds multiple activities on corporate social responsibilities each year to communicate the Company’s goals in implementing its corporate culture.

(3) The Public Affairs Department is charged with the responsibility to implement corporate social responsibilities and the higher-ranking management will periodically report to the Board of Directors on the implementation status.

(4) The Remuneration Committee of the Company has established the “Compensation Management Guidelines” and the Company inspects the performance of employees each year. To meet the actual demand, performance inspections will be reinforced and combined with the Company’s corporate social responsibilities in the future.

None

None

None

None

2. Fostering a Sustainable Environment (1) Does the company endeavor

to utilize all resources more efficiently and use renewable materials which have a low impact on the environment?

(2) Does the company have proper environmental management systems based on the characteristics of their industries in place?

(3) Does the company pay attention to the impacts that the climate change has on the operation activities and implement greenhouse gas inventory, and establish energy-saving, carbon reduction, and greenhouse gas reduction strategies?

ü

ü

ü

(1) The Company promotes recycling, energy conservation and minimizing the use of disposable cups as well as encouraging paper recycling within the Company.

Externally, in addition to incorporating green architecture, green communities, energy conservation, carbon reduction and the creation of renewable energy to make its related beliefs known.

(2) The Kinmen Wind Lion God Shopping Street operated by the Company is the first architectural building in Taiwan to receive "LEED Gold Certification" in the categories of retail, public assembly, warehousing, and office space. The Mall was one of the first complexes to utilize architectural designs from abroad in advanced energy conservation and smart sensing and to apply these smart sensing technologies to daily energy consumptions such as lighting and air conditioning. The complex also features solar panels that generate enough energy to power a portion of its buildings. Aggregated generating capacity of 358,508 kWh and carbon reduction of 224,426 Kg has been attained to date. In response to strategies in energy conservation, carbon reduction, and mitigation of greenhouse gases, the Company has planned and acquired international LEED Green Building certifications for all of its development sites, and has endeavored to reduce energy consumption at its various development projects by utilizing advanced materials and construction methods. Mass cultivations of over 4,064 trees across all development sites facilitate environmental greening and purification. Green carbon reduction is now in excess of 2,222 tons per year. Carbon reduction of the Company's Hualien and Kinmen buildings exceed 1,922 tons per year, while the total volume of water resources conserved annually is over 95,497,500 liters. All offices maintain an indoor temperature of 26 degrees Celsius in compliance with policies in energy conservation and greenhouse gas reduction. These measures contribute toward our social and environmental responsibilities as a leading corporation.

None

None

None

35


Assessment Item




their causes


3. Upholding Public Interest (1) Does the company comply with

relevant laws and regulations and internationally recognized covenants on human rights, and have related management policies and procedures in place?

(2) Does the Company have a complaint mechanism and channel in place for employees and address employees’ complaints properly?

ü

ü

(1) (2)(3) The Company has always treated employees in good faith and protected the legitimate rights and interests of employees in accordance with the requirements of the Labor Standards Act. The Company also abides by relevant labor regulations by establishing a "Labor-Management Committee," "Occupational Safety and Health Committee," "Sexual Harassment Prevention Committee" and "Employee Welfare Committee." The Company also organizes medical checkup and fire drills multiple times each year and maintains a healthy communication channel between management and employees.

None

(3) Does the company provide its employees with safe and healthy workplaces, and organize training on safety and health for its employees on a regular basis?

(4) Does the company have a mechanism for regular communications with employees in place and keep employees informed of changes in company operations that might have significant impacts on them in a reasonable manner?

(5) Does the Company offer its employees effective occupational empowerment training programs?

(6) Does the company have policies on consumer rights and interests in place and provides a clear and effective procedure for accepting consumer complaints relating research and development, procurement, production, operation, and services?

(7) Does the Company comply with applicable laws, regulations, and international guidelines in the marketing and labeling of products and services?

(8) Does the Company evaluate its suppliers and see if they had records of impacting the environment and society from the past before establishing a partnership with them?

(9) Does the contracts that the Company enters into with its major suppliers include terms and conditions that allow termination or dismissal of the contract at any time if the supplier is found with any violation against the Company’s corporate social responsibility policy that results in significant impacts on the environment or society?

ü

ü

ü

ü

ü

ü

ü

(4) The Company has a "labor-management meeting" in place to provide a venue for dialogue between labor and management.

(5) The Company has annual educational training plans and plans intensive development training courses to help boost employees’ professional skills that meet the development demand taking into account the organizational strategies, work instructions, and personal performance and developments. A total of 43 such in-service training courses were held in 2014.

(6) The Company has a responsible customer service unit to address related issues of customers and discuss improvements and deficiencies accordingly in order to increase quality of products and customer satisfaction.

(7) The Company’s products and services are in compliance with applicable laws, regulations, and international guidelines.

(8) The Company has established the Operating Guidelines for Authorizing Technical Labor Providers with Technical Services and the Engineering Tender Operating Guidelines in place to govern authorization over technical services and engineering outsourcing as well as supplier evaluation.

(9) The contracts that the Company enters into with its suppliers include applicable restrictive and dismissal terms and conditions. If a supplier is found with circumstances with significantly unfavorable impacts on society, the Company may terminate the contract.

None

None

None

None

None

None

4. Improving Information Disclosure Does the Company disclose relevant

and reliable information relating its corporate social responsibilities on its website or public information observatory sites?

ü The Company disseminates relevant information and reports to the public through its website and public information observatory sites.

None

5. If the company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation:

The Company has not established related Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies yet but in fact meets and complies with applicable regulations. The compilation will be considered in the future, depending on the circumstances.


Assessment Item




their causes


6. Other important information to facilitate better understanding of the company's corporate social responsibility practices: Jan 2015 Sponsored the Hualian Women's Soccer Team, actively promoted fundamental developments in the sport of soccer May 2015 Sponsored the Hackathon Taiwan creative event, provided a platform upon which dreams may be realized May 2015 Implemented energy conservation and carbon reduction measures in response to global initiatives to control temperature rises

to within 2 degrees Celsius June 2015 Co-hosted the Huilan Bay Windsurfing Festival, promoted the tourism industry of Hualien June 2015 Hosted the Sunrise Music Festival, provided the rock bands of Taiwan with the opportunity to perform Aug 2015 Hosted the Eelin Star pageant, encouraged the youth of Taiwan to follow their dreams Sep 2015 Hosted the Paperwindmill Theater Troupe performance in Hualian on Mid-Autumn Festival, effectively reduced urban-rural

regional differences Sep 2015 Hosted the Taiwan 3D Light Projection Show at Kinmen Wind Lion God Shopping Street to advocate the beauty of Taiwan Oct 2015 Incorporated Hualien Sunrise Villa with smart green architectural designs, thus formulating a green lifestyle of both high quality

and sustainability Dec 2015 Engaged in industry-academia collaborations with Juang Jing Vocational High School in the joint training of professional talent Dec 2015 Hosted the Holiday Camellia Market event to promote local culture and stimulate tourism developments

7. If the products or corporate social responsibility reports have received assurance from external institutions, they should state so below: None

(6) Ethical corporate management and measures adopted

Assessment Item

Implementation status Discrepancy with industry standards in

honest operation and reasons


1. Establishment of ethical corporate management policy and approaches

(1) Does the company state ethical corporate management policies and practices in its internal rules and external documents, as well as the commitment of the board of directors and management to actively implement management polices?

(2) Does the company have dishonest act preventive plans that state operating procedures, conduct guidelines, discipline and complaint systems for violations in place and enforce them?

(3) Does the Company have preventive measures in place against business operations at a relatively high risk of dishonest behavior as indicated in respective subparagraphs under Article 7 Paragraph 3 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies?

ü

ü

ü

(1) (2)The Company's "Ethical Corporate Management Guidelines", "Work Rules", "Service Undertaking", and "Internal Control Systems" all clearly stipulate guidelines for recusal in case of conflict of interest, unethical conduct prohibited, confidentiality obligations, ethical business activities, and requirements for protecting and properly upholding Company reputation, violation discipline and complaint system, and regulatory compliance. Members of the Board of Directors and the Company's staff all duly enforce said regulations to ensure honest operation and honor the principle of good faith.

(3) Operations of the Company are open, fair, transparent, and not violating its social responsibility. The Company’s employees do not accept unjustified giveaways in order to avoid undermining the Company’s rights. Auditors inspect high-risk operations from time to time and report to the Board of Directors as soon as they discover any abnormality.

None

None

37


Assessment Item

Implementation status Discrepancy with industry standards in

honest operation and reasons


2. Implementation of ethical corporate management

(1) Does the company evaluate credit records of its counterparts and specify good faith terms and conditions in the contracts entered into?

(2) Does the Company have a dedicated (concurrent) department responsible for promoting ethical corporate management in place that reports periodically to the Board of Directors on the implementation status?

(3) Does the company have policies that help prevent against conflict of interests and appropriate channels for filing related complaints in place and precisely enforce them?

(4) Does the Company have an effective accounting system and internal control system in place to enforce honest operations and let the internal audit unit perform periodic inspections or authorize a CPA to perform the inspections?

(5) Does the Company organize internal and external educational trainings periodically to help enforce honest operations?

ü

ü

ü

ü

ü

(1) All of the Company’s business activities are fair and transparent. To avoid dealing or entering into contracts with parties with prior record of unethical conduct, the Company may terminate or rescind a contract at any time once a counterparty is found to be involved in unethical business practice.

(2) To ensure sound ethical corporate management, the Board Office is responsible for establishing and supervising the implementation of ethical corporate management policies and their countermeasures, and for reporting to the Board on a regular basis.

(3) The Company's "Ethical Corporate Management Guidelines" stipulate that: Suggestions and complaints regarding personal rights or corporate management may be submitted in accordance with Company regulations.

(4) The Company's accounting system was designed and established in reference to the Regulations Governing the Preparation of Financial Reports by Securities Issuers as well as the Company’s overall operational activities, and provides the basis for accounting treatment. The internal control systems were established in consideration of the overall operational activities of the Company and reviewed whenever necessary in response to changes in the internal and external environments. The internal control systems are documented and observed following approval by the Board of Directors. Internal audits are carried out in accordance with the annual audit plan passed by the Board of Directors.

(5) The Company has been practicing honest operations in daily activities and communicates regulations governing honest operations from time to time each year.

None

None

None

None

None

3. Implementation status of the Company’s reporting system

(1) Does the Company have a substantial reporting and reward system as well as a convenient reporting channel in place with appropriate personnel to be assigned to assist the party being reported on?

(2) Does the Company have a standard operating procedure and a related confidentiality mechanism in place for investigating reported matters?

(3) Does the Company adopt measures to prevent reporters from improper treatment for filing the report?

ü

ü

ü

(1) The Company already specifies applicable self-discipline terms and conditions in its employees’ letter of undertaking. Employees can file complaints or submit suggestions by phone or mail following the Company’s procedures and related departments will be assigned to help them.

(2) For received reports and subsequent investigations, the Company will handle them confidentially and carefully.

(3) The Company will absolutely keep the name of the complainant and details of the complaint confidential and handle them properly.

None

None

None

4. Improving Information Disclosure (1) Does the Company disclose

contents of its honest operation guidelines and implementation status on its website or public information observatory sites?

ü The Company discloses its honest operation status on its website.

None

5. If the company has established Ethical Corporate Management Principles in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation: None.

6. Other important information to facilitate better understanding of the company's implementation of ethical corporate management: (e.g. declare the company’s commitment to practice and policy for ethical corporate management to its business counterparties, and invite them to join the company’s training program, and review/revision of the company’s ethical corporate management principles): None.

(7) If the Company has established corporate governance principles and related guidelines, the means of accessing this information should be disclosed: None.

(8) The Company should also disclose other significant information that may improve the understanding of its governance and operation: None.


(9) Status of implementation of internal control system

A. Statement of Declaration on Internal Control

Taiwan Land Development Corporation Statement of Declaration on Internal Control System

Date: December 31, 2015 　　In 2015 the Company conducted an internal audit in accordance with its Internal Control Regulation and hereby declares as follows: I. The Company acknowledges and understands that the establishment, implementation

and maintenance of the internal control system are the responsibility of the Board and managerial officers, and that the Company has already established such a system. The purpose is to provide reasonable assurance to the effectiveness and efficiency of business operations (including profitability, performance and security of assets), reliability of financial reporting and compliance with relevant regulatory requirements.

II. There are inherent limitations to even the most well designed internal control system. As such, an effective internal control system can only reasonably ensure the achievement of the aforementioned goals. Moreover, the operating environment and situation may change, impacting the effectiveness of the internal control system. The internal control system of the Company features a self-monitoring mechanism. Once identified, any deficiency will be rectified immediately.

III. The Company determines the effectiveness of the internal control system in design and implementation in accordance with the "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as "the Regulations").The Regulations are instituted for judging the effectiveness of the design and implementation of the internal control system. There are five components of effective internal control as specified in the Regulations with which the procedure for effective internal control is measured, namely: (1) Control Environment, (2) Risk Evaluation, (3) Control Operation, (4) Information and Communication, and (5) Monitoring. Each of the elements in turn contains certain audit items. Refer to the Regulations for details.

IV. The Company has adopted the aforementioned internal control system for an internal audit on the effectiveness of the design and enforcement of the internal control system.

V. Based on the aforementioned audit findings, the Company holds that it has reasonably preserved the achievement of the aforementioned with the internal control system as of December 31, 2015 (including the monitoring over the subsidiaries), including the effectiveness and efficiency in operation, reliability in financial reporting and compliance with relevant regulatory requirements, and that the design and enforcement of internal control are effective.

VI. This statement shall form an integral part of the annual report and prospectus of the company and will be publicly announced. If any fraudulent information, concealment or unlawful practices are discovered in the content of the aforementioned information, the Company shall be held liable under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.

VII. This statement of declaration was approved by the Board on February 17, 2016 in the presence of 5 directors, who concurred unanimously.

Taiwan Land Development Corporation

Chairman: Signature:

President: Signature:

39


B. Company which consigns accountants to audit its internal control system shall disclose the examination report by accountants: None.

(10) Penalty on the Company and its personnel, punishment imposed by the Company on personnel in violation of internal control system regulations, major deficiencies and improvement in 2015 and during the current fiscal year up to the date of publication of the annual report: None.

(11) Important resolutions of shareholders meeting and board meeting in 2015 and during the current fiscal year up to the date of publication of the annual report:

A. Important resolutions at the 2015 Annual Shareholders' Meeting (June 30, 2015)

Reported items:

(a) 2014 Business Report

(b) Supervisor's report on inspection of 2014 annual final report

(c) Implementation status of the Company's treasury shares

(d) Status report on loans to and endorsements/guarantees for others.

(e) Issuance of the first secured common corporate bonds in 2015

Ratifications:

(a) 2014 Business Report and Financial Report

(b) Proposal for the distribution of 2014 earnings

Discussions:

(a) Proposal for the issuance of new shares through capitalization of the 2014 distributable earnings

(b) Amendment to the Articles of Incorporation

B. Important resolutions adopted at the 17th term 8th board meeting (01/26/2015)

(a) Buyback of the Company's shares: Approved.

(b) Meeting minutes from the 2nd meeting of the 2nd term Remuneration Committee: Approved.

C. Important resolutions adopted at the 17th term 9th board meeting (02/25/2015)

(a) One copy of the 2014 Business Report of the Company: Approved.

(b) Amendment to the Company's Articles of Incorporation: Approved.

(c) The Company's individual financial reports, consolidated financial report and consolidated business reports of affiliated companies for 2014: Approved.

(d) Voidance of the Company´s treasury shares bought back the 10th time for capital decrease: Approved.

(e) Transfer of the Company´s treasury shares to employees as an incentive: Approved.

D. Important resolutions adopted at the 17th term 10th board meeting (03/25/2015)

(a) Partial payment for stocks with monetary debts pending from Taiwan Innovation Development Corporation: Approved.

(b) Details about the 2015 Annual Shareholders' Meeting: Approved.

E. Important resolutions adopted at the 17th term 11th board meeting (04/28/2015)

(a) Issuance of the first secured convertible corporate bonds in 2015: Approved.

(b) Issuance of the first secured common corporate bonds in 2015: Approved.

(c) The Company's2014 earnings distribution: Approved.

(d) The Company's issuance of new shares through capital increase with disposable earnings from 2014: Approved.


F. Important resolutions adopted at the 17th term 12th board meeting (05/27/2015)

One copy of the 2014 Business Report of the Company: Approved.

G. Important resolutions adopted at the 17th term 13th board meeting (06/24/2015)

The Company's affiliate Taiwan Envirotech Development Corporation requests a loan of NT$80 million for operational needs, in which the Company is the joint and severable guarantor: Approved.

H. Important resolutions adopted at the 17th term 14th board meeting (07/24/2015)

The Company's loan to its affiliate Taiwan Envirotech Development Corporation: Approved.

I. Important resolutions adopted at the 17th term 15th board meeting (08/26/2015)

(a) Taiwan Innovation Development Corporation's plan for cash capital increase: Approved.

(b) Baseline date for ex-rights and ex-dividends and payment date of shareholders´ cash bonus, employees´ bonus, and remunerations for directors and supervisors: Approved.

J. Important resolutions adopted at the 17th term 16th board meeting (09/21/2015)

(a) 13th buyback of the Company´s shares: Approved.

(b) Meeting minutes from the 3rd meeting of the 2nd term Remuneration Committee: Approved.

K. Important resolutions adopted at the 17th term 17th board meeting (10/28/2015)

Taiwan LanYang Development Corporation's plan for cash capital increase: Approved.

L. Important resolutions adopted at the 17th term 18th board meeting (11/23/2015)

(a) 14th buyback of the Company´s shares: Approved.

(b) Cross-reference chart for revised parts of the organizational charter of the Company's Remuneration Committee & revised organizational charter of the Company's Remuneration Committee: Approved.

(c) The Company's Code of Conduct: Approved.

M. Important resolutions adopted at the 17th term 19th board meeting (12/22/2015)

(a) Transfer of the Company's treasury shares to employees as an incentive: Approved.

(b) The Company's Ethical Corporate Management Guidelines: Approved.

N. Important resolutions adopted at the 17th term 20th board meeting (01/20/2016)

(a) Amendment to the Company's Articles of Incorporation: Approved.

(b) Meeting minutes from the 4th meeting of the 2nd term Remuneration Committee: Approved.

(c) 15th buyback of the Company´s shares: Approved.

(d) Transfer of the Company's treasury shares to employees as an incentive: Approved.

O. Important resolutions adopted at the 17th term 21st board meeting (02/17/2016)

(a) Transfer of the Company's treasury shares to employees as an incentive: Approved.

(b) The Company's individual financial reports, consolidated financial report and consolidated business reports of affiliated companies for 2015: Approved.

P. Important resolutions adopted at the 17th term 22nd board meeting (03/30/2016)

(a) Issuance of the first secured common corporate bonds in 2016: Approved.

(b) The Company's loan to its affiliate Taiwan Innovation Development Corporation: Approved.

(c) One copy of the 2015 Business Report: Approved.

(d) Transfer of the Company's treasury shares to employees as an incentive: Approved.

(e) Details of the 2016 Annual Shareholders' Meeting: Approved.

41


(12) Main content of recorded or written opinions from directors or supervisors on passed important resolutions by the Board of Directors in 2015 and during the current fiscal year up to the date of publication of the annual report: None.

(13) Resignation and dismissal of Company chairman, president, chief accounting manager, chief internal auditor and chief R&D officer in 2015 and during the current fiscal year up to the date of publication of the annual report:

Title Name APPOINTMENT DATE DISMISSAL DATE

REASON OF RESIGNATION OR

DISMISSAL

Vice President Chen, Tang-Sheng 08/01/2013 03/01/2015 Retired

Vice President Shen, Alex 01/19/2015 04/30/2015 Personal plan

4. Information of Fees to CPA (1) Information of Fees to CPA

Name of accounting firm Name of accountant Duration of audit Notes

PricewaterhouseCoopers Ueng, Shyh-Rong Wang, Hui-Hsien 1/1/2015~12/31/2015

Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　　　　　Fee category Scale of amount 　　　　　　　　　　　　　　　　　　　　　　　 Audit fee Non-audit fee Total

1 Below NT$2,000,000 ü

2 NT$2,000,000 to NT$4,000,000

3 NT$4,000,000 to NT$6,000,000 ü ü

4 NT$6,000,000 to NT$8,000,000

5 NT$8,000,000 to NT$10,000,000

6 NT$10,000,000 or above

(2) When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

Information of Fees to CPA 　 Unit: NT$

Name of accounting

firm Name of

accountant Audit fee

Non-audit feeAccountant’s duration of

auditNotes

System design

Business registration

Human resources Others Subtotal

Pricewaterhouse Coopers

Ueng, Shyh-ong

5,000 50 270 270

1/1/2015~12/31/2015 Other non-audit fees:

Issuance of corporate bonds: NT$270,000Wang,

Hui-Hsien 1/1/2015~12/31/2015

(3) If accounting firm was replaced and if the audit fees paid for the fiscal year in which such replacement took place are lower than those for the previous year, the reduction in the amount of audit fees, percentage of reduction and the reason(s) should be disclosed: None.

(4) If the audit fees paid for the current year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) should be disclosed: None.


5. Information on Accountant Change: None 6. The Chairman, President and Financial or Accounting Manager of the Company

who had Worked for the Independent Auditor or the Related Party in the Past Year: None.

7. State of Changes to Shareholdings Held by Directors, Supervisors, Presidents and Major Shareholders:

(1) Changes in Shareholding of Directors, Supervisors, Presidents and Major Shareholders

Title Name

2015 2016 up to April 30

Increase (decrease) in shares held

Increase (decrease) in pledged

shares

Increase (decrease) in shares held

Increase (decrease) in pledged

shares

Director Hung Sheng Investment Co., Ltd. 563,394 4,500,000 1,600,000

Director Shi Tuo Investment Co., Ltd. 479,219 (100,000)

Supervisor Nienshin Investment Co., Ltd. 477,411 4,500,000 700,000

Supervisor Dahe Media Co.,Ltd 445,426

Chairman Chiu, Fu-Sheng 7,468,134 7,018,000 12,042,000 6,450,000

Vice Chairman Lian, Tai-Sheng 2,325,530 79,000

Representative Director Kow, Fu-Lin 3,161

Representative Supervisor Yeh, Hui-Ling 16,151

Representative Director and Vice President Cheng, Chi-Li 217,004 71,000

Vice President Guo, Zong-Xiong 211,215(133,000)

426,000(230,000)

Assistant Vice President Rocky Lo 110,081(107,000)

243,000(250,000)

Assistant Vice President Lan, Chi-Jen 171,207(200,000)

447,000(270,000)

Assistant Vice President Chen, Wan-Ling 191,942(150,000) 43,000

Manager Smart Chiang 54,074(100,000)

417,000(120,000)

Manager Ben Lin 157,592(140,000)

474,000(266,000)

Manager Edward Wu 236,001(36,000)

182,000(160,000)

Manager Mao, Zhao-Kai 217,088 358,000(90,000)

Manager Peng, Hua-Hui 82,500 67,000(20,000)

Assistant Vice President Lin,Chien-chih 30,000

Manager Lin,Cheng-Chih 96,000

Assistant Vice President Sean Lin (Note 1) 249,286

Manager Jerry Nien (Note 2) 228,330(186,000)

404,000(196,000)

Assistant Vice President Yang, Clean(Note 3) 110,000

Manager Lin, Hsiang -Pin(Note 4) 194,000(86,000)

157,000(10,000)

Note 1: Mr.Sean Lin was dismissed on December 1,2015Note 2: Mr.Jerry Nien was dismissed on April 1,2016Note 3: Mr.Yang, Clean was dismissed on March 1,2016Note 4: Mr.Lin, Hsiang -Pin was dismissed on August 1,2016; Re-appointed on April 1,2016

(2) Information regarding the transfer of shares with the counterparty being the related party: None.

(3) Information regarding the pledging of shares with the counterparty being the related party: None.

43


8. Information disclosing the spouse, kinship within second degree and relationship between any of the top ten shareholders:

Information disclosing the relationship between any of the top ten shareholders May 1,2016

Name

Shareholder Spouse & Minor

Shareholding

Combination of shares

by nominee arrangement

Titles, Names and Relationships of Top 10 Shareholders

with Relationships, Spousal Relationships, or Kinship within the

Second Degree

Notes

Shares % Shares % Shares % Title(or name) Relation

Primasia Securities Company Limited Representative: Lu, Da-Wen 47,656,142 6.57% - - - - None None

Chiu, Fu-Sheng 37,310,481 5.14% - - - - Chiu, Fu-Sheng

Chairman, Taiwan Land Development

Corporation

Lian, Tai-Sheng 25,659,837 3.53% - - - - Lian, Tai-Sheng

Vice Chairman, Taiwan Land Development

Corporation Chairman, Hung Tu Investment Co., Ltd.

Yushin Investment Co., Ltd. Representative: Chiu, Chi-Chiang

19,298,478 2.66% None None

Kirin Shipping Co., Ltd. Representative: Liu, Han-Yang 16,225,120 2.24% - - - - None None

Huiwen Investment Co., Ltd.Representative: Lan, Mei-Zhou 15,000,044 2.07% None None

PescadoresRepresentative: Chen, Ming-Huang 8,600,979 1.18% None None

Lin, Kao-Huang 7,628,000 1.05% None NoneJPMorgan Chase Bank N.A. Taipei Branch in custody for Vanguard Total International Stock Index Fund a series of Vanguard Star Funds

6,633,725 0.91% - - - - None None

Sun, Wen-hsiung 6,399,635 0.88% - - - - None None

9. The Shareholding of the Company, Director, Supervisor, President and the Business that is Controlled by the Company Directly or Indirectly on the Invested Company

Composite Holding Percentage March 31, 2016; Unit: NT$1,000; %

Reinvested entities (Note)

Investment by the Company

Investments by directors, supervisors, presidents and directly or indirectly controlled enterprises

Total investment

Shares Percentage(%) Shares Percentage

(%) Shares Percentage(%)

Taiwan Innovation Development Corporation 711,811,000 100% 0 0 711,811,000 100%

Hsinchu Hill Garden Corporation 100,000 100% 0 0 100,000 100%

Taiwan Midtown Development Corporation 100,000 100% 0 0 100,000 100%

Taiwan LanYang Development Corporation 1,479,000 51% 0 0 1,479,000 51%

Taiwan Commerce Development Corporation 0 0 200,111,016 100% 200,111,016 100%

Taiwan Envirotech Development Corporation 0 0 3,000,000 100% 3,000,000 100%

Taiwan City Development Corporation 0 0 100,000 100% 100,000 100%

Hualien Culture Clubhouse Corporation 0 0 4,434,000 100% 4,434,000 100%

Hualien Ocean Forum Corporation 0 0 100,000 100% 100,000 100%

Taikai Xiamen Trading Corporation 0 0 $64,417 100% $64,417 100%

Nanguowoo Corporation 0 0 1,000,000 100% 1,000,000 100%

Wind Lion Plaza Shopping Center Corporation 0 0 35,000,000 100% 35,000,000 100%

Taiwan Manpower Development Corporation 0 0 600,000 100% 600,000 100%

Taiwan Wind Lion Travel Service Corporation 0 0 1,000,000 100% 1,000,000 100%

Kinmen Forum Corporation 0 0 300,000 100% 300,000 100%

Note 1: These represent long-term investments of the Company.

IV. Capital Raised

1. Capital & Shares

2. Corporate bonds

3. Preferred stocks

4. Depositary Receipts

5. Employee Stock Options

6. New Shares to Employees with Restricted Rights

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

8. Financing Plans and Implementation


1. Capital & Shares (1) Source of capital stock

A. Source of capital stock May 1, 2016

Month/Year

Issue price

Authorized capital Paid-in Shares Notes

Shares Amount Shares Amount Source of capital stock

Capital increased by assets other then

cash

Others

06/196407/197207/197907/198608/199001/199111/199412/200405/200909/200902/201008/201007/201110/201111/201210/2014

03/2015

06/201510/201504/2016

10,00010,00010,00010,00010,00010,000

10101010

11.81010

11.81010

10

101010

15,00020,00050,000

100,000270,000300,000

300,000,000350,000,000500,000,000500,000,000500,000,000500,000,000500,000,000800,000,000800,000,000800,000,000

800,000,000

990,000,000990,000,000990,000,000

150,000,000200,000,000500,000,000

1,000,000,0002,700,000,0003,000,000,0003,000,000,0003,500,000,0005,000,000,0005,000,000,0005,000,000,0005,000,000,0005,000,000,0008,000,000,0008,000,000,0008,000,000,000

8,000,000,000

9,900,000,0009,900,000,0009,900,000,000

15,00020,00050,000

100,000270,000300,000

300,000,000300,000,000300,000,000314,419,033394,419,033410,057,794469,798,173619,798,173655,300,218679,110,295

662,010,295

662,010,295725,881,325725,890,618

150,000,000200,000,000500,000,000

1,000,000,0002,700,000,0003,000,000,0003,000,000,0003,000,000,0003,000,000,0003,144,190,3303,944,190,3304,100,577,9404,697,981,7306,197,981,7306,553,002,1806,791,102,950

6,620,102,950

6,620,102,9507,258,813,2507,258,906,180

CashCashCashCashCash

Earnings---

EarningsCash

EarningsEarnings

CashEarnings

Earnings and capital decrease through voidance of treasury stock

Capital decrease through voidance of treasury stock

-Earnings

Convertible Bond

(Note 1)(Note 2)

( Note3)

Note 1: Share capital revised in the 2nd provisional shareholders meeting in 2004.Note 2: Share capital revised in the shareholders meeting in 2009.Note 3: Share capital revised in the shareholders meeting in 2015.

Unit: Shares

Shareholding typeAuthorized capital

NotesIssued shares Un-issued shares Total Total

common shares 725,890,618 264,109,382 990,000,000 Listed stocks

B. Information for shelf registration: None.

(2) Shareholder structure: May 1, 2016

Shareholder structureQuantity

Governmental agencies

Financial institutions

Other legal entities

Domestic natural persons

Foreign institutions &

Natural personsTotal

No. of shareholders 3 3 88 40,877 139 41,110

Shares 816,002 47,676,690 109,648,665 496,407,113 71,342,148 725,890,618

Percentage(%) 0.11% 6.57% 15.10% 68.39% 9.82% 100%

(3) Shareholding Distribution Status May 1, 2016

Class of shareholding No. of shareholders Holding Percentage(%)

1 to 999 19,675 2,288,277 0.32%

1,000 to 5,000 10,710 24,622,965 3.39%

5,001 to 10,000 3,774 27,505,420 3.79%

10,001 to 15,000 2,007 24,242,809 3.34%

15,001 to 20,000 1,022 18,014,728 2.48%

20,001 to 30,000 1,206 29,598,236 4.08%

30,001 to 50,000 1,109 43,035,446 5.93%

47

IV CAPITAL RAISED

Class of shareholding No. of shareholders Holding Percentage(%)

50,001 to 100,000 797 56,295,041 7.76%

100,001 to 200,000 438 60,263,123 8.30%

200,001 to 400,000 205 55,818,026 7.69%

400,001 to 600,000 63 30,925,780 4.26%

600,001 to 800,000 30 20,570,645 2.83%

800,001 to 1,000,000 10 8,767,843 1.21%

1,000,001 or above 64 323,942,279 44.63%

Total 41,110 725,890,618 100%

(4) List of Major Shareholders May 1, 2016

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　ShareholdingShareholder's name　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　 Shares Percentage (%)

Primasia Securities Company Limited 47,656,142 6.57%

Chiu, Fu-Sheng 37,310,481 5.14%

Lian, Tai-Sheng 25,659,837 3.53%

Yushin Investment Co., Ltd. 19,298,478 2.66%

Kirin Shipping Co., Ltd. 16,225,120 2.24%

Huiwen Investment Co., Ltd. 15,000,044 2.07%

PESCADORES 　 8,600,979 1.18%

Lin, Kao-Huang　 7,628,000 1.05%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Vanguard Total International Stock Index Fund a series of Vanguard Star Funds 6,633,725 0.91%

Sun, Wen-hsiung　 6,399,635 0.88%

(5) Share Prices for the Past Two Fiscal Years, together with the Company’s Net Worth Per Share, Earnings Per Share, Dividends Per Share, and Related Information

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　 2015 2014 Current fiscal year

up to 03/31/2016

Market price per shareHighest 17.95 12.25 12.75

Lowest 9.22 10.65 9.99

Average 12.22 11.25 11.11

Net worth per shareBefore distribution 25.52 24.57 24.97

After distribution (Note 4) 22.35 -

EPS(after tax)

Weighted average shares 699,277,133 653,254,465 757,031,832

Diluted earnings per share 2.92 8.13 0.04

Adjusted diluted earnings per share (Note 4) 7.39 0.04

Dividend per share

Cash dividend (Note 4) 0.2 -

Stock dividendSurplus earnings (Note 4) 1.0 -

Capital surplus (Note 4) 0 -

Accumulated undistributed dividends 0 0 -

Return on investment

Price-earnings ratio (Note 1) 4.18 1.38 -

Price-dividend ratio (Note 2) (Note 4) 56.25 -

Cash dividend yield rate(Note 3) (Note 4) 0.02 -

Note 1: Price-earnings (P/E) ratio = Average market price/Earnings per shareNote 2: Price-dividend (P/D) ratio = Average market price/Cash dividends per shareNote 3: Cash dividend yield rate = Cash dividend per share/Average market priceNote 4: The resolution for earning distribution was passed at the 17th-term 24th Board of Directors meeting on April 25, 2016, and awaits

approval in the 2016 annual shareholders meeting.


(6) Company’s Dividend Policy and Implementation

Dividend policy:

According to the Articles of Incorporation of the Company, in the event of surplus earnings after closing of annual accounts, due taxes shall be paid in accordance with the law, and losses incurred in previous years shall be compensated. Upon completion of the preceding actions, 10% of the remainder surplus shall be allocated as legal reserve. However, in the event the accumulated legal reserve is equivalent to or exceeds the Company's total paid-in capital, such limitations do not apply. In addition, in accordance with the law or regulatory requirements, special reserve shall be allocated or reversed. The board of directors shall draft a surplus distribution proposal regarding the remainder of the surplus as well as initial undistributed surplus for approval at the shareholders' meeting, at which the allocation of shareholders' dividends shall be decided.

Per the Company's dividend policy, consistent with current and future development plans, considerations for the investment environment, capital needs, domestic and international competition, as well as the interest of shareholders, surplus may be unappropriated or no less than 50 percent of surplus available for distribution may be allocated as dividends to shareholders. Dividends may be paid in either cash or stock shares. Cash dividends shall account for no more than 30 percent, while the remainder shall be paid through stock dividend to shareholders.

Implementation Status:

The issuance of new shares through capitalization of the 2015 distributable earnings proposal to distribute NT$0.2 cash dividend and NT$0.5 stock dividend has been approved by the Board of Directors on April 25, 2016.The Board of Directors will set the record dates for the distribution of cash and stock dividends after the proposal has been approved in shareholders meeting. If the stock dividend ratio is subsequently changed due to change in the number of outstanding shares as a result of Company’s repurchase of Company shares, transfer or cancellation of treasury shares or other reasons, the Board of Directors is fully authorized to handle the matter.

(7) Effect of free-gratis dividend proposed in the current shareholders’ meeting on Company’s business performance and earnings per share:

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

2016(Estimation)

Initial paid-in capital NT$7,258,813,000

Ex-dividend of this year

Cash dividend per share 0.2

No. of stocks per share when capitalizing earnings (Note 1) 0.06

Share distribution per share when capitalizing capital reserve 0.44

Change of operation performance

Operating income

(Note 2)

Percentage of increase (loss) of operating profit compared with last year

Net profit after taxes

Percentage of increase (loss) of net profit after taxes compared with last year

EPS

Earnings per share Percentage of increase (loss) of dividend per share

Annual average ROI (reciprocal of annual average P/E ratio)

Pro forma EPS and P/E ratio

Turning all capitalized earnings to distributing cash dividend

Pro forma EPS

Pro forma annual average ROI

If not capitalizing capital reservePro forma EPS


If not capitalizing capital reserve but turning all capitalized earnings to distributing cash dividend

Pro forma EPS


Note 1: The estimated share distribution for 2016 is filled out in accordance with the earning distribution passed by the board on April 25, 2016.

Note 2: Financial forecast for 2016 is not disclosed; according to the regulation of Taicai letter No. 00371, dated February 1, 2000, disclosure of 2016 forecast information is not required.

49

IV CAPITAL RAISED

(8) Employee Bonus and Director and Supervisor Remuneration

A. The percentages or ranges with respect to employee bonus and director/supervisor compensation, as set forth in the Company’s Articles of Incorporation: In the event of profit after closing of annual accounts(profit refers to pre-tax earnings before deduction of compensation and remuneration distributed to employees as well as directors and supervisors), between one to eight percent shall be allocated as compensation to employees and no more than two percent shall be allocated as remuneration to directors and supervisors. However, in the event the Company has sustained accumulative losses, a proportion of profit shall be reserved in advance for compensation purposes. The preceding employee compensation may be paid in cash or stock shares, and shall be payable to employees of subsidiary companies who meet the requirements stipulated by the board of directors. The preceding remuneration to directors and supervisors shall be paid in cash only.

Proposals for employee compensation and remuneration to directors and supervisors shall be approved by board meeting and shall be briefed in the shareholders' meeting.

(The Company's board of directors approved amendments to the Articles of Incorporation on January 20, 2016. The amendments shall however be submitted for final approval at the 2016 shareholders' meeting.)

B. The basis for estimating employee bonus and director and supervisor remuneration for the current period, the basis for calculating the number of shares distributed as stock dividends, the actual amount distributed and the variance with the estimates as well as accounting treatment:

(a) Per the regulations stipulated in the Articles of Incorporation of the Company, in the event of profit after annual account closing, one percent of profit shall be allocated respectively as employee compensation and remuneration to directors and supervisors.

(b) If there is a variance between the estimated and actual distributed amounts, the variance shall be regarded as the profit (loss) for the following year based on the changes in accounting estimates and will not affect the financial reports that have already been recognized.

C. Information on employee bonus distribution proposals adopted by the Board of Directors:

The 2015 earning distribution proposal has been approved at the 17th-term 22th Board meeting held on March 30,2016; below is the status of employee bonus distribution adopted by the Board:

(a) The cash employee compensation and remuneration to directors and shareholders are NT$21,828,119 each. There has been no discrepancy from the NT$ 21,828,119 in estimated annual recognized expenses.

(b) Employee compensation shall on this occasion be paid in cash.

D. Use of earnings in 2014 fiscal year for distribution of employee bonus and director/supervisor remuneration:

The distribution proposal for employee bonus and director/supervisor remuneration approved at the 17th-term 11th Board meeting held on April 28, 2015 and the actual distribution status are as follows:

(a) NT$7,995,000 in cash bonus will be distributed to employees and the same amount will be distributed to directors and supervisors as remuneration. The recognized expense for the year is estimated at NT$ 7,692,000, respectively, a difference of NT$606,000 in estimation, which will be recorded under the 2015 gain/loss adjustment.

(b) The actual amount ockcash bonus distributed to employees is approximately 0.15% of the net profit after taxes for the period, and constitutes 100% of total bonuses to employees.

(c) The actual amount of distribution of employee bonus and director/supervisor remuneration stated abovomis the same as that of the proposal adopted at the board meeting.


(9) Buyback of Treasury Stock:

Buyback of Treasury Stock: 1 May,2016

Treasury stocks in batches 11th Batch 12th Batch 13th Batch 14th Batch 15th Batch

Purpose of buy-backTransfer

ownership of shares to employees

Transfer ownership

of shares to employees (Note)

Transfer ownership

of shares to employees

Transfer ownership


Transfer ownership


Scheduled buy-back period 11/26/2014~1/25/2015

1/27/2015~3/26/2015

9/22/2015~11/20/2015

11/24/2015~1/22/2016

1/25/2016~2/26/2016

Price range NT$10.50 to NT$12.00

NT$10.50 to NT$12.00

NT$10.00 toNT$14.00

NT$10.00 toNT$14.00

NT$10.00 toNT$13.00

Type and quantity of shares already bought back

Common shares 14,500,000 shares





Value of buy-back shares NT$163,243,518 NT$100,599,204 NT$96,606,005 NT$194,405,992 NT$49,739,450

Shares voided/transferred 14,500,000 shares 8,800,000 shares 8,977,000 shares 18,854,000 shares 4,786,000 shares

Accumulated number of company shares held 0 shares 0 shares 0 shares 0 shares 0 shares

Ratio of total accumulated company shares held to total shares issued (%)

0 % 0 % 0 % 0 % 0 %

Note: This is the purpose for the buy-back determined in the Board of Directors meeting on April 28, 2015 to be changed and submitted to and approved by the Financial Supervisory Commission.

2. Corporate bonds: (1) Profile of corporate bonds

Type First (term) secured corporate bond of 2014

First (term) secured corporate bond of 2015

First (term) domestic secured convertible bond of 2015

Issue date 4/25/2014 June 9, 2015 August 18, 2015

Denomination NT$ 1,000,000 NT$1,000,000 NT$100,000

Issue and transaction location Republic of China Republic of China Republic of China

Issue price NT$ 100 Fully issued at face value Fully issued at face value

Total value NT$ 500,000,000 NT$800,000,000 NT$200,000,000

Interest rate 1.36% 1.55% 0%

Duration 3 years; date of expiration: 04/25/2017

Five-year term maturity date: June 9, 2020

Three-year term maturity date: August, 18, 2018

Guarantor Entie Commercial Bank, Ltd. Taiwan Cooperative Bank Taiwan Cooperative Bank

Trustee Bank Sinopac Company Limited

JihSun International Commercial Bank Co. Ltd

JihSun International Commercial Bank Co. Ltd

Underwriter Sinopac Financial Holding Company Limited

Sinopac Securities Company Limited

Sinopac Securities Company Limited

Certifying lawyer Lawyer Hui-Ji Guo at Yicheng Law Firm

Far East Law Office Attorney at law Charles Ya-Wen Chiu

Far East Law Office Attorney at law Charles Ya-Wen Chiu

Certifying CPA CPA Shi-Rong Weng at PwC Taiwan

PricewaterhouseCoopers (PwC) Taiwan Accountant

Shih-Jung Weng

PricewaterhouseCoopers (PwC) Taiwan Accountant

Shih-Jung Weng

Payback method Principal to be returned in a lump sum upon maturity

Principal to be returned in a lump sum upon maturity

Please refer to Article 6 of the Regulations Governing the Issuance and Conversion of Corporate Bonds for more

details.Principal yet to be paid back NT$ 500,000,000 NT$800,000,000 NT$199,900,000

Terms and conditions for redemption or early liquidation None None

Please refer to Article 18 of the Regulations Governing

the Issuance and Conversion of Corporate Bonds for more

details.Restrictive terms and conditions None None None

Name of credit rating institution, rating date, outcome of corporate bond rating N/A N/A N/A

Additional rights

Value of common shares, depository receipts, or other securities that are converted (exchanged or subscribed) as of the date the annual report is printed

None None

As of the date of printing of the annual report, conversion

has been made in the total amount of NT$100,000 into

9,293 shares of common stock with a face value per

stock of NT$10.Issuance and conversion (swapping or subscription) guidelines

None NonePlease refer to the

Regulations pertaining to issuance and conversion.

51

IV CAPITAL RAISED

Type First (term) secured corporate bond of 2014

First (term) secured corporate bond of 2015

First (term) domestic secured convertible bond of 2015

Impacts of issuance and conversion, exchange or subscription, issue conditions on possible dilution and existing shareholders´ equity

None NonePlease refer to the

Regulations pertaining to issuance and conversion.

Name of swap object custodian institution None None None

(2) Information on conversion of corporate bonds:

Categories of corporate bond First secured convertible corporate bond

　　　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　　　　 2015 Current fiscal year up to

March 31, 2016

Market value of convertible corporate bond

Highest 108.2 119

Lowest 100.6 104.5

Average 103.28 113.28

Conversion price 10.76 10.76

Issue (processing) date and conversion price at issuance. Conversion price at issuance on August 18, 2015 was NT$12.05

Conversion price at issuance on August 18, 2015 was NT$12.05

Methods of fulfilling conversion obligations None Issuance of9,293 new shares

(3) Information on exchange of corporate bonds: none (4) Information for shelf registration: none (5) Information on corporate bonds with stop options: none

3. Preferred stocks: None.4. Depositary Receipts: None.5. Employee Stock Options: None.6. New Shares to Employees with Restricted Rights: None.7. Status of New Shares Issuance in Connection with Mergers and Acquisitions:

None.8. Financing Plans and Implementation (1) Details of the original proposal (a) Competent authority approval date and official letter reference number: Approval letter FSC-Zheng-Fa-

Zi No. 0980060739 issued by the Financial Supervisory Commission, Executive Yuan on November 20, 2009.

(b) Total required capital of NT$1,079,140,000.

(c) Issue of 80,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$944,000 thousand. The remaining required capital is obtained via bank loans, from the Company’s own funds and other approaches.

(d) Project items and estimated progress 　　Unit: NT$ thousand

ItemExpected

completion date

Total amount

of capital

required

Scheduled rate of progress of fund utilization2009 2010 2011 2012

Prior to Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Land development

2012Q3 1,079,140 94,876 22,902 60,662 36,620 81,040 201,776 120,960 120,960 120,960 126,810 80,640 － 10,934

Total 1,079,140 94,876 22,902 60,662 36,620 81,040 201,776 120,960 120,960 120,960 126,810 80,640 － 10,934

(e) "Internet Information System" reporting date entered: November 24, 2009

B. Details of modified proposal

(a) Total required capital of NT$2,679,771,000.

(b) Issue of 80,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$944,000 thousand. The remaining required capital is obtained via bank loans, from the Company's own funds and other approaches.


(c) Project items and estimated progress 　　 Unit: NT$ thousand

ItemExpected

completion date

Total amount

of capital required

Scheduled rate of progress of fund utilization

Before 2011

2012 2013 2014 2015

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Land development Q4 2015 2,679,771 594,304 72,898 66,840 63,491 149,673 134,637 121,316 121,316 121,316 146,809 146,809 146,809 146,809 161,686 161,686 161,686 161,686

Total 2,679,771 594,304 72,898 66,840 63,491 149,673 134,637 121,316 121,316 121,316 146,809 146,809 146,809 146,809 161,686 161,686 161,686 161,686

(d) "Internet Information System" reporting date entered: March 22, 2012

C. Implementation:

(a) Progress of fund implementation: 　　 Unit: NT$ thousand

Project item Implementation Status 2016 Q1

Implementation status as of Q1

2016Reason(s) that the project is ahead of or behind schedule and improvement plan

Land development

Amount of expenditurePlanned 0 2,679,771 The actual progress of fund utilization for

the project fell behind the planned schedule, mainly due to longer-than-anticipated process for review of miscellaneous permit application. As a result, payments of development expenses were delayed.

Actual 6,794 969,801

Progress of implementation(%)

Planned 0.0% 100.00%

Actual 0.25% 36.19%

(b) The capital in the amount of NT$944,000,000 required for the development of Hsinchu Hsinpu Eco-community was raised on January 21, 2010.The planned expenditure for Q1 2015 was NT$2,194,713,000 in total, but the actual drawing of the fund for payment was NT$906,017,000.The actual progress of fund utilization for the project fell behind the planned schedule, mainly due to longer-than-anticipated process for review of miscellaneous permit application. As a result, payments of development expenses were delayed.

(c) Explanation of Benefits: After the hotel area of the Hsinchu Hsinpu Eco-community has been completed, it is expected that income will be generated from rooms, dining, rental of conference hall and wedding venue as well as shops inside the hotel. Currently no such information is available for assessment of target attainment.

(2) 2011 cash capital increase proposal A. Details of the proposal

(a) Competent authority approval date and official letter reference number: Approval letter FSC-Zheng-Fa-Zi No. 1000035541 issued by the Financial Supervisory Commission, Executive Yuan on August 5, 2011.

(b) Total required capital of NT$4,744,827,000.

(c) Issue of 150,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$1,770,000 thousand. The remaining required capital is obtained via bank loans, from the Company´s own funds and other approaches.

(d) Project items and estimated progress 　　 Unit: NT$ thousand

ItemExpected

completion date

Total amount

of capital required

20102011 2012 2013 2014

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Land development Q4 2014 3,944,827 13,552 7,410 207 1,686,833 44,275 57,553 148,516 251,510 372,688 464,302 334,380 220,878 118,617 27,668 185,382 - 11,056

Investment in subsidiary

Taiwan Innovation

Development Corporation

Q3 2012 800,000 - - - - 400,000 100,000 150,000 150,000 - - - - - - - - -

Total 4,744,827 13,552 7,410 207 1,686,833 444,275 157,553 298,516 401,510 372,688 464,302 334,380 220,878 118,617 27,668 185,382 0 11,056

(e) "Internet Information System" reporting date entered: August 8, 2011

B. Implementation:

53

IV CAPITAL RAISED

(a) Progress of fund implementation: 　　 Unit: NT$ thousand

Project item Fund utilization: Reason(s) that project is ahead of or behind schedule

Land development

Cumulative amount of expenditure

Planned 3,944,827 The process for public land release took longer than expected. As a result, we were behind schedule in land acquisition, which also affected the subsequent work schedule. Now we are contracting out works according to schedule and carry out acceptance check. The whole project is expected to be completed according to the original plan. The subsequent works to be carried out are expected to catch up on the planned schedule.

Actual 2,620,018

Cumulative progress of implementation

Planned 100%

Actual 70.98%

Investment in subsidiary Taiwan Innovation Development Corporation

Cumulative amount of expenditure

Planned 800,000

The amount of investment in subsidiary has been fully disbursed.

Actual 800,000

Cumulative progress of implementation

Planned 100%

Actual 100%

(b) With respect to capital raised in the 2011 cash capital increase with the issuance of new shares, the implementation progress and the amount of unused fund are considered reasonable without any major deviation as of Q1 2016. The Company has invested the whole raised fund in the project according to the original fund utilization plan without changes.

(c) Explanation of Benefits: With regard to the sale of factory land (I) for the Taichung Precision Machinery Technology Park Phase II development project commissioned by Taichung City Government, it is completed now. In addition, the recognized labor income accumulated for the company as of December 31, 2015 reached NT$455,450,000; expected benefits are essentially realized. With regard to the subsidiary Taiwan Innovation Development Corporation, it concentrates on the integration, marketing and planning operations at the present time to link up with its earlier efforts in land acquisition, project planning and development planning and to extend its business scope. Based on the actual operations of Taiwan Innovation, expected benefits are essentially realized.

(3) 2014 Corporate Bonds A. Project Details

(a) Approval date and reference number of the Public Authority: Approved by the Financial Supervisory Commission R.O.C, Executive Yuan on April 14, 2014, Jin-Guan-Zheng- Fa-Zi Order No 1030012681.

(b) Total amount of capital required: NT$500,000,000.

(c) Source of capital: Issue 500 units of corporate bonds, the face value for each unit is NT$1,000,000.

(d) Project items and estimated progress 　　　 Unit: NT$1,000

Item Expected completion date Total amount of capital required


Q2 2014

Financial institution loan repayment Q2 2014 500,000 500,000

(e) "Internet Information System" reporting date entered: April 4, 2014

B. Implementation:

Project item Implementation Status During Q2 2014

End of Q2 2014

Reason(s) that the project is ahead of or behind schedule and improvement plan

Financial institution loan repayment

Amount of expenditure

Planned 500,000 500,000

Completed according to schedule.Actual 500,000 500,000

Progress of implementation (%)

Planned 100% 100%

Actual 100% 100%

C. Status of raising capital: The first issuing of secured corporate bonds in 2014 has concluded at the end of Q2 2014, there were no significant abnormal activities to report. All money raised have been invested according to the steps outlined in this project, there were no deviations.

D. Benefits: Saved NT$8,400,000 on interest payments in 2014, with savings of NT$15,400,000 on interest payments during each subsequent year. The outcome of this project is determined to be effective.

(4) Ordinary corporate bonds of 2015

A. Content of proposed items

(a) Competent authority approval date and official letter reference number: Approval letter Jin-Guan-Zheng-Fa-Zi-Di 1040020554 issued by the Financial Supervisory Commission on May 28, 2015.



(c) Source of capital: 800 units of ordinary corporate bonds issued, with NT$ 1,000,000 in face value for each bond.

(d) Proposal items and estimated progress 　　　 Unit: NT$1,000



Q2 2015


(e) "Internet Information System" reporting date entered: July 7, 2015

B. Implementation update:

Project item Implementation status During Q3 2015 As of Q3 2015 Reason(s) that the project is

ahead of or behind schedule and improvement plan


Amount of expenditurePlanned 800,000 800,000

Has been fully utilized.Actual 800,000 800,000

Implementation progress (%)

Planned 100% 100%

Actual 100% 100%

C. Status of raising capital: As of Q2 2015, utilization of money raised through the first domestic issuing of secured ordinary corporate bonds in 2015 has fallen behind schedule, mainly due to contractual constraints. A delay of one quarter from the original plan was recorded. As of Q3 2015, the Company has repaid bank loans with all the money raised, according to the bank repayment receipt obtained. As a result, the percentage of implementation progress for the corporate bonds issued this time is 100%.

D. Description of performance: As of the end of Q2 2015, with the exception of the Megabank syndicated loan whose payment has been delayed by one quarter owing to contractual settlement requirements, all the remaining money raised has been used to repay loans from the King's Town Bank. As a result, there should be no significant discrepancy between the expected effectiveness and the actually achieved conditions. As of the end of Q3 2015, all the money raised has been used to repay bank loans, with no significant discrepancy between the expected effectiveness and the actually achieved conditions.

(5) Convertible corporate bonds of 2015 A. Content of proposed items

(a) Competent authority approval date and official letter reference number: Approval letter Jin-Guan-Zheng-Fa-Zi-Di 1040026651 issued by the Financial Supervisory Commission on July 25, 2015.


(c) Source of capital: Convertible corporate bonds in the amount of200 units issued, with NT$100,000 in face value for each bond.

(d) Proposal items and estimated progress 　　　 Unit: NT$1,000



Q3 2015


(e) "Internet Information System" reporting date entered: October 5, 2015

B. Implementation update:

Project item Implementation status During Q3 2015 As of Q3 2015Reason(s) that the project is

ahead of or behind schedule and improvement plan


Amount of expenditurePlanned 200,000 200,000

Completed according to schedule.Actual 200,000 200,000

Implementation progress(%)

Planned 100% 100%

Actual 100% 100%

C. Status of raising capital: As of Q3 2015, the first domestic issuing of secured convertible corporate bonds by the Company in 2015 has been fully executed, with no significant abnormal activities to report. The Company has committed all the money raised to its proposals. As a result, there are no unencumbered funds.

D. Description of performance: Per its original fund utilization plan, the Company has repaid bank loans. As a result, there should be no significant discrepancy between the expected effectiveness and the actually achieved conditions.

V. Business Activities

１. Business Scope

2. Market and Sales Overview

3. Employee Information

4. Expenditures on Environmental Protection (General Management Department)

5. Labor Relations

6. Important Contracts


1. Business Scope (1) Business Scope

A. Principal business activities and revenue distribution

Business Scope Item2015

Amount (NT$ thousand)

Revenue Distribution (%)

Industrial park development and renewal Service revenue 405,908 68.56

Investment development business Revenue from product sales 160,511 27.11

Self-owned assets development business Rental/leasing revenue 23,691 4.00

Self-owned assets development business Revenue from product sales 1,959 0.33

Total 592,069 100.00

B. Current Products and Services

(a) Industrial park development business: Agency business and joint venture of industrial park development, investment and development of residential and commercial land.

(b) Self-owned assets development business: Provide strategies and sales management for real estate asset activation; assessment of new business associated with the development of Company-owned land; promotion of leisure agriculture and Taiwan’s special agricultural products; and leisure real estate development.

(c) Investment and development business: Assessment and participation in major zone expropriation, urban land readjustment, BOT projects and other new development projects in various cities and counties.

(d) Urban renewal business: Agency of urban renewal projects conducted by the government or by private enterprises, coordination of the settlement of residents, and effective follow-up advancement of construction and development.

C. Future Products and Services Currently Being Planned

(a) Key Development Projects for Industrial Park Development Business

‧ Hualien Guanghua LOHAS Creative Park – Adding value to and invigorating land for production – After the practice of land expropriation compensation based on market value has become law, the supply of industrial land decreases, while their prices go up. We acquired the land in this project in the early days based on the government-declared land value and hence enjoy the advantage of lower land acquisition costs. The Park will aggressively appeal to businesses in cultural creativity and media industries as well as international healthcare and wellness/leisure industries in coordination with the direction of industrial development policies for the eastern part of Taiwan and the overall planning of the Park with the aim to drive the industrial upgrade in Hualien.

‧ Taichung Precision Machinery Technology Innovation Park Phase II - Shaping and developing a comprehensive knowledge-based multifunction park to keep pace with the trend of knowledge-based economy.

‧ Taichung Shengang Fengzhou Industrial Park Phase 2 – Embracing the spirits of humanity, innovation and sustainability to build an “intelligent eco park” that are infused with the elements of knowledge, technology and future.

(b) Key Development of Businesses Associated with Company-owned Assets

‧ Hualien Guanghua LOHAS Creative Park– Commencing the Hualien Huilan Lohas Village building plan; development projects include Nakam Sara Cultural Square (including Golden Lion Cinemax), which is scheduled for completion in 2016 and will bring in the first IMAX cinema in Hualien-Taitung area. The Huilan Bay Sunrise Villa project has received construction permit and started pre-sale in August 2015. The project engages Centaline Property to look for buyers and investors in Hong Kong. Other projects include Huilan Bay Cultural City, Aloft hotel (green, beauty and environmentally friendly), pacific conference center (Westin & Element), Guanghua Media Park (Industries of Tomorrow Park) that have all completed planning and design. The ongoing developments of leisure farm and horse ranch, and eco water bank and green land are expected to steer Hualien to becoming a high-value tourism destination and a city of creative lifestyle of health and sustainability.

57

V BUSINESS ACTIVITIES

‧ Hsinchu Hsinpu Hot Spring– Located on beautiful sloped land in Hsinpu, a contemporary mountain city will be built that blends in with the surrounding geological environment and conditions. The local Hakka style architecture embraces aesthetics, ecology and smart living. The community will offer hot spring resort, Starwood Hotel and vacation home, Camellia Hot Spring Villa, supplemented with 15 hectares of land that will be used to build a leisure farm, forest garden, tea garden, and boarding/dining area to provide an interface between man and nature. Currently the Hsinchu Hsinpu Eco-community project has received construction permit for Camellia Hot Spring Villa and entered into an agreement with Starwood Group to collaborate in the development and operation of Le Méridien Hot Spring Hotel. The overall planning of a leisure farm on the north side has also been completed. The 4th Hsinpu Hot Spring Camellia Season held during the New Year of 2016 continued to receive wide acclaim.

‧ Nantou Caotun Zen Culture Park – A thousand plum trees and cherry blossoms will be planted to create the beautiful scenery of a mountain forest. Based on the theme of “Zen”, the Park will emphasize the philosophy of “less” to open a path to a healthy body and mind for modern people. The Park will contain a club house, service apartment, shops and learning space.

(c) Investment and Development Business

‧ Kinmen Wind Lion Plaza Duty Free Shop recently brought in Kimberly Duty Free Shop, 86 Shop and Pu Pot, which together with Studio A, Starbucks Coffee, Chii Lih Coral, and Golden Lion Cinemax already in business generated steady profit growth. The project also embarks on the development of phase 2 hotel and conference and exhibition center.

(2) Industry Overview

A. The Present and the Future

The land development business continues to evolve with time. Confronted with increasing difficulty in land acquisition, how to create maximum land value becomes a critical issue in land development. In the face of global warming and eco crisis, how to achieve carbon reduction and sustainable environment become the key issues in land development. Moreover, as Taiwan’s society is undergoing rapid population ageing and changing family structure, land developers should come up with more products to meet the housing needs for retirement, long-term care and smaller residential units. On the other hand, Taiwan’s industries are faced with the pressure to undergo transformation and upgrade. Therefore, in the development of industrial parks, developers should, in addition to reviving idle land, offer innovative park design to meet the development needs of next-generation industries. In addition, Taiwan is rich in tourism resources and cultural heritage with the number of local and Chinese tourists continuously on the rise. The government forecasts that Taiwan’s tourism receipts will break the mark of NT$500 billion by 2018. Hence a foreseeable blue ocean for land development can be created to meet the rapidly growing tourism demands by providing more hotels and leisure products.


B. Relationship with upstream, middle-stream, and downstream companies

Upstream

Midstream

Dow

nstream

Landowners

Financial institutions

Land developersConstruction companies

Consumers(Corporate or individual)

Consulting firmsReal estate management companies

Construction companies

Land brokersLand integrators

Steel, cement, electrical and plumbing, and building

materials suppliers

Sales department of construction companiesWarranty department of construction companies

Marketing companiesBrokers

Property management companies

C. Product Trends and Competition

(a) Product Trends

Land development products include intermediary development services and end real estate products.

Development services increasingly stress the capability to innovate and integrate: Innovation is stressed because it enhances the value of land and creates brand force. Integration is stressed because in the professional division of labor, tasks become more and more specialized, while the age of Internet also accelerates cross-industry integration.

Insofar as real estate products are concerned, mixed residential commercial development that offers more flexibility is now the trend. The mix of work, commerce, residence, leisure and entertainment creates new patterns of living and meets the diverse needs of contemporary people. In addition, sustainable architecture design and application of smart technology are important trends in the development of real estate products that could lead to sustainable development and safer and more comfortable living.

(b) Competition

Under the trends of global liberalization and warming of cross-strait relations, the land development market is expected to attract more Chinese and foreign investors and market competition is expected to heat up more. Be it the provision of intermediary development service or real estate products in the end market, development ideas, integration of professionals and innovative capability will be keys to excelling in competition and success.

59


There is a pressing demand for industrial land in Taiwan. As land acquisition has to be based on market value and involves complex environmental feasibility study process, land acquisition and development become more difficult. Under the circumstances, industrial land assets currently owned by the Group are turned into valuable assets. As Taiwan attracts more foreign visitors and the life style of people in Taiwan changes, it becomes necessary for the Group to transform its business pattern and diversify its businesses to capitalize on the increase in land value, spread business risks and grasp more business opportunities.

The Company builds three parallel core businesses by incorporating the elements of "innovation, LOHAS, sustainability and intelligent" in all of its development projects and engages the services of first-rate professional teams at home and abroad, including Bjarke Ingels Group (BIG), an expert in LOHAS and creative design, a firm tapped to design New York's Two World Trade Center (2015) and the Opportunity Pavilion of Dubai Expo 2020, and a Chinese architectural firm MAD (principal designer for the Lucas Museum of Narrative Art in Chicago in 2014). Both BIG and MAD are on the list of 10 of the Best Upcoming Architects in 2016 selected by Highsnobiety. The Company also works with Japanese architect Kengo Kuma, internationally acclaimed architect known for his expertise in blending with the natural landscape and using natural building materials in fragile architecture and winning designer of the National Stadium for the 2020 Olympics in Tokyo, Kako Kikako Sekkeisha (KKS) from Japan, a firm credited with the design of the largest number of hotels in Asia, ARUP, an expert in sustainable development, and Dr. Ken Sakamura, the father of Japan's Internet of Things (IOT). The Company has also formed an alliance with Starwood Hotels & Resorts Worldwide. Future plans for collaborations in architectural planning, membership marketing and operations and management for hotels in Kinmen, Hsinpu, Hualien and Taichung are already in place. The goal is to develop the Company's leisure vacations business and become a leading brand of land development in Taiwan.

(3) Technology and R&D Overview

A. R&D investment in 2015 and during the current fiscal year up to the date of publication of the annual report

Unit: NT$ thousand

Item 2015 As of 2016/03/31 Description

R&D expense 272 0

Operating revenue 592,069 67,635

R&D expense as a percentage of operating revenue 0.05% 0

B. Successfully developed technologies and/or products in 2015 and during The Company is also keen on developing mobile applications and smart services with Internet of Things (IoT) experiences at its core, including:

‧ Intelligent video surveillance system.

‧ Intelligent environment sensor monitoring system

‧ Intelligent power management system.

‧ Product data traceability management system.

‧ Centennial building and building materials data management system.

‧ Digital network video/audio management system.

‧ Mobile commerce App system.

The products we have developed are used in TLDC´s development projects.

C. Future Directions for R&D Development

(a) The Company will continue to collaborate with Professor Ken Sakamura, the father of Japanese computerized architecture TRON on smart technology houses and to enhance the integrated services of application areas such as LOHAS, leisure, wellness and healthcare, and e-commerce.

(b) Combining and conducting joint efforts with affiliate Taiwan Envirotech Development Corporation on IoT, intelligent applications and energy conservation with innovative technology in the areas of “Centennial Buildings”, “Green Buildings”, and “Smart Mall.”


(c) Combing IOT and mobile app technology to develop network-based smart services as well as maker & co-working space related business.

D. Future R&D Programs and Expected R&D Investment

The latest annual plan Current progress Further R&D investment

Expected completion date

Major factors for future success of

R&D

Development of social network and virtual/ physical integrated commerce platform

Development of phase 1 honeycomb marketing APP is completed.

Approx. NT$50,000,000 December, 2016

Innovative service models and mobile applications

(4) Short and Long Term Business Development Plans

A. Short-term plans

(a) Agency business of industrial park development:

‧ Develop land activation strategies to enable diversification of land utilization so that unleased and unsold industrial park land can be minimized.

‧ Introduce cultural creative, leisure and tourism, healthcare and beauty industries, wellness and long-term care to stimulate investment, increase productivity and provide employment opportunities, thus driving the growth and development of local communities.

(b) Self-owned assets development business

‧ Propose the best development ideas in line with the conditions of each individual project, and build an integrated professional team and integrate resources to create the value of assets.

‧ Modularized operation helps leverage Company resources and improve market competitiveness.

‧ Bring in cultural creative, leisure/tourism, health and beauty care, wellness and long-term care businesses to stimulate investment, boost productivity and create more job opportunities to drive the development and prosperity of local communities.

B. Long-term plans

‧ Internally, actively build an integrated professional team, accumulate know-how, and construct a complete lineup for the land development business to establish a solid foundation of sustainable development.

‧ Externally, create brand value and form extensive partnerships to expand the reach of Company business.

2. Market and Sales Overview (1) Market Analysis

A. Sales (Supply) and areas of distribution for principal products and services and their market shares

(a) Agency business of industrial park development and renewal: For newly developed industrial parks, the Taichung area is the primary target market, with aggressive marketing for Hualien Guanghua LOHAS Creative Park, Kaohsiung Kangshan Benjhou Industrial Park and Taichung Technology Building. These are industrial park projects commissioned by the government and undertaken under the Company’s agency business, and as a result no market share data has been calculated.

Unit:

Projects for agency renewal business 2015 2014

Taichung Precision Machinery Technology Innovation Park Phase I 28.59 82.00

Taichung Industrial Park Phase 2 15.10 -

Taichung Technology Building 10.64 0.94

Hualien Guanghua LOHAS Creative Park 6.18 1.80

Taichung Precision Machinery Technology Innovation Park Phase II 4.66 8.28

Kaohsiung Kangshan Benjhou Industrial Park - 2.33

Note: The numbers represent various revenues as percentages of operating income for the entire year.

61


(b) Development Business of Self-owned Assets: The Company's land assets are distributed throughout Taiwan. Currently key development sites are company-owned land located in Hualien Huilan Bay Area, Hsinchu Hsinpu, and Nantou Caotun. In 2015 we conducted the planning and design for those projects and as a result no market share data have been compiled.

B. Future Market Supply and Demand and Future Growth

In the aspect of development service, the Company will concentrate on providing industrial park development services at the present stage. As cities and counties across Taiwan continue to develop new industrial parks, while expanding and renewing their existing ones, it provides the Company with significant business growth opportunity. The Company will continue to bolster its strength in innovative park development and vigorously vie for the business of developing new types of industrial parks.

As the government launches several policies and measures aimed at stabilizing housing prices, the number of real estate transactions in six municipalities for February 2016 aspublished by the local land administration bureaus has declined significantly. However with scarcity of available landand consistently high material costs, plus the recent interest rate cuts by the Central Bank and relaxation of restrictions on real estate loans, the real estate markets in different areas will continue to fluctuate narrowly in the short run, but the room for lower housing prices is limited in the long run. In particular as the land prices in regions other than the metropolitan areas along the west corridor, such as Hsinchu, Hualien and Kinmen have climbed steadily every year, those market trends are particularly favorable to TLDC that holds a considerable amount of land assets and is embarking on several hotel and resort development projects in those areas. Based on the latest assessed land value and land price adjustment declared in 2016, the land assets owned by the Group across the country report nearly18%growth in assessed land value, surpassing the nationwide average growth of6.7%.The Group's land assets in Hualien enjoy the highest growth of36%in assessed land value, much higher than the national average. In the future, through sharing strategy, the Group will offer the opportunity for long-term holding of real estate for investment purpose that is poised to lead to greater profits.

C. Competitive Niche

(a) With solid performance records for industrial park development, the Company is presented with the opportunity to grab a greater share of the industrial park development service market.

(b) The Company owns more than 160,000 ping of land across Taiwan that puts the Company in a highly competitive position.

(c) The Company’s innovative development ideas facilitate the creation of brand image and competitive advantages in the market.

(d) The Company stays close in touch with social trends and makes forward-looking investments that present great opportunity.

(e) The Company has extensive deployment and a strong development team.

D. Advantages and Disadvantages of Company’s Vision of Development and Response Measures Advantages

(a) Advantages

‧ The Company’s overall development deployment is consistent with social development trends and government policies.

‧ As Taiwan and China continue to boost ties and the government implements visa upon arrival at Kinmen for Mainland tourists and the free trade zone policy, significant business opportunities are expected to be created for investment as well as tourism and leisure development projects in Kinmen.

‧ With the promulgation of the Statute for Industrial Innovation, new opportunities for the development of industrial parks present themselves. Rising demands for industrial land are advantageous to the business of industrial park development.

(b) Disadvantages and Response Measures

‧ The global economy is recovering slowly but the risk of a reversal still exists and Taiwan’s export-oriented economy is vulnerable to the impact of global economy. Thus any land development should be planned thoroughly and seek more collaboration partners to reduce risk.


‧ Government policies, including flat tax rate for property and land, rising property tax and farmland used exclusively for agricultural purpose only, are expected to produce certain impact on the real estate market. The Company will formulate response strategies in view of government policies and market trends.

‧ Faced with increasingly scarce land resources and increasing difficulty to acquire land due to government’s adoption of land expropriation compensation by market value policy, the Company will resort to innovative development methods to add more value to the land.

(2) Important Applications and Manufacturing Processes of Major Products:

A. Important Applications of Major Products

(a) Industrial park development business: Providing industrial parks with comprehensive upstream, midstream and downstream services and complying with government policies for the integration of various specialized and financial resources to create the best industrial environment.

(b) Self-owned assets development business: Providing residential buildings, hotels, exhibition centers, business centers, leisure farms and other diversified products to meet the needs of future green lifestyle and cultural creativity.

(c) Investment and development business: We provide comprehensive services and planning according to different development cases and by integrating internal and external resources.

B. Project Implementation Process

(a) Development of industrial parks:

Industrial park establishment - Industrial park development - Industrial park sales and marketing - Industrial park management and maintenance - Industrial park renewal.

(b) Land development

Investigation and assessment - Product positioning - Planning and design - Advertising and marketing - Promotion and sales - Construction - Completion and delivery - After-sales services

(3) Supply Status of Main Materials

A. Purchases for construction projects: All engineering and construction projects handled by the Company are conducted with the turnkey model - contractors are responsible for providing construction work and building materials. In order to gain effective control of construction quality and the progress of projects, apart from clearly stating the rules for construction tendering and contracting technical services organizations to carry out services on behalf of the Company in our internal control system and prudently selecting building contractors with good reputation, the Company also maintains healthy, long-term cooperative relationships with construction firms to make sure there will not be no shortage or monopoly in the supply of construction resources.

B. Land for construction: The acquisition of land required for the Company’s construction projects depends on the location of each case. In addition to purchasing land directly from landowners, we also participate actively in land made available by the government and court-auctioned property. Furthermore, since the Company is flexible in the mode of carrying out construction projects in which we invest, it is possible for us to acquire the necessary land by engaging in joint development and investment with other construction companies or with landowners. Therefore there is no shortage in the supply of land for construction.

(4) Names of customers who contributed to more than 10% of total purchase (or sales) amount in one of the most recent two years and the corresponding purchase (or sales) amounts and percentages, as well as reasons for their changes (if applicable):

63


A. Suppliers: List of suppliers with purchase amount exceeding 10% of total purchase

Unit: NT$ thousand

No.

2014 2015 2016, as of the end of previous quarter

Name Amount

As a percentage

of net purchase

(%)

Relationship with

Relationship with issuer

Name Amount

As a percentage

of net purchase

(%)

Relationship with


Name Amount

As a percentage

of net purchase

(%)


1Costco

Wholesale Corporation

35,530 48.22 NoneCostco


40,362 28.73 NoneBjarke Ingels Group

27,253 51.37 None

2 Others 38,158 51.78 NoneBjarke Ingels Group

20,238 14.40 NoneCostco


9,133 17.22 None

3 Pentagram Design Inc. 19,496 13.88 None

Hsieh Chuan Store

5,916 11.15 None

Others 60,402 42.99 None Others 10,747 20.26 None

Net purchase 73,688 100.00 Net

purchase 140,498 100.00 Net purchase 53,049 100.00

Note 1: The amount of purchase for construction projects includes contracting work, hypothesis engineering (such as soil preparation, fencing, security support and other non-foundation engineering) and site management fees.

Note 2: The parties to the transactions above are represented by codes if they are non-affiliated individuals.

Reasons for changes:

　　Purchases made by the Company include merchandise, construction projects and land for construction. As the Kinmen Wind Lion Plaza has started operations, there has been increase in merchandise purchases for 2015. Purchases for construction projects were primarily planning and design fees paid to domestic and foreign architectural firms for the new development project in Hualien. With respect to land for construction, the acquisition of land required for the Company's construction projects depends on the location of each case. The Company's counterparties in land transactions are not specific to certain individuals and can be from many sources, and the merchandise inventory is acquired mainly due to the needs of sales outlets. Therefore no exceptional situations are present.

B. Merchandise customers: List of customers with sales amount exceeding 10% of total sales

Unit: NT$ thousand

No.

2014 2015 2016, as of the end of previous quarter

Name Amount

As a percentage

of net purchase

(%)

Relationship with issuer Name Amount

As a percentage

of net purchase

(%)

Relationship with issuer Name Amount

As a percentage

of net purchase

(%)


1 Taichung City Government 1,644,439 91.79 None

Taichung City

Government357,323 60.35 None Taichung City

Government 10,354 15.31 None

2 Others 147,047 8.21 None Others 237,746 39.65 NoneHualien County

government8,114 12.00 None

3 - Others 49,167 72.69 None

4 - -

5 -

Net sales 2,536,417 100 Net sales 592,069 100 Net sales 67,635 100


Reasons for changes:

　　In addition to carrying out the development of industrial parks and renovation work on behalf of government agencies, the Company’s main products comprise the sales of buildings commissioned through construction companies. The target buyers of these buildings are non-specific individuals and corporations. Due to the enormous amounts involved in real estate transactions, in general there is a low probability of repeat purchases by the same customers. Furthermore, service revenues for the development and renewal of industrial parks are mainly from government agencies and not from specific individuals or affiliated persons, so sales that are concentrated on government agencies should be considered a characteristic specific to this particular sector.

(5) Production Volumes and Values Table for the Most Recent Two Years 　 Unit: NT$ thousand

Year 2015 2014

　　　　　　　　Output quantity and value

Primary project　　　　　　　　　　　　Quantity produced Value produced Quantity produced Value produced

Taichung Precision Machinery Technology Park Phase I - 505,781 - 1,666,683

Guanghua LOHAS Creative Park - 237,605 - 197,738

Taichung Precision Machinery Technology Park Phase 2 221,686 339,099

Taichung Shengang Fengzhou Industrial Park Phase 2 145,167 195,109

Kangshan Industrial Park - 26,919 - 77,271

Taichung Industrial Park Technology Building - - - 17,516

Others - 15,773 - 8,221

Total - 1,152,931 - 2,501,637

Note: The various costs associated with and paid in advance by the Company's agency business for industrial park development commissioned by government agencies are based on the project owners' overall planning, and therefore the production quantity cannot be shown here.

(6) Sales Volumes and Values for the Most Recent Two Years 　 Unit: NT$ thousand

Year 2015 2014

　　　　　　　Quantity and value of sales

Primary project　　　　　　　　　　　　

Domestic sales Domestic sales

Collection of advance payments

(Note 1)Value

(Note 2)Collection of

advance payments(Note 1)

Value(Note 2)

Taichung Precision Machinery Technology Park Phase I 353,838 169,257 1,916,704 1,468,987

Taichung Industrial Park 89,392

Taichung Industrial Park Technology Building 63,004 52,547 16,883

Guanghua LOHAS Creative Park 36,589 - 32,184

Taichung Precision Machinery Technology Park Phase 2 221,686 27,611 339,099 148,275

Kangshan Industrial Park - 332,035 30,674

Others 20,055 21,325

Total 575,524 405,908 2,640,385 1,718,328

Note 1: The Company is commissioned by the government to develop industrial parks; the numbers shown are the collections of advance payments for development costs.

Note 2: The Company recognizes agency revenues in stages according to the progress of project construction and proportion of sales of industrial parks commissioned by the government.

65


3. Employee Information

Year 2014 2015From that year to

presentMarch 31, 2016

Total number of employees 80 86 84

Average age 46 46 47

Average years of service 8 8 8

EducationDistribution

Ph.D. 0 0 0

Masters 20 20 21

Bachelor's 53 58 56

Senior high school 7 8 7

Below senior high school 0 0 0

4. Expenditures on Environmental Protection (General Management Department) (1) Total losses (including damage awards) and fines for environmental pollution in 2015 and during the

current fiscal year up to the date of publication of the annual report: None.

(2) An explanation of the measures (including corrective measures) and possible disbursements to be made in the future (including an estimate of losses, fines, and compensation resulting from any failure to adopt responsive measures): None.

5. Labor Relations (1) Current Important Labor-management Agreements and Their Implementation:

A. Employee benefits measures:

(a) Leave system: For employees hired after privatization, seven days per year for over one year and up to (and not including) three years of service; Ten days per year for over three years and up to (and not including) five years of service; Fourteen days per year for over five years and up to (and not including) ten years of service; For ten or more years of service, one extra day per year, up to a maximum of thirty days, is granted.

(b) Distribution of performance bonuses, annual bonuses and dividends

(c) The Employee Welfare Committee is responsible for administering various employee welfare-related matters, including periodic domestic or overseas travel, self-improvement activities, distribution of birthday cash gifts, sickness/injury benefits, cash gifts for the three traditional holidays/festivals and subsidies for social clubs.

B. Continuing education: The Company encourages employees to participate in continuing education and training outside of regular working hours and provides employees with an open and diverse learning environment. Employees will be able to improve themselves continuously through internal and external training, knowledge management and guidance from supervisors and peers. The Company has also planned a job training system to allow employees to bring together their personal life and career for a better future.

C. Training: Each year the Company allocates a budget for education and training and establishes training programs. Based on job functions and professional requirements, appropriate training courses are organized to improve employees’ knowledge and enhance their overall quality in the hope that they will be able to develop professional know-how with enthusiasm and innovative ideas. Meanwhile, elites equipped with both professional expertise and practical management experience will be cultivated through the career-training program. In addition to actively arranging for employees to participate in external training courses, the Company also organizes internal seminars and workshops at appropriate times. This year 43 instances of continuing education and training programs were held, with a total cost of about NT$60,000.

The Company strongly encourages employees to acquire job-related certificates and licenses. The Company’s accounting managers have obtained the license for accountant of higher examination, and construction managers have obtained the license for architect of higher examination.


D. Retirement system: Pursuant to the provisions of the “Retirement, pension and severance guidelines for employees of state-owned financial and insurance enterprises operated by the Ministry of Finance,” the Company allocates a fixed percentage of the monthly salary, depending on the salary scale of each employee, into company- and self-contributed funds and pension funds for the benefit of employees in their retirement. The Company was officially privatized on January 8, 1999, at which time the provisions of the Labor Standards Act became applicable. The date was also designated the basis date for the re-evaluation of employee pension liabilities and expenses in accordance with SFAS Bulletin 18, “Principles of Pension Accounting.”Since the 1999 special fiscal year, when labor retirement regulations were adopted, each month the Company has been allocating 8% of monthly payroll as employee pension reserve, which is deposited in a Central Trust of China account. In addition, due to the fact that the Company’s Trust Department was sold to JihSun Bank on August 6, 2005, following the approval from the Labor Bureau of Taipei City government, the Company settled the seniority in the old retirement system with employees in accordance with the pension calculation formulas stipulated in the Labor Standards Act in order to safeguard the interests of employees. Therefore, the retirement seniority of Company employees now follows the rules of the new retirement system, making it unnecessary for the Company to allocate funds into the Central Trust of China pension account. And according to the Labor Pension Act, 6% is allocated, depending on the insurance coverage scale, as pension funds and deposited with the Labor Insurance Bureau.

E. In order to spell out the rights and obligations between the employer and employees clearly, as well as to maintain order in the workplace, the “Code of Practice” has been established and filed with the competent authority before being announced publicly. In addition, in order to impose certain requirements and ethical standards on employee conduct, a “Service Commitment Statement,” applicable to all employees, has also been established.

F. Work environment safety: Employees of the Company shall comply with applicable occupational safety and health laws as well as with the Company regulations so that safety in the workplace and a healthy environment can be maintained. In addition, to prevent theft, fire or other man-made disasters from occurring, the following labor safety and health regulations have been implemented:

(a) Regular medical check-ups will be conducted for employees on a regular basis (once every three years.)

(b) Occupational safety and health-related training will be conducted for employees.

(c) The Company's contractors are required to obtain comprehensive insurance coverage and to enhance the awareness of construction site safety and health management as well as to adopt appropriate measures.

G. Other important agreements: None.

(2) List any loss sustained as a result of labor disputes in 2015, and during the current fiscal year up to the date of publication of the annual report, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot be reasonably estimated, make a statement to that effect: None.

67


6. Important Contracts December 31, 2015

Contract type PartiesCommencement date/expiration

dateMain businesses Restrictive

clauses

EntrustmentContract

Kengo Kuma & Associates 2015.12 Nantou Caotun service apartment project– architectural and interior

planning and design(Zone2-9) －

Kengo Kuma & Associates 2015.10 Hualien Xianwu- Conceptual design of Cultural City －

BIG 2015.06 Hualien community land- Detailed development design service －

Kengo Kuma & Associates 2015.02 Nantou Caotun service apartment project – architectural and

landscape planning and design －

MAD 2014.12 Kinmen Commerce Leisure Park – Zone A and D development project – architectural design －

P49 2014.11 Hsinchu Hsinpu project – Hsinpu Starwood Hotel’s interior design consulting service －

Kengo Kuma & Associates 2014.07 Hsinchu Hsinpu project – Detailed conceptual design of Villa3 －

Ove Arup & Partners Hong Kong Ltd. 2014.06 Consulting service for the directions and range of future

development. －

BIG 2014.02 Hualien commercial zone 2 development project – container home and warehouse wholesale design －

Kengo Kuma & Associates 2014.02 Kinmen development project – construction planning and landscape

design －

Ove Arup & Partners Hong Kong Ltd. 2013.02 Kinmen Commerce Recreation Park BOT project – Zone A

exhibition hall space planning and design service －

Wealthy Engineering Consultant 2013.01 Technical service contract for the design and supervision of

Shengang Fengzhou Industrial Park Phase 2 project －

PINHOLE (Japan) 2012.09 Taipei Chengde Building project – commercial facilities planning and design －

Wu Cheng-rong Architects & Engineers

2012.07 Taipei Bade Road renewal project – construction planning, design, and supervision service －

Taichung City government 2012.06

Service contract for the application, establishment, planning and development, leasing and management of Shengang Fengzhou Industrial Park Phase 2

－

Wealthy Engineering Consultant 2012.06

Technical service contract for the application, establishment, planning and development, leasing and management of Shengang Fengzhou Industrial Park Phase 2

－

R. J. Wu Architects & Engineers 2012.05 Taichung Precision Machinery Technology Park Phase 2-

construction design and supervision service －

R. J. Wu Architects & Engineers 2012.04 Hualien Shiang-Yi Mall project – construction design and

supervision service －

R. J. Wu Architects & Engineers 2012.04 Hualien community project – construction design and supervision

for phase 1 plants-supervision contract －

R. J. Wu Architects & Engineers 2012.02 Jin Hua Lian Hotel in Hualien No. 15 and 18 hotel design project -

Construction architectural design and supervision －

PINHOLE (Japan) 2011.12 Kinmen BOT project - Shopping center planning and interior design service －

R. J. Wu Architects & Engineers 2011.10 Impression Hualien - Hakka Tulou Cultural Center - Construction

architectural design and supervision －

R. J. Wu Architects & Engineers 2011.08 Hsinchu Hsinpu Eco-community - Construction architectural design

and supervision －

Ove Arup & Partners Hong Kong Ltd. 2011.03 Taipei City Bade Road, Sec. 2 urban renewal project – conceptual

design consulting service －

Ove Arup & Partners Hong Kong Ltd. 2011.02 Kinmen Commerce Recreation Par BOT project architectural design

planning contract －

HCCH & Associates Architects, Planners & Engineers

2011.02 Kinmen Commerce Recreation Park BOT project new construction (addition of construction sites in B+D zones) service agreement －

HCCH & Associates Architects, Planners & Engineers

2010.10 Kinmen Commerce Recreation Park BOT project new construction service agreement －

Ove Arup & Partners Hong Kong Ltd. 2010.03 Taichung Precision Machinery Technology Innovation Park

multifunction exhibition facilities service agreement －




clauses

EntrustmentContract

Taichung City government 2007.08 Entrustment contract for the development of Taichung Precision

Machinery Technology Innovation Park Phase II －

Urban Regeneration R&D Foundation 2007.06

Urban renewal business planning service appointment contract for 55 tracts of land including the short section numbered 64 located at the Chenggong Section of Zhongzheng District, Taipei

－

Hondoo Renewal Construction Co., Ltd.

2007.01 Taipei Railway Station Southeast urban renewal review operation entrustment contract －

Taichung City government 2012.06

Service contract for the application, establishment, planning and development, leasing and management of Shengang Fengzhou Industrial Park Phase 2

－

Wealthy Engineering Consultant 2012.06

Technical service contract for the application, establishment, planning and development, leasing and management of Shengang Fengzhou Industrial Park Phase 2

－

Taichung City government 1998.10 Entrustment contract for the development of Taichung Precision

Machinery Technology Innovation Park －

Export Processing Zone Administration, MOEA

1998.05 Taichung Harbor Warehousing and Transshipment Area entrustment contract －

Kaohsiung County government 1994.11 Entrustment contract for the development of the Kaohsiung

Kangshan Benjhou Industrial Park －

Taichung City government 1990.11 Taichung Industrial Park standard factory building joint development

agreement －

Taichung County government 1989.08 Taichung Dali Industrial Park joint development agreement －

Hualien County government 1988.11 Hualien Guanghua Industrial Park joint development agreement －

Construction contract

Jia Fu Interior Decoration Co. 2015.4 Kinmen Commerce Recreation Park BOT project- basic renovation

work for F1 ~ F3 of South Building in Zone B

He Ku Construction Co.

2014.10.21-2015.

Taichung Precision Machinery Technology Park Phase 2 –Park and green land construction work －

Hao Jing Interior Decoration Co.

2014.10.28-2015.

Kinmen Commerce Recreation Park BOT project (new construction in Area B) - Interior decoration works for museum on 3F of North Building

－

Chang Chia Mechanical and Electrical Engineering Co.

2014.07.08-2015.

Hualien commercial zone 1 new construction workMechanical, electrical and elevator works －

Huang Yi Interior Decoration Co. 2014.07

Kinmen Commerce Recreation Park BOT project (new construction in Zone B) – Interior decoration works for North Building 1F office and 2F-3F atrium space.

－

Jia Fu Interior Decoration Co. 2014.07 Kinmen Commerce Recreation Park BOT project - additional work

for 1F of West Building in Zone b －

Chen Fu Yi Construction Co.

2014.06.18-104.

Taichung Precision Machinery Technology Park – Dredging of partial sections of Tali Creek and Caohu Creek and refill of dangerous pits and holes in areas under the administration of Taichung City Government.

－

Jia Fu Interior Decoration Co. 2014.06

Kinmen Commerce Recreation Park BOT project (new construction in Zone B) – Interior decoration and mechanical and electrical works for 2F of North Building taken by Chii Li Coral, including B and C atrium space.

－

Chung Shing Interior Decoration Co. 2014.05 Kinmen Commerce Recreation Park BOT project (new construction

in Zone B) – Interior decoration works for 2F of West Building －

Chung Shing Interior Decoration Co. 2014.04

Kinmen Commerce Recreation Park BOT project (new construction in Zone B) – Interior decoration works for European and American products wholesale market on 1F of North Building

－

Jia Pu Interior Decoration Co. 2013.12

Kinmen Commerce Recreation Park BOT project (new construction in Area B) – Interior decoration and mechanical and electrical works for the public area on 1F of West Building

－

Lee Ming Construction Co., Ltd.

2013.12.12-2015.04 Hualien commercial zone 1 mall project －

TECO Electric and Machinery 2013.11

Kinmen BOT project (new construction in Area B) – 3F~4F West Building and atrium together with second mechanical and electrical works for new additions

－

Jia Fu Interior Decoration Co. 2013.10 Kinmen BOT project (new construction in Area B) – Renovation

work for movie house in West Building and atrium －

69




clauses

Construction contract

Jin-Shi-Cheng Construction 2013.08 Kinmen BOT project – landscape work for new construction in Area

B) －

Ji Yeh Construction and Engineering Co., Ltd.

2013.02~2014.07

Taichung Precision Machinery Technology Park- Service Center works －

Central Taiwan Construction Co., Ltd.

2012.11~2014.06

Taichung Precision Machinery Technology Innovation Park Phase IIWhole-area public facilities works －

Jiapu Interior Design Co., Ltd.

2012.09.01-2015.

Kinmen Commerce Recreation Park BOT project (new construction in Area B) – Partition and miscellaneous works (North and West Buildings)

－

Sheng Yo Interior Decoration Co.

2012.09-2015.

Kinmen Commerce Recreation Park BOT project (new construction in Area B) – Partition and miscellaneous works (South Building) －

CHEN JE CORP. 2012.06.06-2015.

Kinmen Commerce Recreation Park BOT project - new construction service agreement －

TECO Electric & Machinery Co.

2012.05.16-2015. Kinmen Commerce Recreation Park B Area equipment project －

Kone Elevators 2012.05.10-2015.

Kinmen Commerce Recreation Park B Area elevator equipment project －


2012.03.07-2015.

Kinmen Commerce Recreation Park B Area Southwest building project －


2011.09.08-2015. Kinmen Commerce Recreation Park B Area North building project －

Loan agreement

Taiwan Cooperative Bills Finance Corporation

2015.01~2016.01

Line of credit: NT$150 millionThe purpose of the loan is to provide Company with revolving working capital. The loan is secured by the senior mortgage on the company´s real estate assets under development up to NT$180 million.

－

Hwatai Bank Ltd. 2015.12~2016.12

Line of credit: NT$410 millionThe purpose of the loan is for the construction and operating costs for the development of "Guanghua Section of Jian Township, Hualien County." The 14 tracts of land at the two small sections of the Guanghua Section of Jian Township, Hualien County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$372 million.

－

Bank of Panhsin 2015.01~2016.01

Line of credit: NT$30 millionThe purpose of the loan is for the construction and operating costs for the development of "Changan Section of Zhongshan Dist., Taipei." The 1 tracts of land at the two small sections of Changan Section of Zhongshan Dist., Taipei are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$36 million.

－

International Bills Finance Corporation

2015.12~2016.12

Line of credit: NT$37 millionThe purpose of the loan is to provide Company with revolving working capital. The loan is secured by the senior mortgage on the company´s real estate assets under development up to NT$44.4 million.

－

Taiwan Life Insurance Co. Ltd

2013.08~2016.08

Line of credit: NT$380 millionThe purpose of the loan is for the construction and operating costs for the development of "Baozhen Section of Hsinpu Township, Hsinchu County." The 23 tracts of land at the Baozhen Section of Hsinpu Township are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$456 million.

－

Agricultural Bank of Taiwan and Nantou Caotun Farmers´ Association

2013.05~2016.05

Line of credit: NT$239 millionThe purpose of the loan is for the construction and operating costs for the development of "Baozhen Section of Hsinpu Township, Hsinchu County." The 55 tracts of land at the Baozhen Section of Hsinpu Township are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$286.8 million.

－

King Town's Commercial Bank

2015.05~2016.05

Line of credit: NT$700 millionThe purpose of the loan is for the construction and operating costs for the development of "Baozhen Section of Hsinpu Township, Hsinchu County." The 44 tracts of land at the Baozhen Section of Hsinpu Township are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$1.44 billion.

－

King Town's Commercial Bank

2015.03~2016.03

Line of credit: NT$500 millionThe purpose of the loan is for the construction and operating costs for the development of "Baozhen Section of Hsinpu Township, Hsinchu County." The collateral provided and pledge amount are the same as above.

－




clauses

Loan agreement

Taiwan Cooperative Bank

2015.05~2016.05

Line of credit: NT$45 millionThe purpose of the loan is for the construction and operating costs for the development of "Guanghua Section of Jian Township, Hualien County." The 2 tracts of land at the Guanghua Section of Jian Township, Hualien County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$64.8 million.

－

Agricultural Bank of Taiwan and 15 farmers´ associations

2012.12~2017.12

Line of credit: NT$435 millionThe purpose of the loan is for the construction and operating costs for the development of "Guanghua Section of Jian Township, Hualien County." The 10 tracts of land at the Guanghua Section of Jian Township, Hualien County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$522 million.

－

A syndicate of 16 banks with Mega International Bank as the lead bank

2012.08.31~2017.08.31

Line of credit: NT$5.3 billion1. Facility A of the loan is NT$4.8 billion with 16 participating banks. The purpose of the loan is to pay off remaining balance of a 2005 syndicated loan acquired by the Company (with Bank of Taiwan as the lead bank) and as guarantee for a pledge created on the debt receivables from city (county) governments (advance development costs paid by the Company on their behalf).2. Facility B of the loan amounts to NT$500 million with 16 participating bank. The purpose of the loan is to provide medium-term revolving working capital of the Company. The loan is secured by the senior mortgage on the company´s real estate assets under development up to NT$1,196 million.

Collections from the collateral

are put into the sinking

fund designated

for repayment of principal

and interest.

A syndicate of 5 banks with Mega International Bank as the lead bank

2014.09~2019.09

Line of credit: NT$2.1 billionThe purpose of the loan is for construction and working capital for the development of Kinmen BOT Project by Taiwan Commerce Development. The superficies on six tracks of land and five buildings at Zhongshanlin Section, Jing Ning Township, Kinmen County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$2.52 billion.

－

Yuanta Commercial Bank

2012.06 ~2015.06

Loan amount: NT$800 millionThe purpose of this loan is for the development and construction costs of Taichung Precision Machinery Technology Park as well as the Company´s working capital. Advance payment receivables generated from the Taichung Precision Machinery Technology Park are used as collateral for the loan with a maximum pledge amount of NT$1.67 billion.

－

Mega International Commercial Bank

2011.11~2015.11

Line of credit: NT$850 millionThe purpose of the loan is for land expropriation and the development and construction costs of the "Taichung Precision Machinery Technology Innovation Park Phase II." The advance payment receivables generated by the Taichung Precision Machinery Technology Innovation Park Phase II is used as collateral for the loan with a maximum pledge amount of NT$2.5 billion.

－

Note 1: Entrustment contracts are at NT$10 million at a minimum and construction contracts are based on at least NT$50 million. Note 2: Refer to page 112 for contracts with affiliated enterprises.

VI.Financial Information

1. Condensed balance sheet, income statement and auditors' opinions for the last five years

2. Financial Analysis of the Last Five Years

3. 2015 Supervisors' Report

4. 2015 Financial Statements

5. 2015 Consolidated Financial Statements of The Parent Company and Subsidiaries Certified by CPA


1. Condensed balance sheet, income statement and auditors' opinions for the last five years.

(1) Condensed balance sheet (consolidated IFRS) 　　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　Year

Item　　　　　　　　　　　　　　　　　　　　

Financial information for the last five years. Financial information from the current fiscal year up to 03/31/20162012 2013 2014 2015

Current Assets 14,233,266 10,104,909 10,675,490 9,604,072 9,206,446

Real Estate Properties, Factories and Equipment 4,115,538 724,981 892,790 1,390,278 2,106,682

Intangible Asset 12,606 22,481 22,213 35,266 33,969

Other Assets 1,519,950 7,197,569 16,012,920 19,514,962 19,204,400

Total Assets 19,881,360 18,049,940 27,603,413 30,544,578 30,551,497

Current LiabilitiesBefore distribution 11,997,634 8,852,723 8,639,098 9,365,675 9,028,560

After distribution 11,997,634 8,728,075 8,511,356 Note 2 -

Non-current Liabilities 1,148,584 1,406,143 3,224,951 3,737,958 3,727,845

Total LiabilitiesBefore distribution 13,146,218 10,258,866 11,864,049 13,106,633 12,756,405


Capital Stock 6,553,003 6,553,003 6,791,103 7,258,813 7,258,906

Capital Surplus 318,975 328,633 324,608 316,057 334,485

Retained EarningsBefore distribution 441,850 1,285,002 9,052,436 10,318,347 10,328,923

After distribution 441,850 848,734 8,285,984 Note 2 -

Other Equity 1,813 4,985 6,738 5,734 5,534

Treasury Stock (585,349) (380,549) (440,271) (471,595) (146,345)

Non-controlling Interests 4,850 - 4,750 13,589 13,589

Total EquityBefore distribution 6,735,142 7,791,074 15,739,364 17,440,945 17,795,092


Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: The resolution for earning distribution was passed at the 17th term, 24th Board of Directors meeting on April 25, 2016, and awaits

approval from the 2016 annual shareholders meeting.

(2) Condensed balance sheet (individual IFRS) 　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　Year

Item　　　　　　　　　　　　　　　　　　　

Financial information for the last five years. Financial information from the current fiscal year up to 03/31/20162012 2013 2014 2015

Current Assets 13,689,786 9,661,420 9,491,006 8,187,862

Real Estate Properties, Factories and Equipment 498,624 498,159 510,776 516,193

Intangible Asset - -

Other Assets 3,673,786 5,991,570 14,234,119 18,001,520

Total Assets 17,862,196 16,151,149 24,235,901 26,705,575

Current LiabilitiesBefore distribution 11,046,474 8,277,312 7,764,414 7,453,968

After distribution 11,046,474 8,152,664 7,636,672 Note 2

Non-current Liabilities 85,430 82,763 736,873 1,824,251

Total LiabilitiesBefore distribution 11,131,904 8,360,075 8,501,287 9,278,219


Capital Stock 6,553,003 6,553,003 6,791,103 7,258,813

Capital Surplus 318,975 328,633 324,608 316,057

Retained EarningsBefore distribution 441,850 1,285,002 9,052,436 10,318,347

After distribution 441,850 848,734 8,285,984 Note 2

Other Equity 1,813 4,985 6,738 5,734

Treasury Stock (585,349) (380,549) (440,271) (471,595)

Non-controlling Interests - - - -

Total EquityBefore distribution 6,730,292 7,791,074 15,734,614 17,427,356


Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: The resolution for earning distribution was passed at the 17th term, 24th Board of Directors meeting on April 25, 2016, and awaits

approval from the 2016 annual shareholders meeting.

73

Ⅵ FINANCIAL INFORMATION

(3) Condensed balance sheet (Financial Accounting Standards in Taiwan) 　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　　Year

Item　　　　　　　　　　　　　　　　　　　　

Financial information for the last five years.

2011 2012

Current Assets 12,587,771 13,689,786

Funds and Investments 2,071,567 2,230,486

Fixed Assets 979,460 1,093,005

Other Assets 781,876 849,200

Total Assets 16,420,674 17,862,478

Current LiabilitiesBefore distribution 9,531,564 11,044,067

After distribution 9,531,564 11,044,067

Long-term Liabilities - -

Other Liabilities 34,266 85,430

Total liabilitiesBefore distribution 9,565,830 11,129,497


Capital Stock 6,197,982 6,553,003

Capital Surplus 318,500 318,975

Retained EarningsBefore distribution 623,174 444,539

After distribution 272,595 444,539

Unrealized gain or loss on financial instruments - -

Cumulative translation adjustment 3,593 1,813

Net loss not recognized as pension cost - -

Shareholers EquityBefore distribution 6,854,844 6,732,981


Note 1: The financial information for the past five years has been examined and certified by the CPA.

(4) Condensed Consolidated Income Statement (Consolidated IFRS) 　　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　　

Financial information for the last five years. Financial information

from the current fiscal year up to

03/31/20162012 2013 2014 2015

Operating revenue 382,171 2,536,417 1,791,486 592,069 67,635

Operating profit 584,015 1,455,774 1,730,425 461,653 29,158

Operating income 159,468 886,163 957,109 (376,842) (150,534)

Non-operating revenue and expenses 33,582 (37,134) 4,503,447 2,575,988 206,150

Net profit before tax 193,050 849,029 5,460,556 2,199,146 55,616

Continuing operations Net Income 170,736 843,152 5,312,015 2,039,605 30,215

Loss from discontinued operations - - - -

Net Income (loss) 170,736 843,152 5,312,015 2,039,605 30,215

Other consolidated income (net after tax) (1,780) 3,172 1,753 (1,004) (200)

Total consolidated income 168,956 846,324 5,313,768 2,038,601 30,015

Net income belongs to parent company 171,133 843,152 5,312,165 2,040,076 30,215

Net income belongs to non-controlling interests (377) - (150) (471) -

Total comprehensive income (loss) attributable to parent company 169,333 846,324 5,313,918 2,039,072 30,015

Total comprehensive income (loss) attributable to non-controlling interest (377) - (150) (471) -

EPS 0.28 1.30 7.39 2.92 0.04

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: EPS after capitalization of earnings and adjusted number of outstanding shares from 2012 to 2015.


(5) Condensed Consolidated Income Statement ( individual IFRS) 　　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　

Financial information for the last five years. Financial information

from the current fiscal year up to

03/31/20162012 2013 2014 2015

Operating revenue 937,113 2,487,207 1,724,939 411,718

Operating profit 631,010 1,485,768 1,719,589 412,390

Operating income 152,185 1,043,282 1,209,961 (72,693)

Non-operating revenue and expenses 33,045 (184,655) 4,136,859 2,211,849

Net profit before tax 185,230 858,627 5,346,820 2,139,156

Continuing operations Net Income 171,113 843,152 5,312,165 2,040,076

Loss from discontinued operations - -

Net Income (loss) 171,113 843,152 5,312,165 2,040,076

Other consolidated income (net after tax) (1,780) 3,172 1,753 (1,004)

Total consolidated income 169,333 846,324 5,313,918 2,039,072

Net income belongs to parent company

Net income belongs to non-controlling interests

Total comprehensive income (loss) attributable to parent company

Total comprehensive income (loss) attributable to non-controlling interest

EPS 0.28 1.30 7.39 2.92

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: EPS after capitalization of earnings and adjusted number of outstanding shares from 2012 to 2015.

(6) Condensed income statement (Financial Accounting Standards in Taiwan) 　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　　

Financial information for the last five years.

2011 2012

Operating revenue 1,423,661 937,113

Operating profit 1,166,444 631,010

Operating income 593,917 152,901

Non-operating income 68,283 88,264

Non-operating expenses (116,394) (55,104)

Continuing operations Income before income tax 545,806 186,061

Income from continuing operations 546,382 171,944

Income from discontinued operations - -

Extraordinary Items - -

Changes in Accounting Principles Cumulative Effect - -

Net income 546,382 171,944

EPS 1.02 0.28

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: EPS after capitalization of earnings and adjusted number of outstanding shares from 2010 to 2012 .

(7) CPA's audit opinion

A. Names of certified accountants

(a) The audit of the 2009 through 2012 financial statement was consigned to accountants Wang Chao-Ming and Wang, Hui-Hsien of PricewaterhouseCoopers.

(b) The audit of the 2013 through 2015 financial statement was consigned to accountants Weng, Shih-Jung and Wang, Hui-Hsien of PricewaterhouseCoopers.

75


B. CPA's audit opinion:

The CPA has issued an audit report containing an unqualified opinion with modified wording for the 2009 - 2015 financial statements of the Company.

2. Financial Analysis of the Last Five Years. (1) Financial Analysis (IFRS consolidated)

　　　　　　　　　　　　　　　　　　　　　　YearAnalysis Item 　　　　　　　　　　　　　　　　　　

Financial Analysis of the Last Five Years. Current fiscal year up to 3/31/20162012 2013 2014 2015

Financial Structure (%)

Ratio of liabilities to assets 66.12 56.84 42.98 42.90 41.75

Ratio of long-term capital to real estate properties, factories and equipment 191.56 1,268.61 2,124.16 1,523.35 1,021.65

Solvency %

Current Ratio 118.63 114.14 123.57 102.54 101.97

Quick Ratio 89.57 97.04 108.34 86.7 86.28

Interest Protection Multiples 5.33 47.16 348.98 7.86 1.67

Operating ability

Receivables turnover (times) (Note 2) (Note 2) 15.36 42.52 41.93

Average collection period (Note 2) (Note 2) 23.75 8.56 8.65

Inventory turnover (times) (Note 2) (Note 2) 1.68 2.11 2.18

Payables turnover (times) (Note 2) (Note 2) 4.47 7.28 6.01

Average days in sales (Note 2) (Note 2) 217.03 172.46 166.46

Turnover (times) of real estate properties, factories and equipment 0.12 1.05 2.14 0.51 0.03

Total assets turnover (times) 0.04 0.13 0.07 0.02 -

Profitability

ROA(％ ) 1.14 4.53 21.81 7.21 0.18

ROE(％ ) 2.51 11.61 40.20 12.29 0.17

Pre-tax profit to paid-in capital ratio(%) 2.95 12.96 80.40 30.29 0.76

Net profit ratio(％ ) 44.68 33.24 296.51 344.48 44.67

EPS (NT$) 0.28 1.30 7.39 2.92 0.04

Cash Flow

Cash flow ratio (％ ) (0.26) 48.21 15.17 (18.06) (3.27)

Cash flow adequacy ratio (％ ) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

Cash reinvestment ratio (％ ) (0.42) 138.5 28.56 (63.64) 5.14

LeverageOperational Leverage 0.01 2.28 1.13 0.56 0.75

1.39 1.02 1.02 0.84 0.82

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: The ratio is not applicable to the Company due to industry characteristics.Note 3: Not applicable as it is less than five years.


(2) Financial Analysis (IFRS individual)

　　　　　　　　　　　　　　　　　　　　　　　YearAnalysis Item　　　　　　　　　　　　　　　　　　　

Financial Analysis of the last five years. Current fiscal year up to 3/31/20162012 2013 2014 2015

Financial Structure (%)

Ratio of liabilities to assets 61.84 51.25 35.08 34.74

Ratio of long-term capital to real estate properties, factories and equipment 1,366.91 1,580.59 3,224.80 3,729.58

Solvency %

Current Ratio 123.93 116.72 122.24 109.85

Quick Ratio 91.48 109.80 115.33 102.41

Interest Protection Multiples 6.84 (Note 4) 629.67 13.99

Operating ability

Receivables turnover (times) (Note 2) (Note 2) (Note 2) (Note 2)

Average collection period (Note 2) (Note 2) (Note 2) (Note 2)

Inventory turnover (times) (Note 2) (Note 2) (Note 2) (Note 2)

Payables turnover (times) (Note 2) (Note 2) (Note 2) (Note 2)

Average days in sales (Note 2) (Note 2) (Note 2) (Note 2)

Turnover (times) of real estate properties, factories and equipment 1.87 4.99 3.43 0.80

Total assets turnover (times) 0.05 0.26 0.08 0.02

Profitability

ROA(％ ) 1.15 8.66 24.52 8.55

ROE(％ ) 2.52 11.61 40.22 12.30

Pre-tax profit to paid-in capital ratio(%) 2.83 13.10 78.73 29.47

Net profit ratio(％ ) 18.26 33.90 307.96 495.50

EPS (NT$) 0.28 1.30 7.39 2.92

Cash Flow

Cash flow ratio (％ ) 5.96 51.70 19.99 (17.68)

Cash flow adequacy ratio (％ ) (Note 3) (Note 3) (Note 3) (Note 3)

Cash reinvestment ratio (％ ) 10.45 89.79 12.42 (10.74)

LeverageOperational Leverage 3.58 1.99 1.04 0.81

Financial Leverage 1.26 1.00 1.01 0.31

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: The ratio is not applicable to the Company due to industry characteristics.Note 3: Not applicable as it is less than five years.Note 4: Not applicable as the interest is zero.

77


(3) Financial Analysis-Financial Accounting Standards in Taiwan

　　　　　　　　　　　　　　　　　　　　　　　　　　　　YearAnalysis Item　　　　　　　　　　　　　　　　　　　　　　　　

Financial Analysis of the last five years.

2011 2012

Financial Structure (%)Ratio of liabilities to assets 58.25 62.31

Ratio of long-term capital to fixed assets 699.86 616.01

Solvency (%)

Current Ratio 132.06 123.96

Quick Ratio 93.34 91.42

Interest Protection Multiples 14.47 6.69

Operating ability

Receivables turnover (times) (Note 3) (Note 3)

Average collection period (Note 3) (Note 3)

Inventory turnover (times) (Note 3) (Note 3)

Payables turnover (times) (Note 3) (Note 3)

Average days in sales (Note 3) (Note 3)

Fixed assets turnover 1.11 0.90

Total assets turnover 0.09 0.05

Profitability

ROA(％ ) 3.80 1.16

ROE(％ ) 9.19 2.53

Paid-in capital ratio

Operating income 9.58 2.33

Net income before income tax 8.81 2.84

Net profit ratio(％ ) 38.38 18.35

EPS (NT$) 1.02 0.28

Cash flow (Note 2)

Cash flow ratio (％ ) 0.51 5.99

Cash flow adequacy ratio (％ ) 237.53 107.19

Cash reinvestment ratio (％ ) 0.69 9.57

LeverageOperational Leverage 1.49 3.57

Financial Leverage 1.07 1.27

Note 1: The financial information for the past five years has been examined and certified by the CPA.Note 2: The cash flow of operational activities in the cash flow analysis is the net cash flow of operational activities in the cash flow

statement.Note 3: The ratio is not applicable to the Company due to industry characteristics.

(4) Reasons for changes in financial ratios in recent two years:

A. The liability ratio dropped because the overall assets increased, thanks to the adoption of the fair value for invested real estate for this period.

B. The increased ratio of the long-term capital to real estate, manufacturing facilities and equipment, profitability, and interest cover ratio is the result of the changes made to the accounting policy for invested real estate for this period; the after-tax income significantly increased with adoption of fair value.

C. The decrease of both the cash flow ratio and cash reinvestment ratio was due to the net cash flow from operating activities decreasing.

D. The decrease of operational leverage is due to the decreased operating profit for this period.

The formulae of the financial analyses are as below

A. Financial Structure

(a) Ratio of liabilities to assets = Total liabilities/Total assets

(b) Ratio of long-term capital to real estate properties, factories and equipment=(Total equity+Non-current liabilities)/net amount of real estate properties, factories and equipment

B. Solvency

(a) Current ratio=Current assets/Current liabilities


(b) Quick Ratio=(Current assets-Inventories-Prepaid expenses)/Current liabilities

(c) Interest Protection Multiples= PBIT/Interest expenses for this period

C. Operating ability

(a) Receivables turnover (including accounts receivable and notes receivable generated from operation) = net sales/remaining sum of average receivables (including accounts payable and notes payable generated from operation) for every period

(b) Average collection period = 365/receivables turnover

(c) Inventory turnover = cost of sales/average inventory

(d) Payables turnover (including accounts payable and notes payable generated from operation) = cost of sales/remaining sum of average payables (including accounts payable and notes payable generated from operation) for every period

(e) Average days in sales = 365/Inventory turnover

(f) Turnover of real estate properties, factories and equipment = net sales/average net amount of real estate properties, factories and equipment

(g) Total assets turnover = net sales/average total assets

D. Profitability

(a) ROA = [income after tax + interest expense x (1-tax rate)]/average total assets

(b) ROE = income after tax/net average equity

(c) Net profit ratio = income after tax/net sales

(d) EPS = (income belonging to parent company - stock dividend of preferred stocks)/weighted average number of issued shares

E. Cash Flow

(a) Cash flow ratio = net cash flow of operating activities/current liabilities

(b) Net cash flow adequacy ratio = net cash flow of operating activities in the last 5 years/(capital expenditure + addendum of inventory + cash dividend) in the last 5 years

(c) Cash reinvestment ratio = (net cash flow of operating activities - cash dividend)/(gross amount of real estate properties, factories and equipment + long-term investment + other non-current assets + operating capital)

F. Leverage:

(a) Operating leverage = (net operating income - current operating cost and expense)/operating profit

(b) Financial leverage = operating profit/(operating profit - interest expense)

79


3. 2015 Supervisors' Report

Taiwan Land Development Corporation2015 Annual ReportSupervisors' Report

　　The Company’s 2015 individual financial statements (including balance sheet, income statement, statement of changes in shareholders’ equity and cash flow statement) and consolidated financial report, together with the 2015 business report and consolidated business report of affiliates submitted and surplus distribution form to supervisors for the verification by the Board of the Company have been certified and audited by accountants Ueng Shyh-Rong and Wang Hui-Hsien of Pricewaterhouse Coopers. After careful examination of the supervisors, the supervisors concluded that these financial reports have been properly prepared in accordance with requirements of Article 219 of the Corporation Act of the Republic of China.

To the Shareholders’ Meeting of 2016

Corporation Supervisor: Nienshin Investment Co., Ltd.

Representative: Yen, Hui-Ling

Corporation Supervisor: Dahe Media Co.,Ltd

Supervisor: Lin, Hung-Min

April 25 , 2016


REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of Taiwan Land Development Corporation

　　We have audited the accompanying non-consolidated balance sheets of Taiwan Land Development Corporation as of December 31, 2015 and 2014, and the related non-consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.　　We conducted our audits in accordance with the “Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those 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 provide a reasonable basis for our opinion.　　In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Land Development Corporation as of December 31, 2015 and 2014, and its financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.　　Taiwan Land Development Corporation has been consigned to develop the industrial parks since the period it was government-operated. According to the consignment contract, the Company should pay all the development costs in advance, with the payments to be reimbursed when the land is sold. The land development receivables increased by $1,152,931 thousand, the collection of land development receivables amounted to $575,524 thousand for the year ended December 31, 2015, and the uncollected balance of land development receivables was $5,105,397 thousand as of December 31, 2015. The Company’s management has implemented operational policies as disclosed in Note 12(1), and negotiated to collect the payments on behalf of the government (the consignor) earlier.

February 18, 2016Taipei, TaiwanRepublic of China

4. 2015 Financial Statements

81


TAIWAN LAND DEVELOPMENT CORPORATIONNON-CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan dollars)

Assets NotesDecember 31, 2015 December 31, 2014

AMOUNT % AMOUNT %Current assets

1100 Cash and cash equivalents 6(1) $ 2,139,552 8 $ 3,377,796 14

1110 Financial assets at fair value through profit or loss - current 6(13) 80 - - -

1170 Accounts receivable, net 9 - 38 -1200 Other receivables 6(2) and 8 5,107,493 19 4,530,103 191210 Other receivables - related parties 7 97,238 1 651,609 31220 Current income tax assets - - 167 -130X Inventories, net 6(3) and 8 502,629 2 509,914 21410 Prepayments 7 51,431 - 26,491 -1470 Other current assets 8 289,430 1 394,888 1 11XX Total current assets 8,187,862 31 9,491,006 39

Non-current assets1550 Investments accounted for using equity method 6(4) 11,090,006 41 8,211,894 341600 Property, plant and equipment, net 6(5)(8) and 8 516,193 2 510,776 21760 Investment property, net 6(6), 7 and 8 5,863,441 22 5,032,844 211900 Other non-current assets 6(7) and 8 1,048,073 4 989,381 4 15XX Total non-current assets 18,517,713 69 14,744,895 61 1XXX Total assets $ 26,705,575 100 $ 24,235,901 100

Liabilities and EquityCurrent liabilities

2100 Short-term borrowings 6(9) $ 1,263,341 5 $ 700,000 32110 Short-term notes and bills payable 6(10) 186,132 1 185,702 12150 Notes payable 799 - 765 -2170 Accounts payable 30 - 1,768 -2200 Other payables 6(11) 2,393,283 9 3,010,623 122220 Other payables - related parties 7 16,834 - 19,364 -2230 Current income tax liabilities 1,952 - 15,818 -2300 Other current liabilities 6(12)(14) 3,591,597 13 3,830,374 16 21XX Total current liabilities 7,453,968 28 7,764,414 32

Non-current liabilities2530 Corporate bonds payable 6(13) 1,489,265 6 500,000 22570 Deferred income tax liabilities 6(26) 258,504 1 162,134 12600 Other non-current liabilities 7 76,482 - 74,739 - 25XX Total non-current liabilities 1,824,251 7 736,873 3 2XXX Total liabilities 9,278,219 35 8,501,287 35

EquityShare capital 6(17)

3110 Share capital - common stock 7,258,813 27 6,791,103 28Capital surplus 6(18)

3200 Capital surplus 316,057 1 324,608 1Retained earnings 6(19)

3310 Legal reserve 761,373 3 230,157 13320 Special reserve 6,873,013 26 1,403,462 63350 Unappropriated retained earnings 2,683,961 10 7,418,817 31

Other equity interest3400 Other equity interest 5,734 - 6,738 -3500 Treasury stocks 6(17) ( 471,595) ( 2) ( 440,271) ( 2)3XXX Total equity 17,427,356 65 15,734,614 65

Commitments and contingent liabilities 6(2)(13) and 9Significant events after the balance sheet date 11

3X2X Total liabilities and equity $ 26,705,575 100 $ 24,235,901 100

The accompanying notes are an integral part of these non-consolidated financial statements.See report of independent accountants dated February 18, 2016.


TAIWAN LAND DEVELOPMENT CORPORATIONNON-CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

Items Notes

Years ended December 31

2015 2014(Adjusted)

AMOUNT % AMOUNT %

4000 Sales revenue 6(2)(20) $ 411,718 100 $ 1,724,939 100

5000 Operating costs 6(3)(24) and 7 672 - ( 5,350) -

5950 Net operating margin 412,390 100 1,719,589 100

Operating expenses 6(24) and 7

6100 Selling expenses ( 222,916) ( 54) ( 278,028) ( 16)

6200 General & administrative expenses ( 262,167) ( 64) ( 231,600) ( 14)

6000 Total operating expenses ( 485,083) ( 118) ( 509,628) ( 30)

6900 Operating (loss) profit ( 72,693) ( 18) 1,209,961 70

Non-operating income and expenses

7010 Other income 6(21) and 7 31,057 7 43,018 2

7020 Other gains and losses 6(22) 633,049 154 471,384 27

7050 Finance costs 6(23) ( 71,683) ( 17) ( 8,505) -

7070 Share of profit of associates and joint ventures accounted for using equity method 6(4) 1,619,426 393 3,630,962 211

7000 Total non-operating income and expenses 2,211,849 537 4,136,859 240

7900 Profit before income tax 2,139,156 519 5,346,820 310

7950 Income tax expense 6(26) ( 99,080) ( 24) ( 34,655) ( 2)

8200 Profit for the year $ 2,040,076 495 $ 5,312,165 308

Other comprehensive incomeComponents of other comprehensive income that will be reclassified to profit or loss

8361 Other comprehensive income(loss), before tax, exchange differences on translation ($ 1,004) - $ 1,753 -

8500 Total comprehensive income for the year $ 2,039,072 495 $ 5,313,918 308

Basic earnings per share (in dollars) 6(27)

9750 Basic earnings per share $ 2.92 $ 7.39

9850 Diluted earnings per share $ 2.88 $ 7.38


83


TAIW

AN

LA

ND

DEV

ELO

PMEN

T C

OR

POR

ATIO

NN

ON

-CO

NSO

LID

ATED

STA

TEM

ENTS

OF

CH

AN

GES

IN E

QU

ITY

YEA

RS

END

ED D

ECEM

BER

31,

201

5 A

ND

201

4(E

xpre

ssed

in th

ousa

nds

of N

ew T

aiw

an d

olla

rs)

Not

esS

hare

cap

ital -

co

mm

on s

tock

Cap

ital s

urpl

us

Ret

aine

d E

arni

ngs

Fina

ncia

l st

atem

ent

trans

latio

n di

ffere

nces

of

fore

ign

oper

atio

ns

Trea

sury

sto

cks

Tota

l equ

ityLe

gal r

eser

veS

peci

al re

serv

eU

napp

ropr

iate

d re

tain

ed

earn

ings

Year

201

4B

alan

ce a

t Jan

uary

1, 2

014

$ 6,

553,

003

$ 32

8,63

3$

145,

841

$ 1,

233,

727

$ 2,

796,

971

$ 4,

985

($

380,

549)

$ 10

,682

,611

App

ropr

iatio

n an

d di

strib

utio

n of

reta

ined

ear

ning

s:6(

19)

Lega

l res

erve

app

ropr

iate

d-

-84

,316

-(

84,3

16)

--

-

Spe

cial

rese

rve

appr

opria

ted

--

-16

9,73

5(

169,

735)

--

-

Cas

h di

vide

nds

of o

rdin

ary

shar

es-

--

-(

124,

648)

--

( 12

4,64

8)

Sto

ck d

ivid

ends

of o

rdin

ary

shar

es31

1,62

0-

--

( 31

1,62

0)-

--

Pur

chas

e of

trea

sury

sha

res

6(17

)-

--

--

-(

377,

352)

( 37

7,35

2)

Issu

ance

of e

mpl

oyee

sto

ck o

ptio

ns6(

16)(

18)

-18

,094

--

--

-18

,094

Trea

sury

sha

res

sold

to e

mpl

oyee

s6(

17)(

18)

-(

10,3

03)

--

--

232,

294

221,

991

Ret

irem

ents

of t

reas

ury

shar

es6(

17)(

18)

( 73

,520

)(

11,8

16)

--

--

85,3

36-

Profit

for t

he y

ear

--

--

5,31

2,16

5-

-5,

312,

165

Cha

nge

in c

umul

ativ

e ta

nsla

tion

adju

stm

ents

-

-

-

-

-

1,

753

-

1,

753

Bal

ance

at D

ecem

ber 3

1, 2

014

$ 6,

791,

103

$

324,

608

$

230,

157

$ 1,

403,

462

$ 7,

418,

817

$

6,73

8($

44

0,27

1)$

15,7

34,6

14

Year

201

5B

alan

ce a

t Jan

uary

1, 2

015

$ 6,

791,

103

$ 32

4,60

8$

230,

157

$ 1,

403,

462

$ 7,

418,

817

$ 6,

738

($

440,

271)

$ 15

,734

,614

App

ropr

iatio

n an

d di

strib

utio

n of

reta

ined

ear

ning

s:6(

19)

Lega

l res

erve

app

ropr

iate

d-

-53

1,21

6-

( 53

1,21

6)-

--

Spe

cial

rese

rve

appr

opria

ted

--

-5,

469,

551

( 5,

469,

551)

--

-

Cas

h di

vide

nds

of o

rdin

ary

shar

es-

--

-(

127,

742)

--

( 12

7,74

2)

Sto

ck d

ivid

ends

of o

rdin

ary

shar

es63

8,71

0-

--

( 63

8,71

0)-

--

Pur

chas

e of

trea

sury

sha

res

6(17

)-

--

--

-(

364,

039)

( 36

4,03

9)

Issu

ance

of e

mpl

oyee

sto

ck o

ptio

ns6(

16)(

18)

-30

0-

--

--

300

Trea

sury

sha

res

sold

to e

mpl

oyee

s6(

17)(

18)

-(

300)

--

( 7,

183)

-14

8,25

414

0,77

1

Issu

ance

of c

onve

rtibl

e bo

nds

-4,

380

--

--

-4,

380

Ret

irem

ents

of t

reas

ury

shar

es6(

17)(

18)

( 17

1,00

0)(

12,9

31)

--

( 53

0)-

184,

461

-

Profit

for t

he y

ear

--

--

2,04

0,07

6-

-2,

040,

076

Cha

nge

in c

umul

ativ

e ta

nsla

tion

adju

stm

ents

-

-

-

-

-

( 1,

004)

-

( 1,

004)

Bal

ance

at D

ecem

ber 3

1, 2

015

$ 7,

258,

813

$

316,

057

$

761,

373

$ 6,

873,

013

$ 2,

683,

961

$

5,73

4($

47

1,59

5)$

17,4

27,3

56

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se n

on-c

onso

lidat

ed fi

nanc

ial s

tate

men

ts.

See

repo

rt of

inde

pend

ent a

ccou

ntan

ts d

ated

Feb

ruar

y 18

, 201

6.


TAIWAN LAND DEVELOPMENT CORPORATIONNON-CONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan dollars)

NotesYears ended December 31

2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax $ 2,139,156 $ 5,346,820

Adjustments

Income and expenses having no effect on cash flows (Reversal of allowance) Provision for inventory obsolescence and market price decline 6(3) ( 1,871) 2,660

Depreciation 6(5) 14,250 12,635

Interest expense 6(23) 211,136 158,990

Interest income 6(21) ( 11,847) ( 27,941)

Reversal of impairment loss on non-financial assets 6(8) ( 1,588) ( 16,385)

Dividends received from investments accounted for using the eauity method 6(4) ( 1,619,426) ( 3,630,962)

(Gain) loss on disposal of property, plant and equipment 6(5) ( 144) 9

Loss on disposal of investment properties - 455

Adjustment of fair value of investment properties 6(22) ( 631,665) ( 473,054)

Expenses incurred on share-based payment transactions 300 15,494

Changes in operating assets and liabilities

Changes in operating assets

Accounts receivable, net 29) ( 34)

Notes receivable, net - 1,160

Other receivables ( 577,200) 138,742

Inventories 9,156 ( 15,618)

Prepayments ( 26,104) 82,044

Other non-current assets - 33,899

Changes in operating liabilities

Notes payable 34 ( 704)

Accounts payable ( 1,738) ( 3,742)

Other payables ( 626,351) 700,682

Other payables - related parties ( 2,530) 9,961

Other current liabilities 23,224 ( 633,717)

Cash (outflow) inflow generated from operations ( 1,103,179) 1,701,394

Interest received 11,658 27,838

Interest paid ( 209,889) ( 160,389)

Income taxes paid ( 16,408) ( 16,767)

Net cash flows (used in) from operating activities ( 1,317,818) 1,552,076

85


NotesYears ended December 31

2015 2014

CASH FLOWS FROM INVESTING ACTIVITIES

Increase in other receivables - related parties ($ 95,630) ($ 200,000)

Decrease in other assets - current 105,458 434,437

Acquisition of investments accounted for using euity method ( 609,690) ( 5,100)

Proceeds from disposal of investments accounted for using equity method 6(28) - 180,000

Acquisition of property, plant and equipment 6(5) ( 3,100) ( 12,934)

Proceeds from disposal of property, plant and equipment 428 -

Acquisition of investment properties 6(28) ( 189,281) ( 804,108)

Proceeds from disposal of investment properties - 13,596

Increase in prepayments for business facilities - ( 14,099)

Increase in other non-current assets ( 72,792) ( 50,744)

Net cash flows used in investing activities ( 864,607) ( 458,952)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term loans 587,341 700,000

Repayments of short-term loans ( 24,000) ( 700,000)

Increase (decrease) in short-term notes and bills payable 430 ( 187)

Repayments of long-tem debt ( 262,000) ( 500,000)

Proceeds from issuance of bonds 991,677 500,000

Increase in guarantee deposit received 1,743 7,844

Cash dividends paid 6(19) ( 127,742) ( 124,648)

Payments to acquire treasury shares 6(17) ( 364,039) ( 377,352)

Treasury shares sold to employees 140,771 221,991

Net cash flows from (used in) financing activities 944,181 ( 272,352)

Net (decrease) increase in cash and cash equivalents ( 1,238,244) 820,772

Cash and cash equivalents at beginning of year 3,377,796 2,557,024

Cash and cash equivalents at end of year $ 2,139,552 $ 3,377,796



TAIWAN LAND DEVELOPMENT CORPORATIONNOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan Dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION Taiwan Land Development Corporation (the “Company”) was established on June 30, 1964 as a government-

operated company and the principal business was land development. In July 1972, the Company was renamed as “Taiwan Trust and Development Corporation” and its principal business became financial services and land development. The Company became a listed company in January 1999 after privatization.

To comply with the government’s “Second Financial Reformation Policy” and the rules of Trust Enterprise Act, the Company sold its trust department through a public bidding in August 2005. Consequently, the Company became a professional land development company from a financial institution with the approval of the Financial Supervisory Commission on September 13, 2005. The stockholders subsequently resolved to change the company name back to its original name “Taiwan Land Development Corporation” on December 14, 2005 with the principal business of land development and urban renewal development. The Company changed its type of industry in the Taiwan Stock Exchange to Building Material and Construction after March 2006.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These non-consolidated financial statements were authorized for issuance by the Board of Directors on February 17, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and Regulations Governing the Preparation of Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the “2013 version of IFRS”) in preparing the non-consolidated financial statements. The impact of adopting the 2013 version of IFRS is listed below:

A. IAS 1, ‘Presentation of financial statements’

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

B. IFRS 13, ‘Fair value measurement’

The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. Also, the standard requires disclosures about fair value measurements. Based on the Company’s assessment, the adoption of the standard has no significant impact on its non-consolidated financial statements, and the Company will disclose additional information about fair value measurements accordingly.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

87


New Standards, Interpretations and Amendments Effective Date by

International Accounting Standards Board

IFRS 9, ‘Financial instruments’ January 1, 2018

Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)

To be determined by International Accounting

Standards Board

Investment entities: applying the consolidation exception (amendments to IFRS 10, IFRS 12 and IAS 28) January 1, 2016

Accounting for acquisition of interests in joint operations (amendments to IFRS 11) January 1, 2016

IFRS 14, ‘Regulatory deferral accounts’ January 1, 2016

IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

IFRS 16, ‘Leases’ January 1, 2019

Disclosure Initiative (amendments to IAS 1) January 1, 2016

Disclosure initiative (amendments to IAS 7) January 1, 2017

Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) January 1, 2017

Clarification of acceptable methods of depreciation and amortization (amendments to IAS 16 and IAS 38) January 1, 2016

Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016

Defined benefit plans: employee contributions (amendments to IAS 19R) July 1, 2014

Equity method in separate financial statements (amendments to IAS 27) January 1, 2016

Recoverable amount disclosures for non-financial assets (amendments to IAS 36) January 1, 2014

Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) January 1, 2014

IFRIC 21, ‘Levies’ January 1, 2014

Improvements to IFRSs 2010-2012 July 1, 2014


Improvements to IFRSs 2012-2014 January 1, 2016

The Company is assessing the potential impact of the new standards, interpretations and amendments above. The impact on the financial statements will be disclosed when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these non-consolidated financial statements are set

out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The non-consolidated financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

(2) Basis of preparation

A. Except for the following items, the non-consolidated financial statements have been prepared under the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

(b) Investment property is subsequently measured at fair value.

B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the“IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the non-consolidated financial statements are disclosed in Note 5.


(3) Classification of current and non-current items

The Company classifies assets and liabilities relating to the construction department as current and non-current by its operating cycle (which is normally longer than one year). The following are the classification criteria for other departments:

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realised within twelve months from the balance sheet date;

(d) Cash, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

(a) Liabilities that are expected to be paid off within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be paid off within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(4) Accounts receivable

Accounts receivables are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(5) Consigned land development business

A. The government organizations consign land development business to the Company, and the Company is also in charge of marketing the development in some cases.

B. During the consignment period, the Company, as a consignee, pays on behalf of consignors for compensation fees of land collection, construction costs, supervision costs and inspection costs, etc. Consignors compute interest payable on cost paid by the Company. When conducting consigned land development business, including industrial parks, land restructuring and land repurchase, costs are recognized pursuant to the agreements in each consignment contract and contracts with contractors.When the proceeds from sale of land exceed the cost, in accordance with Article 47 of“Act for Industrial Innovation”, developing organizations can make an agreement on receiving certain portion of profit with the commission organizations. In the case of industrial parks development, the Company recognizes service income based on sales rate and progress of construction, when meeting all the following criteria: (a) Costs attributed to the contract can be reasonably confirmed.

(b) Except for the collectible costs, other contract costs can be reasonably estimated.

(c) The collectability of service income can be reasonably confirmed.

C. Development costs are debited to the account “Land Development Receivables”, and receipts from buyers are credited to the account “Other current liabilities – deposit for sale of industrial park received in advance”, which are then offset with land development receivables when buyers settle the last payment.

(6) Impairment of financial assets

A. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated

89


future cash flows of the financial asset or group of financial assets that can be reliably estimated.

B. The criteria that the Company uses to determine whether there is objective evidence of impairment loss is as follows:

(a) Significant financial difficulty of the issuer or debtor; or

(b) A breach of contract, such as a default or delinquency in interest or principal payments.

C. As the Company has assessed that there is objective evidence that the financial assets measured at amortized cost are impaired, the amount of the impairment loss is measured as 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, and is recognized in profit or loss. 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 loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(7) Inventories

A. Except for land development agency, the Company’s inventories are land for construction, construction in progress and land and buildings for sale.

B. Development costs are stated at cost, and qualified interest costs incurred during construction are capitalized. Inventories are transferred to construction costs on ratio-of-area method or ratio-of-selling-price method consistently. Inventories are transferred to property for self-use when they are for self-use. When the purpose of use is changed and the inventories are then leased to others under operating leases, inventories are transferred to investment property.

C. Buildings and land held for sale, construction in progress and land held for construction site are evaluated at the lower of cost or net realisable value, and the individual item approach is used in the comparison of cost and net realisable value.

D. Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The item by item approach is used in applying the lower of cost and net realisable value.

(8) Investments accounted for using equity method/subsidiaries

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

B. Unrealised profit (loss) that occurred from the transactions between the Company and subsidiarieshave been offset. The accounting policies of the subsidiaries have been adjusted to be consistentwith the Company’s accounting policies.

C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.

D. If changes in shareholdings in subsidiaries do not result in loss of control (transaction with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity.

E. When the Company loses control of a subsidiary, the Company remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Company loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to


the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

F. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the non-consolidated financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the non-consolidated financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

(9) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment was a cost that is significant in relation to the total cost must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings 55 years

Transportation equipment 5~15 years

Office equipment 4~15 years

Leasehold assets 3 years

Other equipment 4~10 years

Leasehold improvements 5 years

(10) Investment property

A. Investment property is property held to earn rent or increase value or for both (including property under construction for the purpose). Investment property also includes land whose purpose of use has not yet been decided and is thus considered as capital appreciation. Investment property is transferred to property for self-use when it is for self-use. Investment property is transferred to inventory when it is held-for-sale.

B. An investment property is stated initially at its cost and measured subsequently using the fair value model. A gain or loss arising from a change in the fair value of investment property is recognised in profit or loss.

(11) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(12) Borrowings

A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

91


B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(13) Accounts payable

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(14) Financial liabilities and equity instruments

A. Ordinary bonds

Ordinary corporate bonds issued by the Company are initially recognised at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method.

B. Convertible bonds

Convertible corporate bonds issued by the Company contain conversion options (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares) and call options. The Company classifies the bonds payable and derivative features embedded in convertible corporate bonds on initial recognition as a financial asset or an equity instrument (‘capital surplus—stock warrants’) in accordance with the substance of the contractual arrangement and the definitions of a financial asset and an equity instrument. Convertible corporate bonds are accounted for as follows:

(a) Call options embedded in convertible corporate bonds is recognised initially at net fair value as ‘financial assets at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets at fair value through profit or loss’.

(b) Bonds payable of convertible corporate bonds is initially recognised at fair value and subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method.

(c) Conversion options embedded in convertible corporate bonds issued by the Company, which meet the definition of an equity instrument, are initially recognised in ‘capital surplus—stock warrants’ at the residual amount of total issue price less amounts of ‘financial assets at fair value through profit or loss’ and ‘bonds payable—net’ as stated above. Conversion options are not subsequently remeasured.

(15) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

C. Employees’ compensation, directors’ and supervisors’ remuneration


Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(16) Employee share-based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(17) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

(18) Treasury shares

Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(19) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(20) Revenue recognition

A. Construction revenues

93


The Company’s activities involve developing and investing in fixed assets and mainly focus on developing and selling residential and enterprise buildings. As the customer have limited ability to influence the design or the customer can make little changes to basic design, the sale of residential and enterprise buildings is considered as sale of goods. Revenue should be recognised when the Company has delivered the goods to the customer, significant risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity.

B. Sales of services

The Company serves as an agent of land development on behalf of government organizations and is responsible to sell partial development projects. Sales of services are recognised at the percentage of completion when the following conditions are met:

(a) Amount of sales revenue can be measured reliably;

(b) It is probable that the future economic benefits associated with the transaction will flow to the entity;

(c) Percentage of completion of transactions at the end of reporting period can be measured reliably;

(d) Costs incurred and will incur to complete the transaction can be measured reliably.

Please refer to Note 4(5) for related revenue recognised.

C. Catering income

The Company provides catering services. Revenue is measured at the fair value of the consideration received or receivable taking into account of increment tax, returns, rebates and discounts for the catering services rendered to external customers in the ordinary course of the Company’s activities. Revenue arising from the catering services rendered should be recognised when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

D. Rental revenue

Rental revenue is recognised in profit or loss on a straight-line basis over the lease term.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these non-consolidated financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

Measurement of investment property

As investment property is measured at fair value, the Company must determine the net fair value of investment property such as land and buildings on balance sheet date using experts’ judgements and estimates. The Company must adjust costs to fair value based on the valuation reports by experts. Such assessment of investment property is principally based on the demand for the products within the specified period in the future, trading trends of buildings and experts’ judgements and estimates, and may influence the measurement of fair value. Therefore, there might be material changes to the evaluation.

As of December 31, 2015, the Company has recognised investment property of $5,863,441.


6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents

December 31, 2015 December 31, 2014

Cash on hand and revolving funds $ 1,545 $ 1,155

Checking accounts and demand deposits 2,138,007 3,376,641

$ 2,139,552 $ 3,377,796

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Company’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash.

B. The Company has appropriately reclassified the cash provided for collateral, and the information on pledged assets is provided in Note 8.

(2) Other receivables


Land development receivables $ 5,105,397 $ 4,527,990

Other receivables 2,096 2,113

$ 5,107,493 $ 4,530,103

A. The details on land development receivables were as follows:

December 31, 2015 Accumulated

service income atDecember31, 2015

Consignors

Kuang Hua Lohas Creative Park $ 3,550,008 $ 760,690 Hualien County Government

Kaohsiung Kangshan Benzhou Industrial Park 857,976 1,431,426 Kaohsiung City Government

Taichung Port Warehouse Park 17,432 176,632 Export Processing Zone, MOEA

Taichung City 1st Precision Machinery Innovation Technology Park 151,943 2,836,463 Taichung City

Government Taichung City 2nd Precision Machinery Innovation Technology Park - 455,450 Taichung City

Government

Taichung City, Feng Chou High-Tech Industrial Park 398,880 17,270 Taichung City Government

Taichung City, Wen- Shan Industrial Park 39,694 4,593 Taichung City Government

Taichung Aviation Industrial Park and Astronavigation 89,464 7,388 Taichung City Government

$ 5,105,397 $ 5,689,912



Consignors


Taichung Industrial Park Technology Building - 172,512 Taichung City Government


Taichung Port Warehouse Park 17,432 176,632 Export Processing Zone, MOEA

Taichung City 1st Precision Machinery Innovation Technology Park - 2,667,206 Taichung City

Government Taichung City 2nd Precision Machinery Innovation Technology Park - 427,839 Taichung City

Government


Taichung City, Wen-Shan Industrial Park 33,682 - Taichung City Government

Taichung Aviation Industrial Park and Astronavigation 79,703 - Taichung City Government

$ 4,527,990 $ 5,610,010

95


B. The movements on land development receivables for the year ended December 31, 2015 are as follows:

Items Beginning balances Additions Collections Ending

balances

Kuang Hua Lohas Creative Park $ 3,312,403 $ 237,605 $ - $ 3,550,008

Kaohsiung Kangshan Benzhou Industrial Park 831,057 26,919 - 857,976

Taichung City 1st Precision Machinery Innovation Technology Park - 505,781 ( 353,838) 151,943

Taichung City 2nd Precision Machinery Innovation Technology Park - 221,686 ( 221,686) -

Taichung City, Feng Chou High -Tech Industrial Park 253,713 145,167 - 398,880

Taichung Port Warehouse Park 17,432 - - 17,432

Others 113,385 15,773 - 129,158

$ 4,527,990 $ 1,152,931 ($ 575,524) $ 5,105,397

The movements on land development receivables for the year ended December 31, 2014 are as follows:

Items Beginning balances Additions Collections Ending

balances


Kaohsiung Kangshan Benzhou Industrial Park 1,085,821 77,271 ( 332,035) 831,057

Taichung City 1st Precision Machinery Innovation Technology Park 250,021 1,666,683 ( 1,916,704) -


Taichung Industrial Park Technology Building 35,031 17,516 ( 52,547) -


Taichung Port Warehouse Park 9,211 8,221 - 17,432

Others 113,385 - - 113,385

$ 4,666,738 $ 2,501,637 ($ 2,640,385) $ 4,527,990

C. For the years ended December 31, 2015 and 2014, interests paid on behalf of consignors recognised as deduction of interest expense were $139,453 and $150,485, respectively.

D. The reasons for the Company not providing reserve allowance for uncollectible accounts are as follows:

(a) The debtors of the land development receivables are government organisations, and the possibility of non-payment is remote.

(b) According to the development contracts, proceeds from the sale and rental of the land are to be used first to repay the land development receivables. In addition, the Company can also claim for any related subsidies offered by the government to repay the development costs. Therefore, there is no significant doubt or uncertainty on the collectability of the land development receivables.

(c) The government is the subject of the development and also the owner of the land. Hence, the collectability of the development costs is not associated with the market values of the land. The inspected costs and prices are greater than costs already incurred and the land was sold on inspected prices and the proceeds were all collected. When settling the industrial park revenues and costs, in revenue-above-cost cases, the difference should be handed over to the industrial parks development and management fund based on the “Statute for Industrial Innovation” Article 47. Otherwise, the Company would be compensated by the fund according to the “Act for Industrial Innovation.”

E. The Company’s other receivables that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.

F. As of December 31, 2015 and 2014, the Company did not hold other receivables that were past due but not impaired.

G. Please refer to Note 8 for the details of pledged land development receivables.

(3) Inventories

A. The details of the Company’s inventories are as follows:



Land $ 326,908 $ 327,308

Building 186,065 186,259

Construction in progress 5,766 17,734

Merchandise inventory 22,640 19,209

Restaurant supplies 129 154

541,508 550,664

Less: allowance for price decline ( 38,879) ( 40,750)

$ 502,629 $ 509,914

B. Related loss (gain) on inventory:

Years ended December 31,

2015 2014

Land cost $ 399 $ 797

Building cost 194 408

Restaurant cost 499 506

Loss on (reversal of allowance for) inventory obsolescence and market price decline ( 1,871) 2,660

($ 779) $ 4,371

Due to the change in real estate market recovery, the Company recognized (reversal of allowance for) loss on inventory obsolescence and market price decline amounting to ($1,871) and $2,660 for the years ended December 31, 2015 and 2014, respectively, which were in accordance with appraisal reports issued by independent appraisers.

C. No interest expense was capitalized for the years ended December 31, 2015 and 2014.

D. Please refer to Note 8 for the details of pledged inventories as of December 31, 2015 and 2014.

(4) Investments accounted for using equity method

2015 2014

At January 1 $ 8,211,894 $ 4,171,479

Addition of investments accounted for using the equity method 1,259,690 405,100

Share of profit or loss of investments accounted for using the equity method 1,619,426 3,630,962

Changes in capital surplus - 2,600

Changes in other equity items ( ,004) 1,753

At December 31 $ 11,090,006 $ 8,211,894

Subsidiaries:


Taiwan Innovation Development Corporation $ 11,074,407 $ 8,205,372

Hsinchu Hill Garden Corporation 674 735

Taiwan Midtown Development Corporation 783 844

Taiwan LanYang Development Corporation 14,142 4,943

$ 11,090,006 $ 8,211,894

A. For the related information about subsidiaries, please refer to Note 4(3) of consolidated financial statements in 2015.

B. The Company has capitalized its loans and paid cash to invest in Taiwan Innovation Development Corporation, amounting to $650,000 and $600,000 in March and September 2015, respectively.

C. The Company has capitalized its loans to invest in Taiwan Innovation Development Corporation, amounting to $400,000 in November 2014.

D. The Board of Directors has resolved that the Company and Hwawei International Innovation Co., Ltd, to jointly establish Taiwan LanYang Development Corporation in August 2014. The investment amount was

97


$5,100 and the Company acquired 51% of the equity interest.

E. The Company has invested a total cash of $9,690 in Taiwan LanYang DevelopmentCorporation in October 2015.


Land Buildings Transportation equipment

Office equipment

Leasehold assets

Other equipment

Leasehold improvements Total

At January 1, 2015Cost $ 308,895 $ 197,309 $ 11,558 $ 8,774 $ 3,500 $ 9,474 $ 27,299 $ 566,809

Accumulated depreciation and impairment

- ( 21,117) ( 3,619) ( 5,079) ( 365) ( 4,012) ( 21,841) ( 56,033)

$ 308,895 $ 176,192 $ 7,939 $ 3,695 $ 3,135 $ 5,462 $ 5,458 $ 510,776

2015Opening net book amount $ 308,895 $ 176,192 $ 7,939 $ 3,695 $ 3,135 $ 5,462 $ 5,458 $ 510,776

Additions - - 2,160 736 - 204 - 3,100

Disposals - - 15,263 - - - - 15,263

Transfers - ( 3,524) ( 1,912) ( 1,037) ( 875) ( 1,444) ( 5,458) ( 14,250)

Depreciation charge - - ( 284) - - - - ( 284)

Reversal of impairment loss - 1,588 - - - - - 1,588

Closing net book amount $ 308,895 $ 174,256 $ 23,166 $ 3,394 $ 2,260 $ 4,222 $ - $ 516,193

At December 31, 2015Cost $ 308,895 $ 197,309 $ 26,994 $ 9,509 $ 3,500 $ 9,678 $ 27,299 $ 583,184


- ( 23,053) ( 3,828) ( 6,115) ( 1,240) ( 5,456) ( 27,299) ( 66,991)

$ 308,895 $ 174,256 $ 23,166 $ 3,394 $ 2,260 $ 4,222 $ - $ 516,193


Office equipment

Leasehold assets

Other equipment

Leasehold improvements Total

At January 1, 2014Cost $ 308,895 $ 197,309 $ 4,483 $ 5,377 $ 2,770 $ 9,307 $ 27,299 $ 555,440


- ( 33,979) ( 2,846) ( 4,296) ( 1,270) ( 2,567) ( 16,381) ( 61,339)

$ 308,895 $ 163,330 $ 1,637 $ 1,081 $ 1,500 $ 6,740 $ 10,918 $ 494,101

2014Opening net book amount $ 308,895 $ 163,330 $ 1,637 $ 1,081 $ 1,500 $ 6,740 $ 10,918 $ 494,101

Additions - - 7,112 2,121 3,500 201 - 12,934

Transfers - - - 1,385 ( 1,385) - - -

Depreciation charge - ( 3,523) ( 810) ( 883) ( 480) ( 1,479) ( 5,460) ( 12,635)

Disposals - - - ( 9) - - - ( 9)

Reversal of impairment loss - 16,385 - - - - - 16,385

Closing net book amount $ 308,895 $ 176,192 $ 7,939 $ 3,695 $ 3,135 $ 5,462 $ 5,458 $ 510,776

At December 31, 2014Cost $ 308,895 $ 197,309 $ 11,558 $ 8,774 $ 3,500 $ 9,474 $ 27,299 $ 566,809


- ( 21,117) ( 3,619) ( 5,079) ( 365) ( 4,012) ( 21,841) ( 56,033)

$ 308,895 $ 176,192 $ 7,939 $ 3,695 $ 3,135 $ 5,462 $ 5,458 $ 510,776


A. There is no capitalisation of interest on property, plant and equipment for the years ended December 31, 2015 and 2014.

B. Impairment information about the property, plant and equipment is provided in Note 6(8).

C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.


2015 2014

At January 1 $ 5,032,844 $ 3,837,492

Additions - from subsequent expenditures 198,932 736,349

Disposals - ( 14,051)

Adjustment of fair value 631,665 473,054

At December 31 $ 5,863,441 $ 5,032,844

A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:


2015 2014

Rental income from the lease of the investment property $ 3,295 $ 3,685

Direct operating expenses arising from the investment property that generated rental income in the period $ 130 $ 4,367

Direct operating expenses arising from the investment property that did not generate rental income in the period $ 4,184 $ 2,487

B. Fair value basis of investment property

The Company’s investment property is mainly located in Ji’an Township in Hualien County, Xinpu Township in Hsinchu County and Beitun Dist. in Taichung City. The investment properties are still under development and are mainly built as hotels and shopping centres for collecting rents. Rent is calculated at a fixed amount plus a certain percentage of the lessee’s sales. The related assumptions as of December 31, 2015 and 2014 are as follows:

December 31, 2015

(a) The location and valuation method of the Company’s investment property:

Object Location Valuation method

Ji'an commercial zone 5 Ji’an Township, Hualien County Income approach

Hsinchu Xinpu Xinpu Township, Hsinchu County Land development analysis

Taichung Dakeng Beitun Dist., Taichung City Land development analysis

(b) Ji'an Commercial Zone5 is analysed based on discounted cash flow of income approach, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discount rate. The object is expected to generate net cash inflow annually for the next 10 years after completion. The net cash inflow is discounted annually at an appropriate discount rate and equals the total of the present value.

i. The future cash inflow of Ji'an Commercial Zone 5 is mainly hotel rental revenue and shopping centre rental revenue. Assessment of revenue is as follows:

Operating revenue Estimated rent Local or similar objects

Hotel rental revenue (per dollar/per room/daily) $2,600~$34,000 Slightly higher than the estimated rent

Shopping centre rental revenue (per dollar/per level ground/ monthly) $1,100 Approximate to the estimated rent

ii. Future cash outflow

a. Operating costs

Expendable expenses and direct expenses are operating costs. Hotel and shopping centre rental revenue is estimated to constitute 30% and 15% of the rental revenue, respectively. The rental revenue is calculated at a steady state.

99


b. Operating expenses

Operating expenses are personnel expenses, administrative expenses, repairs and maintenance expenses, utility expenses, promotion expenses, cleaning expenses, afforestation and taxes which are necessary for and directly related to operations.

c. Substantial replacement allowance (including beginning cost of construction sales and interior design)

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2015, Ji'an Commercial Zone 5 adopted a discount rate of 4.925%.

iv. As of December 31, 2015, the fair value of the investment property of Ji'an Commercial Zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 23, 2015.

(c) The land under development in Xinpu of Hsinchu County and Dakeng of Taichung City cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration of legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The investment property measured using land development analysis is mainly for construction of buildings under 5 floors:

Hsinchu Xinpu Taichung Dakeng

Estimated total sales $2,282,786 $2,449,920

Profit margin 25% 15%

Capital interest comprehensive ratio 1.03% 2.29%

Appraisal firm Excellence International Real Estate Appraiser Firm

Leader-Crown International Real Estate Appraiser Affairs

Appraiser Lin, Chin-Sheng Chen, Yueh-Ling

Valuation date (Note) September 30, 2015 September 30, 2015

Note: The reasonableness of fair value was proved by the effective appraisal issued by the appraisers on December 31, 2015.

December 31, 2014

(a) The location and valuation method of the Company’s investment property:


Ji'an Commercial Zone 5 Ji’an Township, Hualien County Income approach

Hsinchu Hsipu Xinpu Township, Hsinchu County Land development analysis


(b) Ji'anCommercial Zone 5 is analysed based on discounted cash flow of income approach, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discount rate. The object is expected to generate net cash inflow annually for the next 10 years after completion. The net cash inflow is discounted annually at an appropriate discount rate and equals the total of the present value.

i. The Future cash inflow of Ji'an Commercial Zone 5 is mainly hotel rental revenue and shopping centre rental revenue. Assessment of revenue is as follows:


Hotel rental revenue (per dollar/ per room/daily) $8,500~$14,500 Slightly higher than the estimated rent

Shopping centre rental revenue (per dollar/per level ground/ monthly) $1,140~$3,000 Approximate to the estimated rent


a. Operating costs

Expendable expenses and direct expenses are operating costs. Hotel and shopping centre rental


revenue is estimated to constitute 30% and 15% of the rental revenue, respectively. The rental revenue is calculated at a steady state.



c. Substantial replacement allowance (including beginning cost of construction sales and interior design).

iii. Discount rates of Ji'an Commercial zone 5 are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2014, the discount rate was 3.43%.

iv. As of December 31, 2014, the fair value of the investment property of Ji’an Commercial Zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 1, 2014.

(c) The land under development in Xinpu of Hsinchu County and Dakeng of Taichung City cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration of legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The investment property measured using land development analysis is mainly for construction of buildings under 5 floors:


Estimated total sales $1,951,829 $2,360,065



Appraisal firm Excellence International Real Estate Appraiser Firm



Valuation date December 1, 2014 December 1, 2014

C. There is no capitalisation of interest on investment property for the years ended December 31, 2015 and 2014.

D. Information about the investment property that was pledged to others as collateral is provided in Note 8.

E. Please refer to Note 7 for the details of property transactions with related parties.

(7) Other non-current assets


Receivables for planning and investigation $ 21,201 $ 21,201

Long-term receivables for selling land 417,176 417,176

Prepayment for land in Hsinchu County 341,215 311,590

Long-term prepaid expenses 38,959 33,822

Refundable deposits 6,654 6,234

Prepayment for equipment - 14,099

Long-term prepaid rents 145,569 145,569

Others 77,299 39,690

$ 1,048,073 $ 989,381

A. The receivables for planning and investigation are fees prepaid by the Company on behalf of the Industrial Development Bureau, Ministry of Economic Affairs (MOEA) for the project “Preparation of pre-project expenses for Fenglin Industrial Park in Hualien County and Chihshang Industrial Park in Taitung County”. In accordance with the resolution of MOEA, as the Company finishes settling costs, MOEA will prepare a budget for reimbursement.

101


B. The Company sold the research building of South Environmental Protection Technology Park in Kangshan Industrial Park to Kaohsiung City Government in 2004. According to the contract, Kaohsiung City Government should pay by installment for 30 years, and the Company recognised discounted receivable and interest expense accordingly. After renegotiation in 2008, the Kaohsiung City Government agreed that the Company take the uncollected receivables plus interest as uncollected land development receivables in accordance with the land development contract of Kangshan Industrial Park. In accordance with Jing-Gong-Zi Letter No.10135463200 issued by Kaohsiung City Government on December 6, 2012. Furthermore, the settlement of Kangshan Industrial Park development business was accepted by the Kaohsiung City Government in accordance with the development contract and the “Act for Industrial Innovation”.

C. The Company acquired land nos. 105, 106, 236, 236-1, 237~240, 259, 259-1, 260, 262, 265, 267, 268, 279~284, 287, 436, 442, 444, 454, 456~459 and 466 in Hsipu Town, Hsinchu County for development. This acquisition was conducted using the Company Chairman’s name, as agricultural land is not allowed to be acquired by any corporate entity based on the Agricultural Development Act. The land is pledged to the Company and the Chairman also signed the letter of commitment to secure the Company’s ownership.

D. The Company has signed contracts of superficies on land nos. 744-47, 744-48, and 744-49 in Xintou, Jinhu Township, Jinmen County with Northern Region Branch, National Property Administration, MOF for a duration of 50 years in December 2012 and July 2013, respectively. The Company has paid royalty of $45,689 and $99,880 in full when the contract was signed, and was recorded as long-term prepaid rent.


The Company recognised reversal of impairment loss for the years ended December 31, 2015and 2014 amounting to $1,588 and $16,385, respectively. Details of such gain are as follows:

Year ended December 31, 2015

Recognised in profit or loss

Recognised in other comprehensive

income

Reversal of impairment loss－ property, plant and equipment ($ 1,588) $ -


Recognised in profit or loss

Recognised in other comprehensive

income


Due to the change in real estate market recovery, the Company recognised reversal of allowance for loss on impairment of non-financial assets, which were in accordance with appraisal reports issued by independent appraisers.

(9) Short-term borrowings


Bank loans

King’s Town Bank secured loans $ 1,176,000 $ 700,000

Mega Bank secured loans 87,341 -

$ 1,263,341 $ 700,000

Interest rate 3.5%~3.54% 3.305%

Please refer to Note 8 for the details of pledged assets.

(10) Short-term notes and bills payable


Commercial paper payable –Taiwan Cooperative Bills $ 150,000 $ 150,000

Commercial paper payable –International Bills 37,000 37,000

187,000 187,000

Less: discount on commercial paper payable ( 868) ( 1,298)

$ 186,132 $ 185,702

Interest rate 2.788%~2.968% 2.788%~2.888%



(11) Other payables


Rent payable for land development $ 59,443 $ 57,655

Accrual for industrial zone construction 1,525,688 2,082,173

Remaining funds for industrial zone 500,839 478,961

Accrued expenses 110,024 75,515

Payables for industrial zone construction 188,514 315,893

Other payables - other 8,775 426

$ 2,393,283 $ 3,010,623

(12) Other current liabilities


Deposit for sale of industrial park received in advance $ 34,883 $ 38,323

Long-term liabilities-current portion 3,327,000 3,589,000

Others 229,714 203,051

$ 3,591,597 $ 3,830,374

(13) Corporate bonds payable


Ordinary corporate bonds

1st issuance in 2014 $ 500,000 $ 500,000

1st issuance in 2015 800,000 -

1,300,000 500,000

Convertible corporate bonds

1st domestic issuance 200,000

Less: Discount on bonds payable ( 10,735) -

189,265 -

Total $ 1,489,265 $ 500,000

A. The issuance of domestic convertible bonds by the Company

(a) The terms of the first domestic secured convertible bonds issued by the Company are as follows

i. The Company issued $200,000, 0%, 1st domestic secured convertible bonds, as approved by the regulatory authority. The bonds mature 3 years from the issue date (August 18, 2015 ~ August 18, 2018) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on August 18, 2015.

ii. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after one month of the bonds issue to 10 days before the maturity date, except the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

iii. The conversion price was set effective on August 10, 2015. The calculation is based on 110% of the basic price, which is one of the arithmetic mean of the closing prices at 1, 3 and 5 working days prior to the effective date. Ex-rights or ex-dividends price shall be calculated if the ex-rights or ex-dividends date is prior to the conversion date. Conversion prices shall be adjusted in accordance with the formula if the shares go ex-rights or ex-dividends prior to the issuance date. In accordance with the aforementioned approach, the conversion price was NT$12.05 per share at issuance.

iv. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the reset conversion price is higher than the conversion price before the reset, the conversion price won’t be adjusted. As of December 31, 2015, the conversion price was adjusted to NT$10.76.

103


v. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of the Company’s common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after one month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after one month of the bonds issue to 40 days before the maturity date.

vi. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

(b) Regarding the issuance of convertible bonds, the equity conversion options amounting to $4,380 were separated from the liability component and were recognised in ‘capital surplus—stock warrants’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IAS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rate of the bonds payable after such separation was 2.67%.

B. The Company issued $800,000, 1.55%, 1st domestic secured ordinary corporate bonds in 2015, as approved by the regulatory authority. The bonds mature 5 years from the issue date (June 9, 2015 ~ June 9, 2020) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on June 9, 2015.

C. The Company issued $500,000, 1.36%, 1st domestic secured ordinary corporate bonds in 2014, as approved by the regulatory authority. The bonds mature 3 years from the issue date (April 25, 2014 ~ April 25, 2017) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on April 25, 2014.

(14) Long-term borrowings

Type of loans. Interest rate range Contract duration December 31, 2015

Tsaotun Township Farmers’ 3.225% 2013.05.22~2016.05.22 $ 239,000

Association in Nantou County

Syndicated loans provided by 2.9%~3.2211% 2012.08.31~2017.08.31

Mega Bank and others 3,088,000

3,327,000

Less: current portion ( 3,327,000)

$ -

Type of loans. Interest rate range Contract duration December 31, 2014

Yuanta Commercial Bank 2.970% 2012.06.25~2015.06.25 $ -

Mega Bank 3.100% 2011.11.16~2015.11.29 -

Tsaotun Township Farmers’

Association in Nantou County 3.170% 2013.05.22~2016.05.22 239,000

Syndicated loans provided by

Mega Bank and others 2.974%~3.295% 2012.08.31~2017.08.30 3,350,000

3,589,000


$ -

A. The Company has applied for credit line of $239,000 with the Agricultural Bank of Taiwan (the host organizer) and Tsaotun Township Farmers’ Association in Nantou County (the co-host and manage organizer) for turnover of construction. The credit line has been fully utilised as of December 31, 2015. The principal will be repaid in full at maturity.

B. To develop business and improve the financial structure, the Company signed a long-term syndicated loan contract to obtain a credit line of $5,300,000 with Mega Bank and 16 other banks on August 14, 2012,


including credit line A for $4,800,000 and credit line B for $500,000. Credit line A was used to pay off the syndicated loan mentioned above, and credit line B was used for working capital. The credit line A has been fully utilised as of December 31, 2015. Only credit line B is revolving. The unused amount for credit line B amounted to $100,000 as of December 31, 2015. According to the contract’s provisions, the Company must maintain certain financial ratios inspected at least once every half year. If not, the Company would be required to pay the penalties monthly until the date of improvement. The loan was successively repaid at the agreed upon debt service ratio starting from August 2013 and $1,200,000 is repaid at maturity.

C. To develop Taichung City 1st Precision Machinery Innovation Technology Park, the Company signed a loan contract of $1,000,000 with Yuanta Bank in 2006.

D. To develop Taichung City 2nd Precision Machinery Innovation Technology Park, the Companysigned a loan contract of $2,500,000 with Mega International Commercial Bank (Mega bank) in September2011. According tothe contract’s provisions, the Company must maintain certain financial ratios (based on financial reports, audited or reviewed by an independentaccountant) inspected at leastonce every half year. If not, the Company would be required to pay the penalties monthlyuntil the date of improvement.

E. Please refer to Notes 7 and 8 for the details of pledged assets.

(15) Pensions

A. Effective July 1, 2005, the Company established a funded defined contribution pension plan (the “New Plan”) under the Labor Pension Act. Employees have the option to be covered under the New Plan. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are portable when the employment is terminated.

B. The pension costs under the defined contribution pension plan for the years ended December 31, 2015 and 2014 were $4,246 and $3,952, respectively.

(16) Share-based payment

A. For the years ended December 31, 2015 and 2014, the Company’s share-based payment arrangements were as follows:

Type of arrangement Grant date Quantity granted (in thousand shares)

Vesting conditions

Treasury stock transferred to employees 2014.08.21 21,560 Vested immediately



Abovementioned share-based payment arrangements are settled by equity.

B. Details of the share-based payment arrangements are as follows:

2015 2014

No. ofoptions (share in thousands)

Weighted-average exercise price

(in dollars)

No. ofoptions (share in thousands)


(in dollars)

Options outstanding at January 1 - $ - - $ -

Options granted 26,500 11.12 21,560 11.11

Options exercised ( 12,000) 11.77 ( 20,060) 11.11

Options expired - - ( 1,500) -

Options outstanding at December 31 14,500 10.58 - -

C. The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2015 and 2014 was $14.23 and $11.95 (in dollars), respectively.

D. Expenses incurred on share-based payment transactions are shown below:


2015 2014

Equity-settled $ 300 $ 18,094

105


(17) Share capital

A. As of December 31, 2015, the authorised common stock was $9,900,000 with par value of NT$10 (in dollars) per share, and the outstanding common stock was $7,258,813 (725,881 thousand shares).

Movements in the number of the Company’s ordinary shares outstanding are as follows:

Unit: shares in thousands

2015 2014

At January 1 640,410 623,240

Treasury stock purchased by employees 12,000 20,060

Shares retired ( 33,381) ( 34,052)

Earnings transferred to capital increase 63,871 31,162

At December 31 682,900 640,410

B. Treasury stocks

(a) Reason for share reacquisition and movements in the number of the Company’s treasury stocks are as follows:

Name of company holding the shares

December 31, 2015

Reason for reacquisition Number of shares (in thousands) Carrying amount

The Company To be reissued to employees 42,981 $ 471,595


December 31, 2014

Reason for reacquisition Number of shares (in thousands) Carrying amount

The Company Protect shareholders’ interests 17,100 $ 184,461

To be reissued to employees 21,600 255,810

$ 440,271

(b) Reacquisition of treasury shares is as follows:


11th 12th 13th 14th

Term of reacquisition To be reissued to employees

To be reissued to employees (Note)

To be reissued to employees


Reason for reacquisitionType and quantity of reacquired shares (shares in thousands)

Common stock 4,900

Common stock 8,800

Common stock 8,977

Common stock 10,704

Amount of reacquired shares $ 55,689 $ 100,599 $ 96,606 $ 111,145


8th 9th 10th 11th

Term of reacquisitionTo enhance the

Company’s credit rating and the

stockholders’ equity

To enhance the Company’s credit

rating and the stockholders’ equity

To enhance the Company’s credit

rating and the stockholders’ equity


Reason for reacquisitionType and quantity of reacquired shares (shares in thousands)

Common stock 2,000

Common stock 5,352

Common stock 17,100

Common stock 9,600


Note: The change of reason for reacquisition has been resolved by the Board of Directors on April 28, 2015 and was approved by FSC.

(c) In 2015, the Board of Directors has resolved to transfer the shares to employees from the 5th and 6th time treasury share buyback amounting to 1,500 thousand shares and 10,500 thousand shares, respectively. The post-tax amount, net of securities transactions tax, was $16,824 and $123,947, respectively.

(d) On February 25, 2015, the Board of Directors has resolved to retire 17,100 thousand shares from the


10th time treasury share reacquired amounting to $184,461. Capital surplus - additional paid-in capital and capital surplus - treasury share transactions were decreased by $7,154 and $5,777, respectively. The capital reduction date was set to be effective on March 3, 2015, which has been registered.

(e) On September 25, 2014, the Board of Directors has resolved to retire 7,352 thousand shares from 8th and 9th time treasury share reacquired amounting to $85,336. Capital surplus - additional paid-in capital and capital surplus - treasury share transactions were decreased by $3,076 and $8,740, respectively. The capital reduction date was set to be effective on October 27, 2014.

(f) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury stock should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital reserve.

(g) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

(h) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should be reissued to the employees within three years and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(i) Events after the balance sheet date

i. The above (b), the Company’s 14th time treasury share reacquired was completed on January 22, 2016. The Company has reacquired 8,150 thousand of treasury shares, which amounted to $83,260, from January 1 to January 22, 2016.

ii. On December 22, 2015, the Board of Directors has resolved to transfer the shares to employees from the 11th time treasury share reacquired of 14,500 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on January 18, 2016. The amount of shares transferred to employees was 14,500 thousand from January 1 to January 18, 2016.

iii. On January 20, 2016, the Board of Directors has resolved to reacquire treasury shares from January 25 to February 26, 2016. The expected reacquisition amount is 4,346 thousand shares and the price range is NT$10 to NT$13 (dollars) per share. From January 25 to February 17, 2016, the amount of shares reacquired was 4,346 thousand, which amounted to $45,100.

iv. On January 20, 2016, the Board of Directors has resolved to transfer the shares to employees from the 12th time treasury share reacquired of 8,800 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on February 17, 2016. The amount of shares transferred to employees was 8,800 thousand from January 20 to February 17, 2016.

v. On February 17, 2016, the Board of Directors has resolved to transfer the shares to employees from the 14th time treasury share reacquired of 18,854 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on February 24, 2016.

(18) Capital surplus

2015

Share premium

Treasury stock transactions Stock options Total

At January 1 $ 284,109 $ 5,777 $ 34,722 $ 324,608

Retirement of treasury stock ( 7,154) ( 5,777) - ( 12,931)

Employee stock options issued - - 300 300

Treasury shares purchased by employees - - ( 300) ( 300)

Convertible corporate bonds issued - - 4,380 4,380

At December 31 $ 276,955 $ - $ 39,102 $ 316,057

107


2014

Share premium

Treasury stock transactions Stock options Total

At January 1 $ 287,185 $ 7,761 $ 33,687 $ 328,633


Employee stock options issued - - 18,094 18,094

Treasury shares purchased by employees - 6,756 ( 17,059) ( 10,303)

At December 31 $ 284,109 $ 5,777 $ 34,722 $ 324,608

Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(19) Retained earnings

A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first beused to pay all taxes and offset prior years’ operating losses and then 10% of the remainingamount shall be set aside as legal reserve. Bonus distributed to the employeesand remuneration paid to the directors and supervisors should account for 1% ~ 8% and 1% ~2%, respectively, of the total distributed amount. The remainder shall be considered with the industry environment and needs for future business or investee with other related factors that is to be proposedby the Board of Directors and resolved by the stockholders for no appropriation or appropriation of no less than 50% for the year. Employees’ bonus and directors’ and supervisors’ remuneration are authorized at the Board of Directors’ meeting in accordance with the aforementioned rules and with chronological orders.

B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

C. In accordance with the Financial Supervisory Commission, Securities and Futures Bureau, No. 1030006415 correspondence, as the investment property is measured at fair value, the Company shall accrue and reverse special reserve accordingly.

D. The appropriations of 2014 and 2013 earnings had been resolved at the stockholders’ meeting onJune 30, 2015 and June 24, 2014, respectively. Details are summarized below:

2014 2013

Amount Dividendsper share

(in dollars) Amount

Dividendsper share

(in dollars)

Legal reserve $ 531,216 $ 84,316

Special reserve 5,469,551 169,735

Cash dividends 127,742 $ 0.2 124,648 $ 0.2

Stock dividends 638,710 1.0 311,620 0.5

$ 6,767,219 $ 1.2 $ 690,319 0.7

E. For the information relating to employees’ compensation (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(25).


(20) Operating revenue


2015 2014

Service income $ 405,908 $ 1,718,328

Construction revenue 649 1,298

Rental revenue 3,295 3,685

Food service revenue 1,231 1,334

Other operating revenues 635 294

$ 411,718 $ 1,724,939

(21) Other income


2015 2014

Interest income from bank deposits $ 5,792 $ 6,559

Other interest income 6,055 21,382

Other non-operating income 19,210 15,077

$ 31,057 $ 43,018

The subsidiary, TIDC, received directors’ and supervisors’ remuneration of $17,035 and $0 for the years ended December 31, 2015 and 2014, respectively.

(22) Other gains and losses


2015 2014

Gain on reversal of impairment loss on property, plant and equipment $ 1,588 $ 16,385

Gain on fair value adjustment of investment property 631,665 473,054

Gain (loss) on disposal of property, plant and equipment 144 ( 9)

Service expenses ( 346) ( 16,865)

Currency exchange losses ( 2) -

Other non-operating losses - ( 1,181)

$ 633,049 $ 471,384

(23) Finance costs


2015 2014

Interest expense:

Bank loans $ 164,699 $ 148,439

Commercial paper 4,782 5,665

Bonds payable 41,411 4,676

Others 244 210

Less: Interest reimbursement for industrial zones ( 139,453) ( 150,485)

Finance cost $ 71,683 $ 8,505

109


(24) Expenses by nature


2015 2014

Employee benefit expense $ 145,293 $ 136,882

Directors’ and supervisors’ remuneration 21,828 7,699

Depreciation 14,250 12,635

Rent expense 30,457 30,666

Advertisement expense 51,680 15,287

Entertainment expense 35,283 39,329

Donation expense 5,073 10,758

Taxes 12,205 7,897

Service expense 67,045 156,502

General and administrative expenses 11,201 11,109

Other operating costs 606 1,485

Other expenses 89,490 84,729

$ 484,411 $ 514,978

Note: In order to promote Taiwan brands, the Company has donated $2,500 and $3,500 to Branding Taiwan Association in 2015 and 2014, respectively. There is no other commitment.

(25) Employee benefit expense


2015 2014

Wages and salaries $ 131,227 $ 121,926

Labour and health insurance fees 6,996 6,716

Pension costs 4,246 3,952

Other personnel expenses 2,824 4,288

$ 145,293 $ 136,882

A. As of December 31, 2015 and 2014, the Company had approximately 88 and 90 employees, respectively.

B. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees and pay remuneration to the directors and supervisors that accounts for 1% to 8% and 1% to 2%, respectively, of the total distributed amount.

However, in accordance with the Company Act amended in May 20, 2015, a company shall distribute employee compensation, based on the distributable profit of the current year, in a fixed amounts or a ratio of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. A company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation distributed in the form of shares or in cash; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation.Taking into consideration of the Company's actual operation procedures, the Company has not revised its Articles of Incorporation in accordance with the amended Company Act before the issuance of these financial statements; thus, the distribution is based on the unrevised Articles of Incorporation.The Board of Directors of the Company has approved the amended Articles of Incorporation of the Company on January 20, 2016. According to the amended articles, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall be 1% to 8% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration. The amended articles will be resolved in the shareholders’meeting in 2016.

C. For the years ended December 31, 2015 and 2014, employees’ compensation (bonus) was accrued at $21,828 and $7,692, respectively; directors’ and supervisors’ remuneration was accrued at $21,828 and $7,692, respectively. The aforementioned amounts were recognised in salary expenses.


The employees’ compensation and directors’ and supervisors’ remuneration were both estimated and accrued based on 1% of distributable profit of current year for the year ended December 31, 2015. The accrued amount has not been resolved by the Board of Directors. The employees’ compensation will be distributed in the form of cash or shares.

The expenses recognised for the year of 2014 were accrued based on the net income of 2014 and the percentage of both 1% for employees and directors/supervisors, respectively, taking into account other factors such as legal reserve. Where the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences are accounted for as changes in estimates. The difference between employees’ bonus and directors’ and supervisors’ remuneration as resolved by the shareholders at the shareholders’ meeting and the amount of $7,692 as employees’ bonus and $7,692 as directors’ and supervisors’ remuneration recognised in the 2014 financial statements by $606, had been adjusted in the profit or loss of 2015.

Information about employees’ compensation (bonus) and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors and the shareholders at the shareholders’ meetingwill be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(26) Income tax

A. Components of income tax expense


2015 2014

Current tax:

Current tax on profits for the period $ - $ 1,498

Tax on undistributed earnings 3,302 -

Adjustment in respect of prior years ( 592) -

Total current tax 2,710 1,498

Deferred tax:

Origination and reversal of temporary differences 96,370 33,157

Income tax expense $ 99,080 $ 34,655

B. Reconciliation between income tax expense and accounting profit


2015 2014

Tax calculated based on profit before tax and statutory tax rate $ 363,657 $ 908,959

Temporary difference not recognised as deferred tax assets 4,754 ( 19,990)

Taxable loss not recognised as deferred tax assets 11,210 ( 170,839)

Additional 10% tax on undistributed earnings 3,302 15,283

Effect from different tax rates on temporary differences ( 12,482) ( 84,698)

Tax exempted income by tax regulation ( 270,769) ( 614,060)

Prior year income tax overestimation ( 592) -


C. Expiration dates of unused net operating loss carryfoward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2015

Year incurred Amount filed/ assessed Unused amount Unrecognised

deferred tax assets Usable until year

2015 Accrued $ 65,945 $ 65,945 2025

111


D. The amounts of deductible temporary differences that are not recognised as deferred tax assets are as follows:


Deductible temporary differences

Allowance for sales return $ 11,225 $ 11,228

Temporary difference on service revenue 31,248 26,601

Allowance for price decline on inventories 7,513 7,832

Unrealised impairment loss 153 423

Others 1,182 483

$ 51,321 $ 46,567

E. As of December 31, 2015 and 2014, the amount of deferred tax liabilities was $258,504 and $162,134, respectively. The land value increment tax originally applied to the Company’s Trust department in accordance with ‘Enterprise Merger and Acquisition Act’ was transferred to JihSun Bank. As of December 31, 2015 and 2014, the increment tax both amounting to $15,868 will be paid when the land will be transferred again, and the tax related accrual arising from the fair value of the other investment property was $242,636 and $146,266, respectively.

F. As of December 31, 2015, the Company’s income tax returns through 2013 have been assessed and approved by the Tax Authority.

G. Unappropriated retained earnings


Earnings generated in and before 1997 $ - $ -

Earnings generated in and after 1998

a.Unappropriated earnings assessed with 10% income tax 610,868 448,842

b.Unappropriated earnings not yet assessed with 10% income tax 2,073,093 6,969,975

$ 2,683,961 $ 7,418,817

As of December 31, 2015 and 2014, the balance of the imputation tax credit account was $21,250 and $31,283, respectively. The creditable tax rate was 0.63% for the year ended December 31, 2014 and is estimated to be 0.86% for the year ended December 31, 2015.

(27) Earnings per share


Amount after tax

Weighted average number of ordinary shares utstanding

(shares in thousands)

Earnings per share

(in dollars)

Basic earnings per share

Profit for the period $ 2,040,076 699,277 $ 2.92

Diluted earnings per share

Assumed conversion of all dilutive potential ordinary shares

Employees’ bonus - 2,069

Conventible bonds 1,566 6,926

Profit plus assumed conversion of all dilutive potential ordinary shares $ 2,041,642 708,272 $ 2.88



Amount after tax

Weighted average number of ordinary shares utstanding

(shares in thousands)

Earnings per share

(in dollars)


Profit for the period $ 5,312,165 718,579 $ 7.39


Assumed conversion of all dilutive potential ordinary shares

Employees’ bonus - 816


(28) Supplemental cash flow information

A. Investing activities with partial cash payments


2015 2014

Purchase of investment property $ 198,932 $ 736,349

Add: opening balance of other accounts payable - 67,759

Less: ending balance of other accounts payable ( 9,651) -

Cash paid during the year $ 189,281 $ 804,108

B. Investing activities with partial cash receipts


2015 2014

Disposal of long-term equity investments $ - $ -

Add: opening balance of other receivables - 180,000

Less: ending balance of other receivables - -

Cash paid during the year $ - $ 180,000

C. Investing activities without cash payments or receipts


2015 2014

Capitalisation of loans into subsidiaries $ 650,000 $ 400,000

7. RELATED PARTY TRANSACTIONS (1) Significant related party transactions and balances

A. Other receivables

December 31,2015 December 31,2014

Subsidiaries $ 17,034 $ -

The receivables are directors’ and supervisors’ remuneration appropriated by subsidiaries.

B. Prepayments

As of December 31, 2015, the prepayments for compensation to the key management amounted to $6,667.

C. Purchases of services


2015 2014

Subsidiaries $ 43,890 $ 55,910

(a) The services purchased from subsidiaries are mainly classified as service expenses of $11,143 and advertisement expense of $32,747 for the year ended December 31, 2015.

(b) The services purchased from subsidiaries are mainly classified as investment property of $9,738, other

113


operating cost of $314, advertisement expense of $1,658 and service expenses of $44,200 for the year ended December 31, 2014.

(c) The total price of the contract is decided by bilateral negotiation. The payment term is based on service-providing schedule as provided by the contract.

D. Other payables



The above payables represent payables for marketing services and property transactions.

E. Property transactions

(a) The Company has signed contracts with TIDC in December 2014 for the acquisition of three tracts of two short sections numbered 145~147 in Guanghua St., Ji’an Township, Hualien County, amounting to $547,342, which are dedicated to Guanghua LOHAS Creative Park development. The title of land has all been transferred.

(b) In October 2009, the Company signed a contract to sell the land located in Hualien, Guanghua LOHAS Creative Park with TIDC. The selling price amounting to $570,128 is based on an appraisal report issued by independent appraisers. As of December 31, 2011, the Company had received $342,532 and recognised it as “receipts in advance”. In March 2012, the Company signed a supplementary contract with TIDC because the Board of Directors’ committee approved a resolution to raise the selling price to $626,000, which is based on an appraisal report of 2011, received all payments, and recognised “construction revenue” of $626,000. The gain on sale of land amounting to $53,333 was recorded as “Other non-current liabilities (deferred credit - gain between related parties)” because TIDC has not yet sold the land to a third party.

F. Loans to related parties

(a) Other receivables


Subsidiaries $ 80,204 $ 651,609

(b) Interest revenue


2015 2014


Loans to related parties are short-term financing for related parties’ capital needs, and carried an interest at 3.3% per annum for the years ended December 31, 2015 and 2014.

G. Endorsements and guarantees

(a) Endorsements and guarantees provided by related parties:


Key management of the Company $ 4,777,341 $ 4,476,000

Subsidiaries 1,086,074 86,074

$ 5,863,415 $ 4,562,074

(b) Endorsements and guarantees provided to related parties:

As of December 31, 2015 and 2014, the amount of endorsement/ guarantee that the Company has provided was $3,608,800 and $2,100,000, respectively.

H. Others

Please refer to Note 6(21) and 6(24).


(2) Key management compensation


2015 2014

Salaries and other short-term employee benefits $ 59,213 $ 37,055

Post-employment benefits 265 213

$ 59,478 $ 37,268

8. PLEDGED ASSETS

Pledged asset December 31,

Purpose 2015 2014

Other current assets

- Demand deposits $ 28,185 $ 83,484 Long-term borrowings compensation account

- Demand deposits 17,007 16,981 Land compensation fee account

- Demand deposits 159,114 159,114 Guarantee for development projects

- Demand deposits 100 - Reserve for rental of land

- Time deposits 75,531 128,767 Guarantee for development projects and long-term borrowings

- Time deposits 160 - Guarantee for projects

280,097 388,346

Other non-current assets

- Refundable deposits 6,654 6,234 Guarantee for projects and leases

- Land in Hsinchu 311,590 285,327 Guarantee for short-term borrowings

- Long-term prepaid Guarantee for short-term borrowings

rent 145,569 -

463,813 291,561

Other receivables

- Land development Long-term borrowings

receivables 4,559,927 4,143,460

Inventories 301,854 302,447 Guarantee for long-term and short-term borrowings and short-term bills payable

Investment property 4,152,649 3,400,845 Guarantee for long-term borrowings and short-term bills payable

Property, plant and equipment

- Land and buildings 361,406 364,187 Guarantee for short-term borrowings

$ 10,119,746 $ 8,890,846

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

Commitments

As of December 31, 2015 and 2014, except for commitments mentioned in Note 6(14), the Company’s aggregate commitments under the consignments for construction and services were $606,288 and $1,090,806, respectively.

10. SIGNIFICANT DISASTER LOSS None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE Please refer to Note 6(17) B(i) for the related information.

12. OTHERS (1) Operational policies

To improve the condition of significant amount of uncollected land development receivables, the Company consolidated its loans from several financial institutions into a 7-year long-term syndicated loan contract with a credit line of $16,500,000 in August 2005. After paying back loans over the years, the debt balance was

115


considerably reduced. In order to expand business, the Company had signed a 5-year long-term syndicated loan contract with a credit line of $5,300,000 in August, 2012. The new syndicated loan was used to pay off the previous syndicated loan, and maintain sufficient working capital. As of December 31, 2015, the syndicated loan amounted to $3,088,000,000. Since 2009, the Company has declared stock dividends for 4 consecutive years since the period of privatization, and completed its capital increase by $1,770,000 in October 2011. This indicates that the Company has the potential of maintaining a long-term stable profit margin to support the operations of the Company.

The Company is committed to a diversified land development and value innovation integrated to providing a high-quality lifestyle. The Company tries to infuse new value into the land with ubiquitous technology and green energy technology.

A. Value-oriented development strategies:

The Group adds value to the land through cultural creativity and technological innovation by integrating art as part of life and creating a sustainable healthy LOHAS park.

B. Sustainable development of the IOT and O2O with the cloud the source of value in the future:

As the Internet era changes, its future value will lie in the cloud. The arrival of the Internet of Things (IOT) era means that the reality must be combined with virtual simulation to integrate online-to-offline (O2O) and maximize market and business opportunities.

C. Consolidation of the development of Kinmen as the border trade center:

The visa-on-arrival policy in Kinmen has enabled the number of visitors from Mainland China to hit a record high. Implementation of increased duty-free shopping quota for people coming from Mainland China through Kinmen and the relaxation of Xiamen as a free trade zone further contributed to a steady growth in bilateral trade volume, the importation of excessive quantities of goods to Xiamen, and significantly increased bilateral trade with Xiamen and the West Coast Zone, consolidating the development of Kinmen as a border trade center.

D. Core values of sustainable enterprise:

Employing “green, intelligent, and cultural creativity” as core beliefs, we infuse the land with new value, creating a unique brand image, communicating our corporate philosophy and committing to the construction of high-quality LOHAS spaces for living.

E. Specialization within the Company

Pursuit of overall rationalization of the Company and further enhancement of enterprise synergy through interaction and cooperation of all employees within the Company.

F. The Company has combined the industrial zone with local uniqueness for innovation and increasing value and to further speed up the disposal of unleased and unsold land and collection for payments on behalf of others.

(2) Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the non-consolidated balance sheet) less cash. Total capital is calculated as ‘equity’ as shown in the non-consolidated balance sheet plus net debt.

During 2015, the Company’s strategy, which was unchanged from 2014, was to maintain the gearing ratio under 50%. The gearing ratios at December 31, 2015 and 2014 were as follows:



Total borrowings $ 6,265,738 $ 4,974,702

Less: cash ( 2,139,552) ( 3,377,796)

Net debt 4,126,186 1,596,906

Total equity 17,427,356 15,734,614

Total capital $ 21,553,542 $ 17,331,520

Gearing ratio 19.14% 9.21%

(3) Financial instruments

A. Fair value information of financial instruments

Except for those listed in the table below, the carrying amounts of financial instruments not measured at fair value (including notes receivable, accounts receivable, other receivables, long-term accounts receivable, other financial assets, refundable deposits, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, other payables, long-term borrowings and guarantee deposits received) are approximate to their fair value.The fair value information of financialinstruments measured at fair value is provided in Note 12(4).

December 31, 2015

Book value Fair value

Level 1 Level 2 Level 3

Financial liabilities:

Bonds payable $ 1,489,265 $ - $ 1,518,831 $ -

December 31, 2014




Bonds payable $ 500,000 $ - $ 500,000 $ -

B. Financial risk management policies

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial position and financial performance.

C. Significant financial risks and degrees of financial risks

(a) Credit risk

Credit risk refers to the risk of financial loss to the Company arising from default by the clients on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The counterparties are government organisations of all cities and counties with high credit quality, thus, there is no critical credit risk.

(b) Liquidity risk

Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.

117



December 31, 2015 Less than 1 year Over 1 year Book value

Short-term borrowings $ 1,277,622 $ - $ 1,277,622

Short-term notes and bills ayable 190,081 - 190,081

Notes payable 799 - 799

Accounts payable 30 - 30

Other payables 1,892,444 500,839 2,393,283

Long-term borrowings (including current portion) 1,358,348 2,143,805 3,502,153

Bonds payable 19,200 1,537,091 1,556,291


Short-term borrowings $ 723,135 $ - $ 723,135

Short-term notes and bills payable 190,953 - 190,953

Notes payable 765 - 765

Accounts payable 1,768 - 1,768

Other payables 2,531,662 478,961 3,010,623

Long-term borrowings (including current portion) 378,653 3,511,577 3,890,230

Bonds payble 6,800 509,067 515,867

(4) Fair value information

A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3).

B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivatives is included in Level 2.

Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in investment property is included in Level 3.

C, The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2015 and 2014 is as follows:

December 31, 2015 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value measurementsFinancial assets at fair value through profit or lossDerivatives $ - $ 80 $ - $ 80

Investment property (Note) - - 5,863,441 5,863,441

Total $ - $ 80 $ 5,863,441 $ 5,863,521

December 31, 2014 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value measurements

Investment property (Note) $ - $ - $ 5,032,844 $ 5,032,844

Note: Investment property is measured at fair value.


D. The methods and assumptions the Company used to measure fair value are as follows:

(a) The fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

(b) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

(c) Under “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the Company appoints external valuers, by using the income approach, to calculate the fair value of investment property. Related assumption and information of inputs are as follows:

i. Cash flow: Cash flow shall be valuated on the basis of existing lease contracts, rent at local market rates, or current market rents for similar comparable properties in the same location and condition, and overvalued and undervalued comparable properties shall be excluded. If there is a period-end value, the discounted present period-end value may be added.

ii. Analysis period: When there is no specified period for the income, the analysis period in principle shall not be longer than 10 years; when there is a specified period for the income, the income shall be estimated for the remainder of the specified period.

iii. Discount rate: The discount rate shall be determined using the risk premium approach only, with the calculation based on a certain interest rate, plus the estimate for the individual characteristics of the investment property. The language “based on a certain interest rate” means the interest rate may not be lower than the floating interest rate on a 2-year time deposit of a small amount, as posted by the Chunghwa Post Co. Ltd., plus 0.75 percentage points.

E. For the years ended December 31, 2015 and 2014, there was no transfer between Level 1 and Level 2.

F. For the movements of Level 3 for the years ended December 31, 2015 and 2014, please refer to Note 6(6).

G. For the years ended December 31, 2015 and 2014, there was no transfer into or out from Level 3.

H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Fair value atDecember 31,

2015 Valuation technique

Significant unobservable

input

Range (weighted average)

Relationship of inputs to fair value

Investment property $ 5,863,441 Discounted cash

flow methodLong-term revenue

growth rate Note

The higher the long-term revenue

growth rate, the higher the fair

value;

Discount ratethe higher the

discount rate, the lower the fair value

Note: Details of the discount rate range are provided in Note 6(6).

13. SUPPLEMENTARY DISCLOSURES (1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.

119


E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 5.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 6.

I. Trading in derivative instruments undertaken during the reporting periods: Conversion rights of convertible bonds. Please refer to Note 6(13).

J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 9.

B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION Disclosure is not required.


Table 1

TAIWAN LAND DEVELOPMENT CORPORATIONNON-CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2015 AND 2014

Expressed in thousands of NTD(Except as otherwise indicated)

No. (Note 1) Creditor Borrower

Generalledger account（Note 2）

Is a related party

Maximumoutstanding

balance duringthe year endedDecember 31,

2015（Note 3）

Balance atDecember

31,2015

（Note 8）

Actual amount

drawn downInterest

rateNature of

loan（Note 4）

Amount oftransactions

with theborrower（Note 5）

Reasonfor short-

termfinancing（Note 6）

Allowance

fordoubtfulaccounts

CollateralLimit on loans

granted toa single party（Note 7）

Ceiling ontotal loans

granted（Note 7）

FootnoteItem Value

0 The Company Taiwan Innovation Development Corp.

"Other receivables-related parties"

Yes $ 800,000 $ - $ - 3.30% 2 $ - Working capital $ - None $ - $ 3,485,471 $ 8,713,678

0 The Company Taiwan Commerce Development Corp.


Yes 350,000 - - 3.30% 2 - Working capital - None - 3,485,471 8,713,678

0 The Company Taiwan Envirotech Development Corp.


Yes 100,000 100,000 80,000 3.30% 2 - Working capital - None - 3,485,471 8,713,678

1 Taiwan Innovation Development Corp.

Taiwan Commerce Development Corp.




Taiwan Envirotech Development Corp.


Yes 60,000 30,000 - 3.80% 2 - Working capital - None - 4,429,763 4,429,763

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with

stockholders, prepayments, temporary payments, etc. Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2015. Note 4: The column of ‘Nature of loan’ shall fill in ‘Business transaction or ‘Short-term financing’. (1) Business relationship is ‘1’. (2) Short-term financing is ‘2’. Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of

business transactions occurred between the creditor and borrower in the current year. Note 6: Fill in purpose of loan when nature of loan is for short-term financing, for example, repayment of loan, acquisition of

equipment, working capital, etc. Note 7: Fill in limit on loans granted to a single party and ceiling on total loans granted as prescribed in the creditor company’s

“Procedures for Provision of Loans”, and state each individual party to which the loans have been provided and the calculation for ceiling on total loans granted in the footnote.

121


Table 1





Is a related party

Maximumoutstanding


2015（Note 3）

Balance atDecember

31,2015

（Note 8）

Actual amount

drawn downInterest

rateNature of

loan（Note 4）



Reasonfor short-


Allowance

fordoubtfulaccounts




granted（Note 7）

FootnoteItem Value


















(1) Ceiling on total loans granted to others is 50% of the Company's net assets; limit on loans granted to a single party is 20% of the Company's net assets.

(2) Ceiling on total loans granted to others is 40% of the TIDC's net assets; limit on loans granted to a single party is 40% of TIDC's net assets.

Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has authorized the chairmanto loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.


Table 2

TAIWAN LAND DEVELOPMENT CORPORATIONProvision of endorsements and guarantees to othersYear ended December 31, 2015


Number(Note 1)

Endorser/guarantor

Party being endorsed/guaranteedLimit on

endorsements/guarantees

provided for asingle party（Note 3）

Maximumoutstanding

endorsement/guarantee

amount as ofDecember 31,

2015（Note 4）

Outstandingendorsement/

guaranteeamount at

December 31,2015

（Note 5）

Actual amountdrawn down（Note 6）

Amount ofendorsements/

guaranteessecured with

collateral

Ratio ofaccumulatedendorsement/

guarantee amount to

net asset value ofthe endorser/

guarantor company

Ceiling ontotal amount ofendorsements/

guaranteesprovided（Note 3）

Provision ofendorsements/guarantees by

parent company

to subsidiary(Note 7)

Provision ofendorsements/guarantees bysubsidiary to

parent company(Note 7）

Provision ofendorsements/guarantees to

the party inMainland

China（Note 7）

FootnoteCompany name

Relationshipwith the

endorser/guarantor（Note 2）

0 The Company Taiwan Innovation Development Corp. 2 $ 5,228,207 $ 380,000 $ 380,000 $ - $ - 2.18 $ 8,713,678 Y N N

0 The Company Taiwan Innovation Development Corp. 2 5,228,207 1,100,000 1,100,000 - - 6.31 8,713,678 Y N N

0The Company and Taiwan Innovation Development Corp.

Taiwan Commerce Development Corp. 2 5,228,207 2,100,000 2,100,000 1,760,000 - 12.05 8,713,678 Y N N

0 The Company Taikai Xiamen Trading Corp. 2 5,228,207 28,800 28,800 - - 0.17 8,713,678 Y N Y


Taiwan Commerce Development Corp. 2 9,966,966 650,000 - - - - 9,966,966 N N N

1 Taiwan Innovation Development Corp. The Company 4 9,966,966 86,074 86,074 86,074 86,074 0.78 9,966,966 N Y N

1 Taiwan Innovation Development Corp. The Company 4 9,966,966 1,000,000 1,000,000 1,000,000 1,000,000 9.03 9,966,966 N Y N

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six

categories; fill in the number of category each case belongs to: (1) Having business relationship. (2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed

subsidiary. (3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/

guaranteed company. (4) The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/

guarantor subsidiary. (5) Mutual guarantee of the trade as required by the construction contract. (6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in

proportion to its ownership.

Table 3

TAIWAN LAND DEVELOPMENT CORPORATIONHolding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)Year ended December 31, 2015


Securities held by Marketable securities（Note 1）

Relationship with thesecurities issuer （Note 2）

Generalledger account

As of December 31, 2015Footnote（Note 4）Number of shares Book value

（Note 3） Ownership (%) Fair value

Taiwan Innovation Development Corp.

Hwatai Bank Co.,Ltd,2010 first phase of the first priority financial bonds N/A Financial assets at fair value

through profit or loss - current 4(units) $ 4,000 - $ 4,000

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities

measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

123


Table 2



Number(Note 1)

Endorser/guarantor




Maximumoutstanding



2015（Note 4）


guaranteeamount at

December 31,2015

（Note 5）




collateral


guarantee amount to


guarantor company




parent company






China（Note 7）













Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s “Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.

(1) Ceiling on total endorsements/guarantees is 50% of the Company's net asset; limit on endorsements/guarantees to a single party is 30% of the Company's net assets.

(2) Ceiling on total endorsements/guarantees is 90% of TIDC's net assets; limit on endorsements/guarantees to a single party is 90% of TIDC's net assets.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period. Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the

banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company. Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by

subsidiary to listed parent company, and provision to the party in Mainland China.

Table 3












Table 4

TAIWAN LAND DEVELOPMENT CORPORATIONAcquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capitalYear ended December 31, 2015


InvestorMarketablesecurities(Note 1)

Generalledger

accountCounterparty

(Note 2)

Relationshipwith

the investor(Note 2)

Balance as atJanuary 1, 2015

Addition（Note 3）（Note 5） Disposal (Note 3) Balance as at

December 31, 2015

Number ofshares Amount Number of

shares Amount Number ofshares Selling price Book value Gain (loss)

on disposalNumber of

shares Amount

The CompanyTaiwan Innovation Development Corp. - common stock

Investment accounted for under the equity method

Taiwan Innovation Development Corp. Subsidiary 260,000,000 $ 2,600,000 451,812,000 $ 1,250,000 - $ - $ - $ - 711,812,000 $ 3,850,000

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave

the columns blank. Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they

individually reach NT$300 million or 20% of paid-in capital or more.

Table 5

TAIWAN LAND DEVELOPMENT CORPORATIONPurchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or moreYear ended December 31, 2015


Purchaser/seller Counterparty

Relationship with the

counterparty

TransactionDifferences in transaction terms

compared to third party transactions（Note 1）

Notes/accounts receivable(payable)

Footnote（Note 2）

Purchases(sales) Amount Percentage of total

purchases (sales) Credit term Unit price Credit term BalancePercentage of total

notes/accounts receivable(payable)



Same Parent Company (sales) $ 243,604 94.60% Based on the

contract Negotiated price Approximately the same as third parties $ 183,131 94.58% -

Note 1: If terms of related-party transactions are different from third-party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns.

Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Table 6

TAIWAN LAND DEVELOPMENT CORPORATIONReceivables from related parties reaching NT$100 million or 20% of paid-in capital or moreDecember 31, 2015


Creditor Counterparty Relationship with the counterparty

Balance as at December

31, 2015（Note 1）Turnover rate

Overdue receivables Amount collectedsubsequent to thebalance sheet date

Allowance fordoubtful accountsAmount Action taken

Taiwan Envirotech Development Corp. Taiwan Commerce Development Corp. Same Parent

Company $ 183,131 0.96 time $ - - $ 14,349 $-

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties⋯.

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

125


Table 4




Generalledger

accountCounterparty

(Note 2)

Relationshipwith




December 31, 2015




shares Amount





Note 5: The Company has capitalised its loans and paid cash to invest in TIDC, amounting to $650,000 and $600,000 in March and September 2015, respectively, and received stock dividends of 326,812 thousand shares of TIDC's in December 2015.

Table 5





counterparty













Table 6









Company $ 183,131 0.96 time $ - - $ 14,349 $-


Table 7

TAIWAN LAND DEVELOPMENT CORPORATIONSignificant inter-company transactions during the reporting periodsYear ended December 31, 2015


Number(Note 1) Company name Counterparty Relationship

(Note 2)

Transaction

General ledger account Amount Transaction terms

Percentage ofnon-consolidated totaloperating revenues or

total assets(Note 3)

3 Taiwan Envirotech Development Corp. Taiwan Commerce Development Corp. 3 Construction revenue $ 243,604 Note 6 41.14%

3 Taiwan Envirotech Development Corp. Taiwan Commerce Development Corp. 3 Service revenue 13,906 Note 5 2.35%

1 Taiwan Innovation Development Corp. Taiwan Land Development Corp. 2 Service revenue 43,890 Note 5 6.00%

1 Taiwan Innovation Development Corp. Wind Lion Plaza Corp. 3 Service revenue 10,921 Note 5 1.84%

2 Taiwan Commerce Development Corp. Taiwan Innovation Development Corp. 3 Rental revenue 34,115 Note 5 2.10%

2 Taiwan Commerce Development Corp. Wind Lion Plaza Corp. 3 Rental revenue 131,931 Note 5 22.28%

0 Taiwan Land Development Corp. Taiwan Commerce Development Corp. 1 Endorsements and guarantees 1,760,000 None 5.76%

1 Taiwan Innovation Development Corp. Taiwan Commerce Development Corp. 3 Endorsements and guarantees 〃 None 5.76%

1 Taiwan Innovation Development Corp. Taiwan Land Development Corp. 2 Endorsements and guarantees 1,086,074 None 3.56%

3 Taiwan Envirotech Development Corp. Taiwan Commerce Development Corp. 3 Other revenue 10,000 None 1.69%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the

number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

Table 8

TAIWAN LAND DEVELOPMENT CORPORATIONInformation on investees (not including investees in Mainland China)Year ended December 31, 2015


Investor Investee Location Main businessactivies

Initial investment amount Shares held as at December 31, 2015Net profit (loss)of the investee

for the yearended December

31, 2015

Investmentincome(loss)

recognised by theCompany for the yearended December 31,

Invester Investee Location 2015

Footnote Balance as at December

31, 2015


31, 2014 Number of shares Ownership (%) Book value

The Company Taiwan Innovation Development Corp. Taiwan Metropolis renewal conformity service $ 3,850,000 $ 2,600,000 711,811,629 100 $ 11,074,407 $ 1,620,039 $ 1,620,039 Subsidiary

The Company Hsinchu Hill Garden Corp. Taiwan Development of Hsinpu, Hsinchu 1,000 1,000 100,000 100 674 (61) (61) Subsidiary

The Company Taiwan Midtown Development Corp. Taiwan Development of Taichung 1,000 1,000 100,000 100 783 (61) (61) Subsidiary

The Company Taiwan LanYung Development Corp. Taiwan Development of Yilan 14,790 5,100 1,479,000 51 14,142 (962) (491) Subsidiary


Taiwan Commerce Development Corp. Taiwan Kinmen BOT project 1,550,000 1,300,000 200,111,016 100 2,638,410 59,674 59,674 Indirectly-owned subsidiary


Taiwan Envirotech Development Corp. Taiwan Construction and Technology 30,000 30,000 3,000,000 100 41,271 1,380 119 Indirectly-owned subsidiary


Taiwan City Development Corp. Taiwan City renewal integration 1,000 1,000 100,000 100 631 (96) (96) Indirectly-owned subsidiary


Hualien Culture Clubhouse Corp. Taiwan Development of Hualien 30,000 30,000 4,434,000 100 45,575 (361) (361) Indirectly-owned subsidiary

Taiwan Innovation Development Corp. Hualien Ocean Forum Corp. Taiwan Development of Hualien 1,000 1,000 100,000 100 388 (62) (62) Indirectly-owned subsidiary

127


Table 7




(Note 2)

Transaction














(1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based

on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.(Transactions less than 1% are not disclosed.)

Note 5: The above transactions were based on agreements with the counterparties. Note 6: Based on the sales rate and progress of construction in contract.

Table 8






31, 2015





31, 2015




















31, 2015





31, 2015



Taiwan Innovation Development Corp. Nanguowoo Corp. Taiwan International trade 10,000 10,000 1,000,000 100 8,702 205 205 Indirectly-owned subsidiary

Taiwan Innovation Development Corp. Wind Lion Plaza Corp. Taiwan General merchandise retail 300,000 150,000 30,000,000 100 7,100 (202,786) (202,786) Indirectly-owned subsidiary


Taiwan Talent Development Corp. Taiwan Human capital cultivation 6,000 3,000 600,000 100 3,071 (443) (443) Indirectly-owned subsidiary

Taiwan Innovation Development Corp. Dufry TCDC Ltd. Taiwan Management of duty free shops 29,400 29,400 2,940,000 49 17,891 (16,797) (8,230) Indirectly-owned subsidiary


Taiwan Wind Lion Travel Service Corp. Taiwan Travel agency related business 10,000 10,000 1,000,000 100 9,907 (29) (29) Indirectly-owned subsidiary

Taiwan Innovation Development Corp. Kinmen Forum Corp. Taiwan Hotel management and conference

and exhibition business 3,000 3,000 300,000 100 2,994 (6) (6) Indirectly-owned subsidiary

Table 9

TAIWAN LAND DEVELOPMENT CORPORATIONInformation on investments in Mainland ChinaYear ended December 31, 2015


Investee in Mainland China

Main business activities

Paid-in capital Investment

method（Note 1）

Accumulatedamount of

remittance fromTaiwan to

Mainland Chinaas of January 1,

2015

Amount remitted fromTaiwan to Mainland

China / Amount remitted backto Taiwan for the year

ended December 31, 2015

Accumulatedamount

of remittancefrom Taiwan toMainland Chinaas of December

31, 2015

Net income ofinvestee as ofDecember 31,

2015

Ownership heldby

the Company(direct orindirect)

Investment income(loss)

recognised by theCompany for the

yearended December

31,2015

Book value ofinvestments in

Mainland Chinaas of December

31, 2015

Accumulatedamount

of investmentincome

remitted back toTaiwan as of

December 31,2015

Footnote

Remitted toMainland

China

Remittedback toTaiwan

Taikai Xiamen Trading Corp.

Trading Business $ 61,172 (1) $ 61,172 $3,245 $ - $ 64,417 ($ 6,532) 100 ($ 6,532) $ 47,276 $ -

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to: (1) Directly invest in a company in Mainland China.. (2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. (3) Others Note 2: The financial statements that are audited and attested by R.O.C. parent company’s CPA. Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Company name Accumulated amount of remittance from Taiwan toMainland China as of December 31, 2015

Investment amount approved by the InvestmentCommission of the Ministry of Economic Affairs (MOEA)

Ceiling on investments in Mainland Chinaimposed by the Investment Commission ofMOEA

Taikai Xiamen Trading Corp. $ 64,417 $ 92,967 $ 10,456,414


129





31, 2015





31, 2015












Table 9






method（Note 1）




2015




Accumulatedamount


31, 2015


2015

Ownership heldby




yearended December

31,2015



31, 2015

Accumulatedamount

of investmentincome


December 31,2015

Footnote

Remitted toMainland

China











5. 2015 Consolidated Financial Statements of The Parent Company and Subsidiaries Certified by CPA

Taiwan Land Development Corporation and its subsidiaries Consolidated Financial Statement of Affiliates:

　　For the 2015 year (from January 1 to December 31, 2015), companies that should be included in the consolidated financial statement of affiliates as provided by the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as what should be included in the consolidated financial statements of parent and subsidiary companies as provided in SFAS No. 10, and the relevant information that should be disclosed in the consolidated financial statements of affiliates has been disclosed in the consolidated financial statements of the parent and its subsidiaries. The Company shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declared that

Company Name: Taiwan Land Development Corporation and its subsidiaries

Representative: Chiu, Fu-Sheng

February 18, 2016

131


REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of Taiwan Land Development Corporation

　　We have audited the accompanying consolidated balance sheets of Taiwan Land Development Corporation and its subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.　　We conducted our audits in accordance with the “Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those 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 provide a reasonable basis for our opinion.　　In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Land Development Corporation and its subsidiaries as of December 31, 2015 and 2014, and their financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.　　Taiwan Land Development Corporation has been consigned to develop the industrial parks since the period it was government-operated. According to the consignment contract, the Company should pay all the development costs in advance, with the payments to be reimbursed when the land is sold. The land development receivables increased by $1,152,931 thousand, the collection of land development receivables amounted to $575,524 thousand for the year ended December 31, 2015, and the uncollected balance of land development receivables was $5,105,397 thousand as of December 31, 2015. The Company’s management has implemented operational policies as disclosed in Note 12(1), and negotiated to collect the payments on behalf of the government (the consignor) earlier.　　We have also audited the non-consolidated financial statements of the Company as of and for the years ended December 31, 2015 and 2014 (not presented herein), and have expressed a modified unqualified opinion on those non-consolidated financial statements.

February 18, 2016Taipei, TaiwanRepublic of China


TAIWAN LAND DEVELOPMENT CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan dollars)

Assets NotesDecember 31, 2015 December 31, 2014AMOUNT % AMOUNT %

Current assets1100 Cash and cash equivalents 6(1) $ 2,622,966 8 $ 4,155,290 15

1110 Financial assets at fair value through profit or loss - current 6(2) 4,080 - 4,000 -

1150 Notes receivable, net - - 282 -1170 Accounts receivable, net 6(3) 2,988 - 2,721 -1200 Other receivables 6(4) and 8 5,107,881 17 4,548,082 161220 Current income tax assets 1,895 - 365 -130X Inventories, net 6(5) and 8 1,159,774 4 1,315,529 51410 Prepayments 7 323,608 1 190,257 11470 Other current assets 8 380,880 1 458,964 2 11XX Total current assets 9,604,072 31 10,675,490 39

Non-current assets

1550 Investments accounted for using equity method 6(6) 17,891 - 26,121 -

1600 Property, plant and equipment, net 6(7) and 8 1,390,278 5 892,790 31760 Investment property, net 6(8) and 8 18,267,391 60 14,793,170 541780 Intangible assets 6(9) 35,266 - 22,213 -1840 Deferred income tax assets 6(29) 23,270 - 33,142 -1900 Other non-current assets 6(10) and 8 1,206,410 4 1,160,487 4 15XX Total non-current assets 20,940,506 69 16,927,923 61 1XXX Total assets $ 30,544,578 100 $ 27,603,413 100

Liabilities and EquityCurrent liabilities

2100 Short-term borrowings 6(12) 1,752,061 6 1,079,000 42110 Short-term notes and bills payable 6(13) 186,132 1 185,702 12150 Notes payable 316,887 1 112,982 -2170 Accounts payable 153,354 1 226,066 12200 Other payables 6(14) 2,558,794 8 3,061,778 112230 Current income tax liabilities 1,952 - 17,677 -2300 Other current liabilities 6(15)(17) 4,396,495 14 3,955,893 14 21XX Total current liabilities 9,365,675 31 8,639,098 31

Non-current liabilities2530 Corporate bonds payable 6(16) 1,489,265 5 500,000 22540 Long-term borrowings 6(17) 1,654,971 5 2,283,171 82570 Deferred income tax liabilities 6(29) 563,185 2 418,190 22600 Other non-current liabilities 30,537 - 23,590 - 25XX Total non-current liabilities 3,737,958 12 3,224,951 12 2XXX Total liabilities 13,103,633 43 11,864,049 43

Equity attributable to owners of parentShare capital 6(20)

3110 Share capital - common stock 7,258,813 24 6,791,103 25Capital surplus 6(21)

3200 Capital surplus 316,057 1 324,608 1Retained earnings 6(22)

3310 Legal reserve 761,373 2 230,157 13320 Special reserve 6,873,013 23 1,403,462 53350 Unappropriated retained earnings 2,683,961 9 7,418,817 27

Other equity interest3400 Other equity interest 5,734 - 6,738 -3500 Treasury stocks 6(20) ( 471,595) ( 2) ( 440,271) ( 2)

31XX Equity attributable to owners of the parent 17,427,356 57 15,734,614 57

36XX Non-controlling interest 13,589 - 4,750 - 3XXX Total equity 17,440,945 57 15,739,364 57

Commitments and contingent liabilities 6(17) and 9

Significant events after the balance sheet date 11

3X2X Total liabilities and equity $ 30,544,578 100 $ 27,603,413 100 The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated February 18, 2016.

133


TAIWAN LAND DEVELOPMENT CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31(Expressed in thousands of New Taiwan dollars, except for earning per share amount)

Items Notes

Years ended December 31

2015 2014(Adjusted)

AMOUNT % AMOUNT %

4000 Sales revenue 6(4)(23) $ 592,069 100 $ 1,791,486 100

5000 Operating costs 6(5)(27) ( 130,416) ( 22) ( 61,061) ( 3)

5950 Net operating margin 461,653 78 1,730,425 97

Operating expenses 6(27)(28)

6100 Selling expenses ( 322,320) ( 55) ( 311,182) ( 17)

6200 General & administrative expenses ( 516,175) ( 87) ( 462,134) ( 26)

6000 Total operating expenses ( 838,495) ( 142) ( 773,316) ( 43)

6900 Operating (loss) profit ( 376,842) ( 64) 957,109 54

Non-operating income and expenses

7010 Other income 6(24) 12,532 2 23,537 1

7020 Other gains and losses 6(25) 2,641,111 446 4,498,881 251

7050 Finance costs 6(26) ( 69,425) ( 12) ( 15,692) ( 1)

7060 Share of loss of associates and joint ventures accounted for using equity method 6(6) ( 8,230) ( 1) ( 3,279) -

7000 Total non-operating income and expenses 2,575,988 435 4,503,447 251

7900 Profit before income tax 2,199,146 371 5,460,556 305

7950 Income tax expense 6(29) ( 159,541) ( 27) ( 148,541) ( 8)

8200 Profit for the year $ 2,039,605 344 $ 5,312,015 297

Other comprehensive incomeComponents of other comprehensive income that will be reclassified to profit or loss

8361 Financial statement translation differences of foreign operations ($ 1,004) - 1,753 -

8500 Total comprehensive income for the year $ 2,038,601 344 $ 5,313,768 297

Profit (loss), attributable to:

8610 Owners of the parent $ 2,040,076 344 5,312,165 297

8620 Non-controlling interest ( 471) - ( 150) -

$ 2,039,605 344 $ 5,312,015 297

Comprehensive income (loss) attributable to:

8710 Owners of the parent $ 2,039,072 344 5,313,918 297

8720 Non-controlling interest ( 471) - ( 150) -

$ 2,038,601 344 $ 5,313,768 297

Earnings per share (in dollars) 6(30)

9750 Basic earnings per share $ 2.92 $ 7.39

9850 Diluted earnings per share $ 2.88 $ 7.38

The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated February 18, 2016.


TAIW

AN

LA

ND

DEV

ELO

PMEN

T C

OR

POR

ATIO

N A

ND

SU

BSI

DIA

RIE

SC

ON

SOLI

DAT

ED S

TATE

MEN

TS O

F C

HA

NG

ES IN

EQ

UIT

YFO

R T

HE

YEA

RS

END

ED D

ECEM

BER

31,

201

5 A

ND

201

4(E

xpre

ssed

in th

ousa

nds

of N

ew T

aiw

an d

olla

rs)

Not

es

Equ

ity a

ttrib

utab

le to

ow

ners

of t

he p

aren

t

Non

-co

ntro

lling

inte

rest

Tota

l equ

itySh

are

capi

tal

-com

mon

st

ock

Cap

ital

surp

lus

Ret

aine

d E

arni

ngs

Fina

ncia

l st

atem

ents

tra

nsla

tion

diffe

renc

es

of fo

reig

n op

erat

ions

Trea

sury

st

ocks

Tota

lLe

gal

rese

rve

Spe

cial

re

serv

eUn

appr

opria

ted

reta

ined

ea

rnin

gs

Year

201

4B

alan

ce a

t Jan

uary

1, 2

014

$ 6,

553,

003

$ 32

8,63

3$

145,

841

$ 1,

233,

727

$ 2,

796,

971

$ 4,

985

($

380,

549)

$ 10

,682

,611

$ -

$ 10

,682

,611

App

ropr

iatio

n an

d di

strib

utio

n of

reta

ined

ear

ning

s:6(

22)

Lega

l res

erve

app

ropr

iate

d-

-84

,316

-(

84,3

16)

--

--

-S

peci

al re

serv

e ap

prop

riate

d-

--

169,

735

( 16

9,73

5)-

--

--

Cas

h di

vide

nds

of o

rdin

ary

shar

es-

--

-(

124,

648)

--

( 12

4,64

8)-

( 12

4,64

8)S

tock

div

iden

ds o

f ord

inar

y sh

ares

311,

620

--

-(

311,

620)

--

--

-P

urch

ase

of tr

easu

ry s

hare

s-

--

--

-(

377,

352)

( 37

7,35

2)-

( 37

7,35

2)Is

suan

ce o

f em

ploy

ee s

tock

opt

ions

6(19

)(21

)-

18,0

94-

--

--

18,0

94-

18,0

94Tr

easu

ry s

hare

s so

ld to

em

ploy

ees

6(20

)(21

)-

( 10

,303

)-

--

-23

2,29

422

1,99

1-

221,

991

Ret

irem

ent o

f tre

asur

y sh

ares

6(20

)(21

)(

73,5

20)

( 11

,816

)-

--

-85

,336

--

-P

rofit

(los

s) fo

r the

yea

r-

--

-5,

312,

165

--

5,31

2,16

5(

150)

5,31

2,01

5C

hang

e in

cum

ulat

ive

trans

latio

n ad

just

men

ts-

--

--

1,75

3-

1,75

3-

1,75

3C

hang

e in

non

-con

trolli

ng in

tere

sts

-

-

-

-

-

-

-

-

4,

900

4,

900

Bal

ance

at D

ecem

ber 3

1, 2

014

$ 6,

791,

103

$ 32

4,60

8$

230,

157

$ 1,

403,

462

$ 7,

418,

817

$ 6,

738

($

440,

271)

$ 15

,734

,614

$ 4,

750

$ 15

,739

,364

Year

201

5B

alan

ce a

t Jan

uary

1, 2

015

$ 6,

791,

103

$ 32

4,60

8$

230,

157

$ 1,

403,

462

$ 7,

418,

817

$ 6,

738

($

440,

271)

$ 15

,734

,614

$ 4,

750

$ 15

,739

,364

App

ropr

iatio

n an

d di

strib

utio

n of

reta

ined

ear

ning

s:6(

22)

Lega

l res

erve

app

ropr

iate

d-

-53

1,21

6-

( 53

1,21

6)-

--

--

Spe

cial

rese

rve

appr

opria

ted

--

-5,

469,

551

( 5,

469,

551)

--

--

-S

tock

div

iden

ds o

f ord

inar

y sh

ares

638,

710

--

-(

638,

710)

--

--

-C

ash

divi

dend

s of

ord

inar

y sh

ares

--

--

( 12

7,74

2)-

-(

127,

742)

-(

127,

742)

Pur

chas

e of

trea

sury

sha

res

--

--

--

( 36

4,03

9)(

364,

039)

-(

364,

039)

Issu

ance

of e

mpl

oyee

sto

ck o

ptio

ns6(

19)(

21)

-30

0-

--

--

300

-30

0Tr

easu

ry s

hare

s so

ld to

em

ploy

ees

6(20

)(21

)-

( 30

0)-

-(

7,18

3)-

148,

254

140,

771

-14

0,77

1Is

suan

ce o

f con

verti

ble

bond

s-

4,38

0-

--

--

4,38

0-

4,38

0R

etire

men

t of t

reas

ury

shar

es6(

20)(

21)

( 17

1,00

0)(

12,9

31)

--

( 53

0)-

184,

461

--

-P

rofit

(los

s) fo

r the

yea

r-

--

-2,

040,

076

--

2,04

0,07

6(

471)

2,03

9,60

5C

hang

e in

cum

ulat

ive

trans

latio

n ad

just

men

ts-

--

--

( 1,

004)

-(

1,00

4)-

( 1,

004)

Cha

nge

in n

on-c

ontro

lling

inte

rest

s

-

-

-

-

-

-

-

-

9,31

0

9,31

0B

alan

ce a

t Dec

embe

r 31,

201

5$

7,25

8,81

3$

316,

057

$ 76

1,37

3$

6,87

3,01

3$

2,68

3,96

1$

5,73

4($

47

1,59

5)$

17,4

27,3

56$

13,5

89$

17,4

40,9

45Th

e ac

com

pany

ing

note

s ar

e an

inte

gral

par

t of t

hese

con

solid

ated

fina

ncia

l sta

tem

ents

.S

ee re

port

of in

depe

nden

t acc

ount

ants

dat

ed M

arch

3, 2

015.

135


TAIWAN LAND DEVELOPMENT CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan dollars)

Notes Years ended December 31 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax $ 2,199,146 $ 5,460,556Adjustments

Income and expenses having no effect on cash flows (Reversal of allowance) Provision for inventory obsolescence and market price decline 6(5) ( 1,871) 2,660

Share of loss of associates accounted for using equity method 6(6) 8,230 3,279Depreciation 6(7)(27) 30,001 19,271Reversal of impairment loss on non-financial assets 6(11)(25) ( 1,588) ( 16,385)(Gain) loss on disposal of property, plant and equipment 6(25) ( 145) 11Adjustments of fair value of investment properties 6(25) ( 2,640,321) ( 4,547,595)Loss on disposal of investment properties 6(25) - 455Amortization 6(9)(27) 4,761 4,770Interest income 6(24) ( 7,269) ( 7,802)Interest expense 6(26) 320,550 239,339Expenses incurred on share-based payment transactions 6(19) 300 18,094

Changes in operating assets and liabilitiesChanges in operating assets

Notes receivable, net 282 879Accounts receivable, net ( 267) ( 2,359)Other receivables, net ( 561,962) 111,962Inventories ( 55,683) ( 45,738)Prepayments ( 133,351) 44,137Other non-current assets - 67,324

Changes in operating liabilitiesAccounts payable 1,401 7,930Notes payable 8,416 ( 709)Other payables ( 553,986) 698,285Other current liabilities 25,180) ( 502,088)

Cash (outflow) inflow generated from operations ( 1,358,176) 1,556,276Interest received 7,218 7,794Interest paid ( 320,765) ( 235,345)Income tax paid ( 19,715) ( 17,853)

Net cash flows (used in) from operating activities ( 1,691,438) 1,310,872 CASH FLOWS FROM INVESTING ACTIVITIES

Decrease in other assets - current $ 78,084 $ 356,772Acquisition of investments accounted for using equity method - ( 29,400)Acquisition of property, plant and equipment 6(31) ( 170,633) ( 34,691)Proceeds from disposal of property, plant and equipment 429 -Acquisition of investment properties 6(31) ( 722,848) ( 926,619)Proceeds from disposal of investment properties - 13,596Acquisition of intangible assets 6(9) ( 7,658) ( 1,661)Increase in prepayments for business facilities ( 5,661) ( 86,549)Increase in other non-current assets ( 130,209) ( 132,092)

Net cash flows used in investing activities ( 958,496) ( 840,644)CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term loans 2,947,780 700,000Repayment of short-term loans ( 2,274,719) ( 700,000)Increase (decrease) in short-term notes and bills payable 430 ( 187)Proceeds from issuance of bonds 991,677 500,000Proceeds form long-term debt 170,000 1,579,200Repayment of long-term debt ( 382,777) ( 1,140,000)Increase (decrease) in guarantee deposit received 6,947 8,313Cash dividends paid 6(22) ( 127,742) ( 124,648)Payments to acquire treasury shares ( 364,039) ( 377,352)Treasury shares sold to employees 140,771 221,991Change in non-controlling interests 9,310 4,900

Net cash flows from financing activities 1,117,638 672,217 Effect of exchange rate changes on cash and cash equivalents ( 28) 65

Net (decrease) increase in cash and cash equivalents ( 1,532,324) 1,142,510Cash and cash equivalents at beginning of year 4,155,290 3,012,780 Cash and cash equivalents at end of year $ 2,622,966 $ 4,155,290 The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated February 18, 2016.


TAIWAN LAND DEVELOPMENT CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2015 AND 2014(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION Taiwan Land Development Corporation (the “Company”) was established on June 30, 1964 as a government-

operated company and the principal business was land development. In July 1972, the Company was renamed as “Taiwan Trust and Development Corporation” and its principal business became financial services and land development. The Company became a listed company in January 1999 after privatization.

To comply with the government’s “Second Financial Reformation Policy” and the rules of Trust Enterprise Act, the Company sold its trust department through a public bidding in August 2005. Consequently, the Company became a professional land development company from a financial institution with the approval of the Financial Supervisory Commission on September 13, 2005. The stockholders subsequently resolved to change the company name back to its original name “Taiwan Land Development Corporation” on December 14, 2005 with the principal business of land development and urban renewal development. The Company changed its type of industry in the Taiwan Stock Exchange to Building Material and Construction after March 2006.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on February 17, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3,2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9,‘Financial instruments’) as endorsed by the FSC and Regulations Governing the Preparation of Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the “2013 version of IFRS”) in preparing the consolidated financial statements. The impact of adopting the 2013 version of IFRS is listed below: A . IAS 1, ‘Presentation of financial statements’

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

B. IFRS 12, ‘Disclosure of interests in other entities’

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. Also, the Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

C. IFRS 13, ‘Fair value measurement’

The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. Also, the standard requires disclosures about fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group will disclose additional information about fair value measurements accordingly.

137


(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

New Standards, Interpretations and Amendments Effective Date by

International Accounting Standards Board

IFRS 9, ‘Financial instruments' January 1, 2018

Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)

To be determined by International Accounting Standards Board

Investment entities: applying the consolidation exception (amendments to IFRS 10, IFRS 12 and IAS 28) January 1, 2016

Accounting for acquisition of interests in joint operations (amendments to IFRS 11) January 1, 2016

IFRS 14, 'Regulatory deferral accounts' January 1, 2016

IFRS 15, ‘Revenue from contracts with customers' January 1, 2018

IFRS 16, ‘Leases' January 1, 2019



Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) January 1, 2017

Clarification of acceptable methods of depreciation and amortization (amendments to IAS 16 and IAS 38) January 1, 2016

Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016

Defined benefit plans: employee contributions (amendments to IAS 19R) July 1, 2014

Equity method in separate financial statements (amendments to IAS 27) January 1, 2016

Recoverable amount disclosures for non-financial assets (amendments to IAS 36) January 1, 2014

Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) January 1, 2014

IFRIC 21, ‘Levies’ January 1, 2014



Improvements to IFRSs 2012-2014 January 1, 2016

The Group is assessing the potential impact of the new standards, interpretations and amendments above. The impact on the consolidated financial statements will be disclosed when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out

below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

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

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

(b) Investment property is subsequently measured at fair value.


B. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

B. Subsidiaries included in the consolidated financial statements:

Name of Investor Name of Subsidiary Main Business Activities

Ownership (%)

December 31, 2015

December 31, 2014

The Company Taiwan InnovationDevelopment Corporation (TIDC)

Urban renewal services Marketing and e-commerce 100 100

The Company Hsinchu Hill Garden Corporation Land development of Hsinpu Town in Hsinchu 100 100

The Company Taiwan Midtown Development Corporation

Real estate lease and business Land development of Taichung 100 100

The Company Taiwan LanYung Development Corporation

Real estate lease and business Land development of IlanReal estate management

51 51

TIDC Taiwan Commerce Development Corporation

Development of Jinmen commerce and leisure parkReal estate management Retail trading

100 100

TIDC Taiwan Envirotech Development Corporation Information and technology business 100 100

TIDC Taiwan City DevelopmentCorporation Urban renewal services 100 100

TIDC Hualien Ocean Forum CorporationReal estate lease and business Hualien Kuang Hua Lohas Creative Park development business

100 100

TIDC Hualien Culture Clubhouse Corporation

Real estate lease and business Hualien Kuang Hua Lohas Creative Park development business

100 100

TIDC Wind Lion Plaza Corporation General merchandise retail 100 100

TIDC Nanguowoo Corporation International trade 100 100

TIDC Taiwan Talent Development Corporation Human capital cultivation 100 100

TIDC Taikai Xiamen TradingCorporation Trading business 100 100

TIDC Taiwan Wind Lion Travel Service Corporation Travel agency related business 100 100

TIDC Kinmen Forum Corporatio Hotel management Conference and exhibition business 100 100

139


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

D. Adjustments for subsidiaries with different balance sheet dates: None.

E. Significant restrictions: None.

F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

B. Translation of foreign operations

The operating results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

(b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

(c)All resulting exchange differences are recognised in other comprehensive income.

(5) Classification of current and non-current items

The Group classifies assets and liabilities relating to the construction department as current and non-current by its operating cycle (which is normally longer than one year). The following are the classification criteria for other departments:

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realised within twelve months from the balance sheet date;

(d) Cash, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:


(a) Liabilities that are expected to be paid off within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be paid off within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

(a) Hybrid (combined) contracts; or

(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

C. Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.


Accounts receivable are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(8) Consigned land development business

A. The government organizations consign land development business to the Company, and the Company is also in charge of marketing the development in some cases.

B. During the consignment period, the Company, as a consignee, pays on behalf of consignors for compensation fees of land collection, construction costs, supervision costs and inspection costs, etc. Consignors compute interest payable on cost paid by the Company. When conducting consigned land development business, including industrial parks, land restructuring and land repurchase, costs are recognised pursuant to the agreements in each consignment contract and contracts with contractors. When the proceeds from sale of land exceed the cost, in accordance with Article 47 of Act for Industrial Innovation, developing organizations can make an agreement on receiving certain portion of profit with the commission organizations. In the case of industrial parks development, the Company recognises service income based on sales rate and progress of construction, when meeting all the following criteria:

(a) Costs attributed to the contract can be reasonably confirmed.

(b) Except for the collectible costs, other contract costs can be reasonably estimated.

(c) The collectibility of service income can be reasonably confirmed.

C. Development costs are debited to the account “Land Development Receivables”, and receipts from buyers are credited to the account “Other current liabilities – deposit for sale of industrial park received in advance”, which are then offset with land development receivables when buyers settle the last payment.

141


(9) Impairment of financial assets

A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

B. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:

(a) Significant financial difficulty of the issuer or debtor; or

(b) A breach of contract, such as a default or delinquency in interest or principal payments.

C. As the Group has assessed that there is objective evidence that the financial assets measured at amortised cost are impaired, the amount of the impairment loss is measured as 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, and is recognised in profit or loss. 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 loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(10) Inventories

A. Except for land development agency, the Company’s inventories are land for construction, construction in progress and land and buildings for sale.

B. Development costs are stated at cost, and qualified interest costs incurred during construction are capitalised. Inventories are transferred to construction costs on ratio-of-area method or ratio-of-selling-price method consistently. Inventories are transferred to property for self-use when they are for self-use. When the purpose of use is changed and the inventories are then leased to others under operating leases, inventories are transferred to investment property.

C. Buildings and land held for sale, construction in progress and land held for construction site are evaluated at the lower of cost or net realisable value, and the individual item approach is used in the comparison of cost and net realisable value.

D. Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The item by item approach is used in applying the lower of cost and net realisable value.

(11) Investments accounted for using equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

C. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.


E. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.


A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings 55 years

Transportation equipment 5~15 years

Utility equipment 4~15 years

Machinery and equipment 5 years

Leasehold assets 5 years

Other equipment 4~10 years

Leasehold improvements 5 years


A. Investment property is property held to earn rent or increase value or for both (including property under construction for the purpose). Investment property also includes land whose purpose of use has not been decided and is thus considered as capital appreciation. Investment property is transferred to property for self-use when it is for self-use. Investment property is transferred to inventory when it is held-for-sale.

B. An investment property is stated initially at its cost and measured subsequently using the fair value model. A gain or loss arising from a change in the fair value of investment property is recognised in profit or loss.

(14) Intangible assets

A. Trademarks are stated at cost and amortised over the estimated life of 47 years using the straight-line method.

B. Operating rights are stated at cost and amortised over the estimated life of 10 years using the straight-line method.

C. Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 to 5 years.


The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less

143


costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(16) Borrowings

A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(17) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(18) Financial liabilities and equity instruments

A. Ordinary corporate bonds payable

Ordinary corporate bonds issued by the Group are initially recognised at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method.

B. Convertible corporate bonds payable

Convertible corporate bonds issued by the Group contain conversion options (that is, the bondholders have the right to convert the bonds into the Group’s common shares by exchanging a fixed amount of cash for a fixed number of common shares) and call options. The Group classifies the bonds payable and derivative features embedded in convertible corporate bonds on initial recognition as a financial asset or an equity instrument (‘capital surplus—stock warrants’) in accordance with the substance of the contractual arrangement and the definitions of a financial asset and an equity instrument. Convertible corporate bonds are accounted for as follows:

(a) Call options embedded in convertible corporate bonds are recognised initially at net fair value as ‘financial assets at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets at fair value through profit or loss’.

(b) Bonds payable of convertible corporate bonds is initially recognised at fair value and subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method.

(c) Conversion options embedded in convertible corporate bonds issued by the Group, which meet the definition of an equity instrument, are initially recognised in ‘capital surplus—stock warrants’ at the residual amount of total issue price less amounts of ‘financial assets at fair value through profit or loss’ and ‘bonds payable—net’ as stated above. Conversion options are not subsequently remeasured.


(19) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

C. Employees’ compensation, directors’ and supervisors’ remuneration

Employees’ compensation, directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(20) Employee share-based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(21) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

145


(22) Treasury shares

Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(23) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(24) Revenue recognition

A. Construction revenues

The Group’s activities involve developing and investing in fixed assets and mainly focus on developing and selling residential and enterprise buildings. As the customer have limited ability to influence the design or the customer can make little changes to basic design, the sale of residential and enterprise buildings is considered as sale of goods. Revenue should be recognised when the Group has delivered the goods to the customer, significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity.

B. Sales of services

The Group serves as an agent of land development on behalf of government organizations and is responsible to sell partial development projects. Sales of services are recognised at the percentage of completion when the following conditions are met:

(a) Amount of sales revenue can be measured reliably;

(b) It is probable that the future economic benefits associated with the transaction will flow to the entity;

(c) Percentage of completion of transactions at the end of reporting period can be measured reliably;

(d) Costs incurred and will incur to complete the transaction can be measured reliably.

Please refer to Note 4(8) for related revenue recognised.

C. Catering and entertainment income

The Group provides catering and film related entertainment services. Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, amusement tax, returns, rebates and discounts for the of catering services rendered and sales of tickets to external customers in the ordinary course of the Group’s activities. Revenue arising from the catering services rendered and sales of tickets should be recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

D. Sales of goods

The Group provides goods-related services. Revenue is measured at the fair value of the consideration received or receivable taking into account of increment tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods should be recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks


and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

(25) Operating segments

The information on operating segments of the Group is consistent with the internal management report which is prepared for the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources to the operating segments and for evaluating their performance.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Realisability of deferred income tax assets

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets.

As of December 31, 2015, the Group recognised deferred income tax assets amounting to $23,270.

(2) Measurement of investment property

As investment property is measured at fair value, the Group must determine the net fair value of investment property such as land and buildings on balance sheet date using experts’ judgements and estimates. The Group must adjust costs to fair value based on the valuation reports by experts. Such assessment of investment property is principally based on the demand for the products within the specified period in the future, trading trends of buildings and experts’ judgements and estimates, and may influence the measurement of fair value. Therefore, there might be material changes to the evaluation.

As of December 31, 2015, the Group has recognised investment property of $18,267,391.

6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents


Cash on hand and revolving funds $ 8,572 $ 2,951

Checking accounts and demand deposits 2,614,394 4,152,339

$ 2,622,966 $ 4,155,290

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

B. As of December 31, 2015 and 2014, details of cash and cash equivalents pledged to others as collateral are provided in Note 8.

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

Items December 31, 2015 December 31, 2014

Current items:

Financial assets held for trading Hwatai Bank-Financial bonds $ 4,000 $ 4,000

Derivative financial instruments-Bonds payable 80 -

$ 4,080 $ 4,000

147


A. For the years ended December 31, 2015 and 2014, the Group did not recognise any gain or loss on these financial assets.

B. The counterparties of the Group’s debt instrument investments have good credit quality; their credit rating levels are twBBB and above. The maximum exposure to credit risk at balance sheet date is the carrying amount of financial assets at fair value through profit or loss.

C. The Group has no financial assets at fair value through profit or loss pledged to others.



Accounts receivable $ 17,108 $ 16,841

Less: allowance for bad debts ( 14,120) ( 14,120)

$ 2,988 $ 2,721

A. The Group’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.

B. As of December 31, 2015 and 2014, the Group has no accounts receivable that were past due but not impaired.

C. Movement analysis of financial assets that were impaired is as follows:

(a) As of December 31, 2015 and 2014, the Group’s accounts receivable that were impaired amounted to $14,120.

(b) Movements on the Group’s provision for impairment of accounts receivable are as follows:

2015

Individual provision Group provision Total

At January 1 $ 14,120 $ - $ 14,120

Provision for impairment - - -

Reversal of impairment - - -

At December 31 $ 14,120 $ - $ 14,120

2014

Individual provision Group provision Total

At January 1 $ 14,120 $ - $ 14,120

Provision for impairment - - -

Reversal of impairment - - -

At December 31 $ 14,120 $ - $ 14,120

(4) Other receivables


Land development receivables $ 5,105,397 $ 4,527,990

Other receivables 2,484 20,092

$ 5,107,881 $ 4,548,082


A. The details on land development receivables were as follows:



Consignors



Taichung Port Warehouse Park 17,432 176,632 Export Processing Zone, MOEA Taichung City 1st Precision Machinery Innovation Technology Park 151,943 2,836,463 Taichung City Government

Taichung City 2nd Precision Machinery Innovation Technology Park - 455,450 Taichung City Government


Taichung City, Wen- Shan Industrial Park 39,694 4,593 Taichung City GovernmentTaichung Aviation Industrial Park and Astronavigation 89,464 7,388 Taichung City Government

$ 5,105,397 $ 5,689,912



Consignors


Taichung Industrial Park Technology Building - 172,512 Taichung City Government Kaohsiung Kangshan Benzhou Industrial Park 831,057 1,431,426 Kaohsiung City Government

Taichung Port Warehouse Park 17,432 176,632 Export Processing Zone, MOEA Taichung City 1st Precision Machinery Innovation Technology Park - 2,667,206 Taichung City Government

Taichung City 2nd Precision Machinery Innovation Technology Park - 427,839 Taichung City Government


Taichung City, Wen- Shan Industrial Park 33,682 - Taichung City Government Taichung Aviation Industrial Park and Astronavigation 79,703 - Taichung City Government

$ 4,527,990 $ 5,610,010

B. The movements on land development receivables for the year ended December 31, 2015 are as follows:

Items Beginning balances Additions Collections Ending balances


Kaohsiung Kangshan Benzhou Industrial Park 831,057 26,919 - 857,976

Taichung City 1st Precision Machinery Innovation Technology Park - 505,781 ( 353,838) 151,943



Taichung Port Warehouse Park 17,432 - - 17,432

Others 113,385 15,773 - 129,158

$ 4,527,990 $ 1,152,931 ($ 575,524) $ 5,105,397

149


The movements on land development receivables for the year ended December 31, 2014 are as follows:

Items Beginning balances Additions Collections Ending balances


Kaohsiung Kangshan Benzhou Industrial Park 1,085,821 77,271 ( 332,035) 831,057

Taichung City 1st Precision Machinery Innovation Technology Park 250,021 1,666,683 ( 1,916,704) -


Taichung Industrial Park Technology Building 35,031 17,516 ( 52,547) -


Taichung Port Warehouse Park 9,211 8,221 - 17,432

Others 113,385 - - 113,385

$ 4,666,738 $ 2,501,637 ($ 2,640,385) $ 4,527,990

C. For the years ended December 31, 2015, and 2014, interests paid on behalf of consignors recognised as deduction of interest expense were $139,453 and $150,485, respectively.

D. The reasons for the Company not providing reserve allowance for uncollectible accounts are as follows:

(a) The debtors of the land development receivables are government organizations, and the possibility of non-payment is remote.

(b) According to the development contracts, proceeds from the sale and rental of the land are to be used first to repay the land development receivables. In addition, the Company can also claim for any related subsidies offered by the government to repay the development costs. Therefore, there is no significant doubt or uncertainty on the collectability of the land development receivables.

(c) The government is the subject of the development and also the owner of the land. Hence, the collectability of the development costs is not associated with the market values of the land. The inspected costs and prices are greater than costs already incurred and the land was sold on inspected prices and the proceeds were all collected. When settling the industrial park revenues and costs, in revenue-above-cost cases, the difference should be handed over to the industrial parks development and management fund based on the “Statute for Industrial Innovation” Article 47. Otherwise, the Company would be compensated by the fund according to the “Act for Industrial Innovation.”

E. The Group’s other receivables that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.

F. As of December 31, 2015 and 2014, the Group did not hold other receivables that were past due but not impaired.

G. Please refer to Note 8 for the details of pledged land development receivables.

(5) Inventories

A. The details of the Group’s inventories are as follows:


Land $ 357,561 $ 357,959

Building 188,084 188,278

Construction in progress 604,046 759,509

Merchandise inventory 48,268 49,729

Restaurant supplies 694 804

1,198,653 1,356,279

Less: allowance for price decline ( 38,879) ( 40,750)

$ 1,159,774 $ 1,315,529


B. Related loss (gain) on inventory:


2015 2014

Land cost $ 399 $ 797

Building cost 194 408

Cost of sales 93,386 29,409

Food service costs 10,028 11,202

Loss on (reversal of allowance for) inventory obsolescence and market price decline ( 1,871) 2,660

$ 102,136 $ 44,476

Due to the change in real estate market recovery, the Group recognised(reversal of allowance for)loss on inventory obsolescence and market price decline amounting to ($1,871) and $2,660for the years ended December 31, 2015 and2014, respectively, which were in accordance with appraisal reports issued by independentappraisers.

C. Interest expense capitalized for the years ended December 31, 2015 and 2014 amounted to $22,306 and $6,979, respectively.

D. Please refer to Note 8 for the details of pledged inventories as of December 31, 2015 and 2014.

(6) Investments accounted for using equity method

A. Taiwan Innovation Development Corp. and Dufry International AG have jointly established Dufry TCDC Ltd. in March 2014. Taiwan Innovation Development Corp. has invested $29,400 and acquired 49% of capital share. Dufry TCDC Ltd. engages in providing products and services at Wind Lion Plaza, Kinmen. As of December 31, 2015 and 2014, the investment balance were $17,891 and $26,121, respectively. The share of loss of associates and joint ventures accounted for using equity method were $8,230 and $3,279, respectively for the years ended December 31, 2015 and 2014.

2015 2014

At January 1 $ 26,121 $ -

Addition of investments accounted for using equity method - 29,400

Share of profit or loss of investments accounted for using equity method ( 8,230) ( 3,279)

At December 31 $ 17,891 $ 26,121

B. The summarized financial information of the associates that are material to the Group is as below:

Dufry TCDC Ltd.


Current assets $ 36,512 $ 42,338

Non-current assets - 12,138

Current liabilities - ( 1,168)

Non-current liabilities - -

Total net assets $ 36,512 $ 53,308

Share in associate's net assets $ 17,891 $ 26,121

Goodwill - -

Carrying amount of the associate $ 17,891 $ 26,121

Dufry TCDC Ltd.



Revenue $ - $ -

Loss for the period from continuing operations ( 16,749) ( 6,961)

Loss for the period from discontinued operations - -

Other comprehensive income, net of tax - -

Total comprehensive income ($ 16,749) ($ 6,961)

151




Utility equipment

Machineryand

equipment Leasehold

assetsOther

equipmentLeasehold

improvements Construction

in progress

Total

At January 1, 2015Cost $ 461,184 $ 247,490 $ 18,736 $ 22,251 $ 546 $ 3,500 $ 42,119 $ 30,212 $ 142,970 $ 969,008


- ( 28,573) ( 4,139) ( 9,752) ( 74) ( 365) ( 10,711) ( 22,604) - ( 76,218)

$ 461,184 $ 218,917 $ 14,597 $ 12,499 $ 472 $ 3,135 $ 31,408 $ 7,608 $ 142,970 $ 892,790

2015Opening net book amount $ 461,184 $ 218,917 $ 14,597 $ 12,499 $ 472 $ 3,135 $ 31,408 $ 7,608 $ 142,970 $ 892,790

Additions - - 2,160 1,113 - - 14,646 - 429,301 447,220

Disposals - - ( 284) - - - - - - ( 284)

Transferred - - 15,263 - - - 64,528 - - 79,791

Depreciation charge - ( 5,884) ( 2,808) ( 2,644) ( 50) ( 875) ( 11,808) ( 5,932) - ( 30,001)

Reversal of impairment loss - 1,588 - - - - - - - 1,588

Net exchange differences - ( 798) ( 28) - - - - - - ( 826)

Closing net book amount $ 461,184 $ 213,823 $ 28,900 $ 10,968 $ 422 $ 2,260 $ 98,774 $ 1,676 $ 572,271 $ 1,390,278

At December 31, 2015Cost $ 461,184 $ 248,122 $ 35,843 $ 23,364 $ 546 $ 3,500 $ 121,294 $ 30,212 $ 572,271 $ 1,496,336


- ( 34,299) ( 6,943) ( 12,396) ( 124) ( 1,240) ( 22,520) ( 28,536) - ( 106,058)

$ 461,184 $ 213,823 $ 28,900 $ 10,968 $ 422 $ 2,260 $ 98,774 $ 1,676 $ 572,271 $ 1,390,278


Utility equipment

Machineryand

equipment Leasehold

assetsOther

equipmentLeasehold

improvements Construction

in progress

Total

At January 1, 2014Cost $ 461,184 $ 245,789 $ 5,790 $ 11,882 $ 75 $ 2,770 $ 19,221 $ 28,573 $ 73,843 $ 849,127


- ( 38,875) ( 2,856) ( 8,148) ( 55) ( 1,270) ( 6,769) ( 16,899) - ( 74,872)

$ 461,184 $ 206,914 $ 2,934 $ 3,734 $ 20 $ 1,500 $ 12,452 $ 11,674 $ 73,843 $ 774,255

2014Opening net book amount $ 461,184 $ 206,914 $ 2,934 $ 3,734 $ 20 $ 1,500 $ 12,452 $ 11,674 $ 73,843 $ 774,255

Additions - - 11,754 9,334 236 3,500 17,452 1,639 69,127 113,042

Disposals - - - ( 9) - - ( 2) - - ( 11)

Transferred - - 1,171 1,385 236 ( 1,385) 5,481 - - 6,888

Depreciation charge - ( 5,831) ( 1,315) ( 1,945) ( 20) ( 480) ( 3,975) ( 5,705) - ( 19,271)

Reversal of impairment loss - 16,385 - - - - - - - 16,385

Net exchange differences - 1,449 53 - - - - - - 1,502

Closing net book amount $ 461,184 $ 218,917 $ 14,597 $ 12,499 $ 472 $ 3,135 $ 31,408 $ 7,608 $ 142,970 $ 892,790

At December 31, 2014Cost $ 461,184 $ 247,490 $ 18,736 $ 22,251 $ 546 $ 3,500 $ 42,119 $ 30,212 $ 142,970 $ 969,008


- ( 28,573) ( 4,139) ( 9,752) ( 74) ( 365) ( 10,711) ( 22,604) - ( 76,218)

$ 461,184 $ 218,917 $ 14,597 $ 12,499 $ 472 $ 3,135 $ 31,408 $ 7,608 $ 142,970 $ 892,790


A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:


2015 2014

Amount capitalized $ 10,797 $ 2,763

Interest rate 2.69%~3.55% 3.58%~3.69%

B. Impairment information about the property, plant and equipment is provided in Note 6(11).

C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.


2015 2014

At January 1 $ 14,793,170 $ 9,287,635

Additions - from subsequent expenditures 620,591 971,991

Reclassifications 213,309 -

Disposals - ( 14,051)

Adjustment of fair value 2,640,321 4,547,595

At December 31 $ 18,267,391 $ 14,793,170

A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:


2015 2014

Rental income from the lease of the investment property $ 23,042 $ 7,732

Direct operating expenses arising from the investment property that generated rental income in the period $ 11,265 $ 4,367

Direct operating expenses arising from the investment property that did not generate rental income in the period $ 8,252 $ 15,019

B. Fair value basis of investment property

The Group’s investment property is mainly located in Jinhu Township in Kinmen County, Ji’an Township in Hualien County, Xinpu Township in Hsinchu County and Beitun Dist. in Taichung City. Except for the investment property located in Jinhu Township in Kinmen County which has started to operate, others are still under development. The investment property is mainly built as hotels and shopping centres for collecting rents. Rent includes a certain percentage of the lessee’s sales calculated based on the business practices. The related assumptions as of December 31, 2015 and 2014 are as follows:

December 31, 2015

(a) The location and valuation method of the Group’s investment property:


Kinmen BOT Jinhu Township, Kinmen County Income approach

Ji'an Commercial Zone 1 to Commercial Zone 4 Ji’an Township, Hualien County Income approach

Ji'an Commercial Zone 5 Ji’an Township, Hualien County Income approach

Community lots Ji’an Township, Hualien County Income approach



(b) Kinmen BOT is building Wind Lion Plaza and a star-rated hotel on investment property held by Taiwan Commerce Development Corp. in Jinhu Township, Kinmen County. The investment property is evaluated using income approach. The shopping centre is expected to operate for the next 45 years and the star-rated hotel is expected to be completed in 2018 and to operate for the next 41 years. The net income and ending value of the objects are analysed based on the future discounted cash flow, and are discounted at the valuation date for sum up.

153


i. Future cash inflow of Kinmen BOT:


Shopping centre rental revenue (per dollar/per level ground/monthly) Approximately $1,300~$2,700 Slightly higher than the estimated rent

Parking lot rental revenue (per dollar/per parking space/hourly) $20 -

Hotel rental revenue (per dollar/per room/daily) Approximately $3,000~$3,800 Approximate to the estimated rent

ii. Future cash outflow of Kinmen BOT:

a. Operating costs

Expendable expenses and direct expenses are operating costs and are estimated to constitute 20%~30% of the rental revenue.


Operating expenses are personnel expenses, promotion expenses, repairs and maintenance expenses, utility expenses and taxes which are necessary for and directly related to operations.

c. Substantial replacement allowance (including beginning cost of construction sales).

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Discount rates are further determined based on individual characteristics such as liquidity, risk, value increment and the difficulty of management. As of December 31, 2015, the discount rate was estimated to be 4.78%.

iv. As of December 31, 2015, the fair value of the investment property of Kinmen BOT was based on the valuation report by Chang Shih-Hsien from Zhan Mao Real Estate Appraisals Office, and the valuation date was December 23, 2015.

(c) Commercial Zone 1, Commercial Zone 2, Commercial Zone 3, Commercial Zone 4 and Commercial Zone 5 are all analysed based on discounted cash flow of income approach, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discounted rate. All objects are expected to generate net cash inflow annually for the next 10 years after completion. The net cash inflow is discounted annually at an appropriate discounted rate and equals the total of the present value.

i. Future cash inflow is mainly hotel rental revenue and shopping centre rental revenue. Assessment of revenue is as follows:


Ji'an Commercial Zone 1 with Commercial Zone 2, Commercial Zone 3 and Commercial Zone 4 :


Shopping centre rental revenue (per dollar/per level ground/monthly) $3,000 Approximate to the estimated rent

Ji'an commercial zone 5:


Shopping centre rental revenue (per dollar/per level ground/monthly) $1,100 Approximate to the estimated rent


a. Operating costs





c. Substantial replacement allowance (including beginning cost of construction sales and interior design)

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2015,Ji'anCommercial Zone1 to Commercial Zone 4 and Commercial Zone 5 adopted a discount rate of 4.995% and 4.925%, respectively.

iv. As of December 31, 2015, the fair value of the investment property of Ji'anCommercial Zone1 to Commercial Zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 23, 2015.

(d) Community lots are analysed using discounted cash flow of income approach, which is to compare with adjacent markets and rental of the lots, taking into account the lots’ condition, planned usage and rent in nearby or similar area.

Pre-calculated rent after adjustment is analysed using the cash flow, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discounted rate.

i. Future cash inflow of community lots:

a. Rent income


Rent of buildings (per dollar/per level ground/monthly) Approximately $600~$1,400 Approximate to the estimated rent

Parking lot rental revenue (per dollar/ per parking space / monthly) $2,000 Approximate to the

estimated rent

b. Interest income on rental deposits: estimated using the rent for 3 months and interest rate for one-year time deposits (1.4%).

c. Losses on earnings: calculated based on vacancy for 2 months every year.

ii. Future cash outflow of community lots:

a. Construction costs

Construction cost is approximately $150 per ping (or 3.306 square metres), which is estimated based on development project in the neighbouring area and is estimated to be incurred in 2016~2018.


Operating expenses include depreciation, taxes, repairs and maintenance expenses, administrative expenses and fire insurance.

c. Labour costs

Labour costs are estimated at 20% of income value of built-up property.

iii. Discount rate was calculated at the interest rate for two-year time deposits offered by the Directorate General of the Postal Remittances and Savings Bank plus 0.8%. As of December 31, 2015, the discount rate which applies to the community lots is 2.105%.

iv. As of December 31, 2015, the fair value of the investment property of community lots is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 23, 2015.

(e) The land under development in Xinpu of Hsinchu County and Dakeng of Taichung City cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The investment property measured using land

155


development analysis is mainly for construction of buildings under 5 floors:


Estimated total sales $ 2,282,786 $ 2,449,920



Appraiser Firm Excellence International Real Estate Appraiser Firm


Appraiser Lin Chin-Sheng Chen, Yueh-Ling

Valuation date (Note) September 30, 2015 September 30, 2015

Note: The reasonableness of fair value was proved by the effective appraisal issued by the appraisers on December 31, 2015.

December 31, 2014

(a) The location and valuation method of the Group’s investment property:


Kinmen BOT Jinhu Township, Kinmen County Income approach

Ji'an commercial zone 1 to commercial zone 4 Ji’an Township, Hualien County Income approach

Ji'an commercial zone 5 Ji’an Township, Hualien County Income approach



(b) Kinmen BOT is building Wind Lion Plaza and a star-rated hotel on investment property held by Taiwan Commerce Development Corp. in Jinhu Township, Kinmen County. The investment property is evaluated using income approach. The shopping centre was completed in 2014 and is expected to operate for the next 46 years and the star-rated hotel is expected to be completed in 2018 and to operate for the next 42 years. The net income and ending value of the objects are analysed based on the future discounted cash flow, and are discounted at the valuation date for sum up.

i. Future cash inflow of Kinmen BOT:


Shopping centre rental revenue (per dollar/per level ground/monthly) Approximately $1,300~$2,700 Slightly higher than the estimated rent

Parking lot rental revenue (per dollar/per parking space/hourly) $20 -

Hotel rental revenue (per dollar/per room/daily) Approximately $3,000~$3,800 Approximate to the estimated rent

ii. Future cash outflow of Kinmen BOT:

a. Operating costs

Expendable expenses and direct expenses are operating costs and are estimated to constitute 20%~30% of the rental revenue.


Operating expenses are personnel expenses, promotion expenses, repairs and maintenance expenses, utility expenses and taxes which are necessary for and directly related to operations.

c. Substantial replacement allowance (including beginning cost of construction sales).

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Discount rates are further determined based on individual characteristics such as liquidity, risk, value increment and the difficulty of management. As of December 31, 2014, the discount rate was estimated to be 4.57%.

iv. As of December 31, 2014, the fair value of the investment property of Kinmen BOT was based on the valuation report by Chang Shih-Hsien from Zhan Mao Real Estate Appraisals Office, and the valuation date was December 1, 2014.

(c) Commercial Zone 1to Commercial Zone 5 are both analysed based on discounted cash flow of income


approach, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discount rate. All objects are expected to generate net cash inflow annually for the next 10 years after completion. The net cash inflow is discounted annually at an appropriate discount rate and equals the total of the present value.

i. Future cash inflow is mainly hotel rental revenue and shopping centre rental revenue. Assessment of revenue is as follows:


Ji'an Commercial Zone 1 to Commercial Zone 4 :


Shopping centre rental revenue (per dollar/per level ground/monthly) $3,000 Approximate to

the estimated rent

Ji'an Commercial Zone 5 :


Shopping centre rental revenue (per dollar/per level ground/monthly) $1,140~$3,000 Approximate to

the estimated rent


a. Operating costs




c. Substantial replacement allowance (including beginning cost of construction sales and interior design).

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 2.125%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2014, Ji’an Commercial zone 1 to Commercial zone 4 and Commercial zone 5 adopted a discount rate of 5.27% and 3.43%, respectively.

iv. As of December 31, 2014, the fair value of the investment property of Ji’an Commercial zone 1 to Commercial zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 1, 2014.

(d) The land under development in Xinpu of Hsinchu County and Dakeng of Taichung City cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The investment property measured using land development analysis is mainly for construction of buildings under 5 floors:


Estimated total sales $ 1,951,829 $ 2,360,065



Appraiser Firm Excellence International Real Estate Appraiser Firm



Valuation date December 1, 2014 December 1, 2014

157


C. For the year ended December 31, 2015, as the purpose of inventories was changed to be leased, inventories were reclassified as property investment amounting to $213,309.

D. The fair value information about the investment property is provided in Note 12(4).

E. Amount of borrowing costs capitalized as part of investment property and the range of the interest rates for such capitalization are as follows:


2015 2014

Amount capitalised $ 78,569 $ 63,420

Interest rate 3.55%~4.107% 3.300%~4.095%

F. On November 3, 2009, the subsidiary of TIDC, Taiwan Commerce Development Corporation (TCDC), signed a 50-year “Build, Operate and Transfer” (BOT) contract with the government of Jinmen County to develop Jinmen Commerce and Leisure Park. TCDC incurred original costs for the development of Jinmen Commerce and Leisure Park for $3,222,187, recognized as “Investment property” as of December 31, 2015. The related agreements are as follows:

(a) TCDC provided a guarantee of $50,000 through a bank as compliance deposit.

(b) In February, 2010, Jinmen County set the right of superficies of Jinmen Commerce and Leisure Park to TCDC. TCDC shall return the right of superficies upon expiration of the term. TCDC has to disburse the rental payment to the government of Jinmen County every year according to the “Regulation for favorable rentals regarding public land lease and right of superficies in infrastructure projects” and related laws.

(c) The Company has paid development royalties amounting to $15,000 to the government of Jinmen County in accordance with the agreement and will pay annual royalties computed as a certain percentage of operating income after its commercial launch.

G. Information about the investment property that was pledged to others as collateral is provided in Note 8.

(9) Intangible assets

Operating rights Trademark Computer software Total

At January 1, 2015

Cost $ 9,500 $ 20,337 $ 4,269 $ 34,106

Accumulated amortisation and impairment ( 7,363) ( 3,302) ( 1,228) ( 11,893)

$ 2,137 $ 17,035 $ 3,041 $ 22,213

2015

Opening net book amount $ 2,137 $ 17,035 $ 3,041 $ 22,213

Additions－ acquired separately - 875 6,783 7,658

Transferred - - 10,156 10,156

Amortisation charge ( 949) ( 2,468) ( 1,344) ( 4,761)

Closing net book amount $ 1,188 $ 15,442 $ 18,636 $ 35,266

At December 31, 2015

Cost $ 9,500 $ 21,212 $ 21,208 $ 51,920


$ 1,188 $ 15,442 $ 18,636 $ 35,266


Operating rights Trademark Computer software Total

At January 1, 2014

Cost $ 9,500 $ 19,502 $ 3,443 $ 32,445

Accumulated amortisation and impairment ( 6,413) ( 108) ( 602) ( 7,123)

$ 3,087 $ 19,394 $ 2,841 $ 25,322

2014

Opening net book amount $ 3,087 $ 19,394 $ 2,841 $ 25,322

Additions－ acquired separately - 835 826 1,661

Amortisation charge ( 950) ( 3,194) ( 626) ( 4,770)

Closing net book amount $ 2,137 $ 17,035 $ 3,041 $ 22,213

At December 31, 2014

Cost $ 9,500 $ 20,337 $ 4,269 $ 34,106


$ 2,137 $ 17,035 $ 3,041 $ 22,213

A. The Group recognized amortization charges on intangible assets as general and administrative expenses in the consolidated statements of comprehensive income for the years ended December 31, 2015 and 2014.

B. TIDC signed a contract of acquisition for Jun Guo Construction Corporation (Jun Guo Construction) with Jun Guo Corporation (Jun Guo). TIDC paid by installment the total price of $9,500 to acquire all of Jun Guo’s equity. The excess of purchase price over the recognizable net assets fair value was recognized as “intangible assets – operating rights” based on the appraisal report issued by Ernst & Young Financial Advisory Co., Ltd. and amortized over the estimated life of 10 years.

C. Trademark is the logo of Jinmen Wind Lion Plaza designed by an external designer. The design contract price amounted to $17,829. As of December 31, 2015, TCDC had paid $9,430.

(10) Other non-current assets


Receivables for planning and investigation $ 21,201 $ 21,201

Long-term receivables for selling land 417,176 417,176

Prepayment for land in Hsinchu County 341,215 311,590

Long-term prepaid expenses 46,442 43,376

Long-term prepaid rents 145,569 145,569

Prepayment for business facilities 2,263 86,549

Refundable deposits 78,962 21,079

Other financial assets 68,033 66,007

Others 85,549 47,940

$ 1,206,410 $ 1,160,487

A. The receivables for planning and investigation are fees prepaid by the Company on behalf of the Industrial Development Bureau, Ministry of Economic Affairs (MOEA) for the project “Preparation of pre-project expenses for Fenglin Industrial Park in Hualien County and Chihshang Industrial Park in Taitung County”. In accordance with the resolution of MOEA, as the Company finishes settling costs, MOEA will prepare a budget for reimbursement.

B. The Company sold the research building of South Environmental Protection Technology Park in Kangshan Industrial Park to Kaohsiung City Government in 2004. According to the contract, Kaohsiung City Government should pay by installment for 30 years, and the Company recognized discounted receivable and interest expense accordingly. After renegotiation in 2008, the Kaohsiung City Government agreed that the Company take the uncollected receivables plus interest as uncollected land development receivables in accordance with the land development contract of Kangshan Industrial Park. In accordance with Jing-Gong-Zi Letter No.10135463200 issued by Kaohsiung City Government on December 6, 2012. Furthermore,

159


the settlement of Kangshan Industrial Park development business was accepted by the Kaohsiung City Government in accordance with the development contract and the “Act for Industrial Innovation”.

C. The Company acquired land nos. 105, 106, 236, 236-1, 237~240, 259, 259-1, 260, 262, 265, 267, 268, 279~284, 287, 436, 442, 444, 454, 456~459 and 466 in Hsinpu Town, Hsinchu County for development. This acquisition was conducted using the Company Chairman’s name, as agricultural land is not allowed to be acquired by any corporate entity based on the Agricultural Development Act. The land is pledged to the Company and the Chairman also signed the letter of commitment to secure the Company’s ownership.

D. The Company has signed contracts of superficies on nos. 744-47, 744-48, and 744-49 in Xintou, Jinhu Township, Jinmen County with Northern Region Branch, National Property Administration, MOF for a duration of 50 years in December 2012 and July 2013, respectively. The Company has paid royalty of $45,689 and $99,880 in full when the contract was signed and was recorded as long-term prepaid rents.

E. Refundable deposits are mainly performance guarantee deposits of $23,459 for tendering a bid for the land used for industry in Taichung Precision Machinery Technology Innovation Park Phase II and guarantees of $20,000 for applying provisional attachment and compulsory enforcement for the lawsuit relating to sections numbered 15 and 18 in Guanghua St., Ji’an Township, Hualien County, paid by TIDC. The remaining of refundable deposits is mainly lease deposits.


The Group recognized reversal of impairment loss for the years ended December 31, 2015 and 2014amounting to $1,588 and $16,385, respectively. Details of suchgain are as follows:


Recognized in profit or loss

Recognized in other comprehensive income



Recognized in profit or loss

Recognized in other comprehensive income


Due to the change in real estate market recovery, the Group recognized “reversal of allowance for loss on non-financial assets”, which were in accordance with appraisal reports issued by independent appraisers.

(12) Short-term borrowings


Bank loans

King’s Town Bank secured loans $ 1,176,000 $ 700,000

Taiwan Cooperative Bank secured loans 45,000 45,000

Hwatai Bank secured loans 410,000 310,000

Bank of Panhsin secured loans 24,000 24,000

Mega Bank secured loans 97,061 -

Total $ 1,752,061 $ 1,079,000

Interest rate range 2.93%~3.54% 3.2%~3.67%

A. In May 2015, the creditor banks have approved to extend the balance of Taiwan Cooperative Bank secured loans amounting to $45,000 to be paid in May 5, 2016.

B. Please refer to Notes 7 and 8 for the details of pledged assets.


(13) Notes and bills payable


Commercial paper payable –International Bills $ 37,000 $ 37,000

Commercial paper payable –Taiwan Cooperative Bills 150,000 150,000

187,000 187,000

Less: discount on commercial paper payable ( 868) ( 1,298)

$ 186,132 $ 185,702

Interest rate 2.788%~2.968% 2.788%~2.888%


(14) Other payables


Rent payable for land development $ 59,443 $ 57,655

Accrual for industrial zone construction 1,525,688 2,082,173

Remaining funds for industrial zone 500,839 478,961

Accrued expenses 220,584 116,929

Payables for industrial zone construction 188,514 315,893

Other payables - other 63,726 10,167

$ 2,558,794 $ 3,061,778

(15) Other current liabilities


Deposit for sale of industrial park received in advance $ 34,883 $ 38,323

Long-term liabilities-current portion 4,125,198 3,709,775

Others 236,414 207,795

$ 4,396,495 $ 3,955,893

(16) Corporate bonds payable


Ordinary corporate bond

1st issuance in 2014 $ 500,000 $ 500,000

1st issuance in 2015 800,000 -

1,300,000 500,000

Convertible corporate bonds

1st domestic issuance 200,000 -

Less: Discount on bonds payable ( 10,735) -

189,265 -

Total $ 1,489,265 $ 500,000

A. The issuance of domestic convertible bonds by the Group

(a) The terms of the 1st domestic secured convertible bonds issued by the Group are as follows

i. The Group issued $200,000, 0%, 1st domestic secured convertible corporate bonds, as approved by the regulatory authority. The bonds mature 3 years from the issue date (August 18, 2015 ~ August 18, 2018) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on August 18, 2015.

ii. The bondholders have the right to ask for conversion of the bonds into common shares of Company during the period from the date after one month of the bonds issue to 10 days before the maturity date, except the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

161


iii. The conversion price was set effective on August 10, 2015. The calculation is based on 110% of the basic price, which is one of the arithmetic mean of the closing prices at 1, 3 and 5 working days prior to the effective date. Ex-rights or ex-dividends price shall be calculated if the ex-rights or ex-dividends date is prior to the conversion date. Conversion prices shall be adjusted in accordance with the formula if the shares go ex-rights or ex-dividends prior to the issuance date. In accordance with the aforementioned approach, the conversion price was NT$12.05 per share at issuance.

iv. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the reset conversion price is higher than the conversion price before the reset, the conversion price will not be adjusted. As of December 31, 2015, the conversion price was adjusted to NT$10.76.

v. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after one month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after one month of the bonds issue to 40 days before the maturity date.

vi. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

(b) Regarding the issuance of convertible bonds, the equity conversion options amounting to $4,380 were separated from the liability component and were recognised in ‘capital surplus—stock warrants’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IAS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rate of the bonds payable after such separation was 2.67%.

B. The Group issued $800,000, 1.55%, 1st domestic secured ordinary corporate bonds in 2015, as approved by the regulatory authority. The bonds mature 5 years from the issue date (June 9, 2015 ~ June 9, 2020) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on June 9, 2015.

C. The Group issued $500,000, 1.36%, 1st domestic secured ordinary corporate bonds in 2014, as approved by the regulatory authority. The bonds mature 3 years from the issue date (April 25, 2014 ~ April 25, 2017) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on April 25, 2014.

(17) Long-term borrowings

Type of loans Interest rate range Contract duration December 31, 2015 Tsaotun Township Farmers’ Association in Nantou County 3.225% 2013.05.22~2016.05.22 $ 239,000

Syndicated loans provided by Mega Bank and others 3.900% 2014.09.01~2019.09.01 1,780,000

Taiwan Life 3.680% 2013.08.16~2016.08.16 220,000

Syndicated loans provided by Agricultural Bank of Taiwan 3.35% 2012.12.27~2016.12.27 435,000

Syndicated loans provided by Mega Bank and others 2.9%~3.2211% 2012.08.31~2017.08.31 3,088,000

The First Credit Cooperative of Hualien 2.175% 2014.08.29~2034.08.29 18,169

5,780,169


$ 1,654,971


Type of loans Interest rate range Contract duration December 31, 2014

Yuanta Commercial Bank 2.970% 2012.06.25~2015.06.25 $ -

Mega Bank 3.100% 2011.11.19~2015.11.29 -

Tsaotun Township Farmers’ Association in Nantou County 3.295% 2013.05.22~2016.05.22 239,000

Syndicated loans provided by Mega Bank and others 3.974% 2014.09.01~2019.09.01 1,610,000

Taiwan Life 3.750% 2013.08.16~2016.08.16 340,000

Syndicated loans provided by Agricultural Bank of Taiwan and others 3.295% 2012.12.27~2015.12.27 435,000

Syndicated loans provided by Mega Bank and others 2.974%~3.295% 2012.08.31~2017.08.31 3,350,000

The First Credit Cooperative of Hualien 2.250% 2014.08.29~2034.08.29 18,946

5,992,946


$ 2,283,171

A. The Company has applied for credit line of $239,000 with the Agricultural Bank of Taiwan (the host organizer) and Tsaotun Township Farmers’ Association in Nantou County (the co-host and manage organiser) for turnover of construction. The credit line has been fully utilised as of December 31, 2015. The principal will be repaid in full at maturity.

B. To develop Jinmen Commerce and Leisure Park, Taiwan Commerce Development Corporation (TCDC) signed a long-term syndicated loan contract to obtain a credit line of $2,100,000 with Mega Bank and other 5 banks on August 18, 2014, including credit line A for $600,000, credit line B for $1,200,000 and credit line C for $300,000. Credit line A was used to pay off the unpaid syndicated loan signed with Bank SinoPac in 2012. Credit line B was used to pay for construction costs of the Kinmen Commerce and Leisure Park. Credit line C was used to pay for construction expenses of the Kinmen Commerce and Leisure Park. None of the credit lines is revolving. As of December 31, 2015, the unused credit line was $320,000, and the drawn amount and unpaid balance both ware $1,780,000. According to the contract’s provisions, the Group must maintain certain financial ratios that are inspected annually, based on the financial statements audited by the borrower’s independent accountant who is approved by the bank. If the Group fails to meet the requirement, the Group would be required to pay the penalties monthly at the agreed upon annual rate until the date of improvement. According to the contract, the Group has pledged all its shares of Taiwan Commerce Development Corp. at Mega Bank on October 31, 2014. The loan will be subsequently repaid at the agreed upon debt service ratio starting from March 2016 and will be repaid in full at maturity.

C. To develop business and improve the financial structure, TIDC signed a loan contract with the following bank:

(a) TIDC signed a loan contract of $380,000 with Taiwan Life Insurance Corporation (Taiwan Life). The credit line has been fully utilised. The unpaid balance was $220,000. The loan is repaid at $10,000 monthly starting from September 2014 and shall be repaid in full at maturity.

(b) The Company signed a long-term syndicated loan contract to obtain a credit line of $435,000 with Agricultural Bank of Taiwan and 15 other banks in December, 2012. As of December 31, 2015, the credit line has been fully utilised. The principal will be repaid in full at maturity.

(c) In December 2015, TIDC signed a supplementary contract with Agricultural Bank of Taiwan and 15 other financial institutions, which postponed the maturity date from December 27, 2015 to December 27, 2016.

D. To develop business and improve the financial structure, the Company signed a long-term syndicated loan contract to obtain a credit line of $5,300,000 with Mega Bank and other 16 banks on August 14, 2012, including credit line A for $4,800,000 and credit line B for $500,000. Credit line A was used to pay off the syndicated loan signed in 2005, and credit line B was used for working capital. Only credit line B is revolving. The credit line A has been fully utilised as of December 31, 2015. The unused credit line B was $100,000 as of December 31, 2015. According to the contract’s provisions, the Company must maintain certain financial ratios inspected at least once every half year. If not, the Company would be required to pay the penalties monthly until the date of improvement. The loan was successively repaid at the agreed upon debt service ratio starting from August 2013 and $1,200,000 is repaid at maturity.

163


E. In order to purchase employee dormitories, Hualien Culture Clubhouse Corp. has signed a loan contract with The First Credit Cooperative of Hualien in August 2014. The amount of the loan is $19,200 and borrowing period is 20 years. The principal and interest are repaid monthly.

F. To develop Taichung City 1st Precision Machinery Innovation Technology Park, the Company signed a loan contract of $1,000,000 with Yuanta Bank in 2006 and the credit line has been fully paid.

G. To develop Taichung City 2nd Precision Machinery Innovation Technology Park, the Company signed a loan contract of $2,500,000 with Mega International Commercial Bank (Mega Bank) in September 2011 and the credit line has been fully paid.

H. Please refer to Notes 7 and 8 for the details of pledged assets.

(18) Pensions

A. Effective July 1, 2005, the Company and subsidiaries established a funded defined contribution pension plan (the “New Plan”) under the Labor Pension Act. Employees have the option to be covered under the New Plan. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are portable when the employment is terminated.

B. The pension costs under the defined contribution pension plan for the years ended December 31, 2015 and 2014 were $10,675 and $9,310, respectively.

(19) Share-based payment

A. For the years ended December 31, 2015 and 2014, the Group’s share-based payment arrangements were as follows:

Type of arrangement Grant date Quantity granted (in thousand shares)

Vesting conditions




Abovementioned share-based payment arrangements are settled by equity.

B. Details of the share-based payment arrangements are as follows:

2015 2014

No. ofoptions

(in thousands)


(in dollars)

No. ofoptions

(in thousands)


(in dollars)

Options outstanding at January 1 - $ - - $ -

Options granted 26,500 11.12 21,560 11.11

Options exercised ( 12,000) 11.17 ( 20,060) 11.11

Options expired - - ( 1,500) -

Options outstanding at December 31 14,500 10.58 - -

C. The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2015 and 2014 was $14.23 and $11.95 (in dollars), respectively.

D. Expenses incurred on share-based payment transactions are shown below:


2015 2014

Equity-settled $ 300 $ 18,094


(20) Share capital

A. As of December 31, 2015, the authorized common stock was $9,900,000 with par value ofNT$10 (dollars) per share, and the outstanding common stock was $7,258,813 (725,881thousand shares).

Movements in the number of the Company’s ordinary shares outstanding are as follows:

Unit: In thousands of shares

2015 2014

2015 2014

At January 1 640,410 623,240

Treasury stock purchased by employees 12,000 20,060

Shares retired ( 33,381) ( 34,052)

Earnings transferred to capital increase 63,871 31,162

At December 31 682,900 640,410

B. Treasury stocks

(a) Reason for share reacquisition and movements in the number of the Company’s treasury stocks are as follows:


Reason for reacquisition

December 31, 2015

Number ofshares

(thousand shares) Carrying amount

The Company To be reissued to employees 42,981 $ 471,595


Reason for reacquisition

December 31, 2014

Number ofshares

(thousand shares) Carrying amount

The Company Protect shareholders' interests 17,100 $ 184,461

To be reissued to employees 21,600 255,810

$ 440,271

(b) Reacquisition of treasury shares is as follows:


11th 12th 13th 14th

Term of reacquisition To be reissued To be reissued to employees

Reason for reacquisition (Note) To be reissued To be reissued

to employees to employees to employees

Type and quantity of reacquired shares (shares in thousands)

Common stock 4,900

Common stock 8,800

Common stock 8,977

Common stock 10,704



8th 9th 10th 11th

Term of reacquisition Enhance the Company’s credit

Enhance the Company’s credit

rating and the stockholders’

equity

Enhance the Company’s credit

rating and the stockholders’

equity

To be reissued to

Reason for reacquisitionrating and the stockholders’

equityemployees

Type and quantity of reacquired shares (shares in thousands)

Common stock 2,000

Common stock 5,352

Common stock 17,100

Common stock 9,600


Note: The change of reason for reacquisition has been resolved by the Board of Directors on April 28, 2015 and was approved by FSC.

165


(c) In 2015, the Board of Directors has resolved to transfer the shares to employees from the 5th and 6th time treasury share buyback amounting to 1,500 thousand shares and 10,500 thousand shares, respectively. The post-tax amount, net of securities transactions tax, was $16,824 and $123,947, respectively.

(d) On February 25, 2015, the Board of Directors has resolved to retire 17,100 thousand shares from the 10th time treasury share reacquired amounting to $184,461. Capital surplus - additional paid-in capital and capital surplus - treasury share transactions were decreased by $7,154 and $5,777, respectively. The capital reduction date was set to be effective on March 3, 2015, which has been registered.

(e) On September 25, 2014, the Board of Directors has resolved to retire 7,352 thousand shares from 8th and 9th time treasury share reacquired amounting to $85,336. Capital surplus - additional paid-in capital and capital surplus - treasury share transactions were decreased by $3,076 and $8,740, respectively. The capital reduction date was set to be effective on October 27, 2014.

(f) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury stock should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital reserve.

(g) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

(h) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should be reissued to the employees within three years and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(i) Events after the Balance Sheet Date

i. The above (b), the Company’s 14th time treasury share reacquired was completed on January 22, 2016. The Company has reacquired 8,150 thousand of treasury shares, which amounted to $83,260, from January 1 to January 22, 2016.

ii. On December 22, 2015, the Board of Directors has resolved to transfer the shares to employees from the 11th time treasury share reacquired of 14,500 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on January 18, 2016. The amount of shares transferred to employees was 14,500 thousand from January 1 to January 18, 2016.

iii. On January 20, 2016, the Board of Directors has resolved to reacquire treasury shares from January 25 to February 26, 2016. The expected reacquisition amount is 4,346 thousand shares and the price range is NT$10 to NT$13 (dollars) per share. From January 25 to February 17, 2016, the amount of shares reacquired was 4,346 thousand, which amounted to $45,100.

iv. On January 20, 2016, the Board of Directors has resolved to transfer the shares to employees from the 12th time treasury share reacquired of 8,800 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on February 17, 2016. The amount of shares transferred to employees was 8,800 thousand from January 20 to February 17, 2016.

v. On February 17, 2016, the Board of Directors has resolved to transfer the shares to employees from the 14th time treasury share reacquired of 18,854 thousand in accordance with the Company’s ‘Regulations governing transfer of reacquired shares to employees’. The employees’ acquisition was set to be effective on February 24, 2016.


(21) Capital surplus

2015

Share premium

Treasury stock transactions

Stock options Total

At January 1 $ 284,109 $ 5,777 $ 34,722 $ 324,608


Employee stock options issued - - 300 300

Treasury shares purchased by employees - - ( 300) ( 300)

Convertible corporate bonds issued - - 4,380 4,380

At December 31 $ 276,955 $ - $ 39,102 $ 316,057

2014

Share premium

Treasury stock transactions

Stock options Total

At January 1 $ 287,185 $ 7,761 $ 33,687 $ 328,633


Employee stock options issued - - 18,094 18,094

Treasury shares purchased by employees - 6,756 ( 17,059) ( 10,303)

At December 31 $ 284,109 $ 5,777 $ 34,722 $ 324,608

Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(22) Retained earnings

A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first beused to pay all taxes and offset prior years’ operating losses and then 10% of the remainingamount shall be set aside as legal reserve. Bonus distributed to the employeesand remuneration paid to the directors and supervisors should account for 1% ~ 8% and 1% ~2%, respectively, of the total distributed amount. The remainder shall be considered with the industry environment and needs for future business or investee with other related factors that is to be proposedby the Board of Directors and resolved by the stockholders for no appropriation or appropriation of no less than 50% for the year. Employees’ bonus and directors’ and supervisors’ remuneration are authorized at the Board of Directors’ meeting in accordance with the aforementioned rules and with chronological orders.

B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

C. In accordance with the Financial Supervisory Commission, Securities and Futures Bureau, No. 1030006415 correspondence, as the investment property is measured at fair value, the Company shall accrue special reserve accordingly.

167


D. The appropriations of 2014 and 2013 earnings had been resolved at the stockholders’ meeting onJune 30, 2015 and June 24, 2014, respectively. Details are summarized below:

2014 2013

Amount Dividendsper share

( in Dollars) Amount

Dividendsper share

( in Dollars)

Legal reserve $ 531,216 $ 84,316

Special reserve 5,469,551 169,735

Cash dividends 127,742 $ 0.2 124,648 $ 0.2

Stock dividends 638,710 1.0 311,620 0.5

$ 6,767,219 $ 1.2 $ 690,319 0.7

E. For the information relating to employees’ remuneration (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(28).

(23) Operating revenue


2015 2014

Service revenue $ 408,005 $ 1,718,738

Construction revenue 649 1,298


Food service revenue 16,649 9,431

Sales revenue 110,722 34,775

Ticket revenue 27,203 17,915

Other operating revenues 5,799 1,597

$ 592,069 $ 1,791,486

(24) Other income


2015 2014

Interest income from bank deposits $ 7,269 $ 7,802

Other non-operating income 5,263 15,735

$ 12,532 $ 23,537

(25) Other gains and losses


2015 2014

Gain on reversal of property, plant and equipment $ 1,588 $ 16,385

Gain on fair value adjustment of investment property 2,640,321 4,547,595

Gain (loss) on disposal of property, plant and equipment 145 ( 11)

Loss on disposal of investment property - ( 455)

Service expenses ( 375) ( 40,450)

Currency exchange gains 22 1

Other non-operating losses ( 590) ( 24,184)

$ 2,641,111 $ 4,498,881


(26) Finance costs


2015 2014

Interest expense:

Bank loans $ 274,116 $ 228,646

Commercial paper 4,782 5,665

Bonds payable 41,411 4,676

Others 241 352

320,550 239,339

Less: Capitalisation of qualifying assets ( 111,672) ( 73,162)

Interest reimbursement for industrial zones ( 139,453) ( 150,485)

Finance cost $ 69,425 $ 15,692

(27) Expenses by nature


2015 2014

Employee benefit expense $ 338,889 $ 271,002

Directors' and supervisors' remuneration 21,828 7,699

Depreciation 30,001 19,271

Amortisation 4,761 4,770

Entertainment expense 39,647 48,533

Rent expense 46,479 46,777

Advertisement expense 67,176 28,664

Taxes 37,554 19,020

Service expense 62,002 178,067

General and administrative expenses 12,129 11,695

Commission expense 20,008 2,710

Donation expense 5,073 11,038

Changes in inventory of merchnadise and food service 103,414 40,611

Cost of ticket 16,382 14,279

Other operating costs 10,620 6,171

Other expenses 152,948 124,070

$ 968,911 $ 834,377

Note: In order to promote Taiwan brands, the Group has donated $2,500 and $3,500 to Branding Taiwan Association for the years ended December 31, 2015 and 2014, respectively. There is no other commitment.

(28) Employee benefit expense


2015 2014

Wages and salaries $ 302,623 $ 236,743

Labour and health insurance fees 18,341 16,572

Pension costs 10,675 9,310

Other personnel expenses 7,250 8,377

$ 338,889 $ 271,002

A. As of December 31, 2015 and 2014, the Group had approximately 279 and 290 employees, respectively.

B. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees and pay remuneration to the directors and supervisors that accounts for 1%~8% and 1%~2%, respectively, of the total distributed amount.

169


However, in accordance with the Company Act amended in May 20, 2015, a company shall distribute employee compensation, based on the distributable profit of the current year, in a fixed amount or a ratio of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation distributed in the form of shares or in cash; and in addition thereto a report of such distribution shall be submitted to the shareholders' meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. Taking into consideration of the Company's actual operation procedures, the Company has not revised its Articles of Incorporation in accordance with the amended Company Act before the issuance of these financial statements. The Board of Directors of the Company has approved the amended Articles of Incorporation of the Company on January 20, 2016. According to the amended articles, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees' compensation and directors' and supervisors' remuneration. The ratio shall be 1% to 8% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration. The amended articles will be resolved in the shareholders’ meeting in 2016.

C. For the years ended December 31, 2015 and 2014, employees’ compensation (bonus) was accrued at $21,828 and $7,692, respectively; directors’ and supervisors’ remuneration was accrued at $21,828 and $7,692, respectively. The aforementioned amounts were recognized in salary expenses.

The employees’ compensation and directors’ and supervisors’ remuneration were both estimated and accrued based on 1% of distributable profit of current year for the year ended December 31, 2015. The accrued amount has not been resolved by the Board of Directors. The employees’ compensation will be distributed in the form of cash or shares.

The expenses recognised for the year of 2014 were accrued based on the net income of 2014 and the percentage of 1% both for employees and directors/supervisors, respectively, taking into account other factors such as legal reserve. Where the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at the stockholders’ meeting subsequently, the differences are accounted for as changes in estimates.The difference between employees’ bonus and directors’ and supervisors’ remuneration as resolved by the shareholders at the shareholders’ meeting and the amount of $7,692 as employees’ bonus and $7,692 as directors’ and supervisors’ remuneration recognised in the 2014 financial statements by $606, had been adjusted in the profit or loss of 2015.

Information about employees’ compensation (bonus) and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors and the shareholders at the shareholders’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(29) Income tax

A. Components of income tax expense


2015 2014

Current tax:

Current tax on profits for the period $ - $ 38,548

Tax on undistributed earnings 3,302 -

Adjustments in respect of prior years 1,372 88

Total current tax 4,674 38,636

Deferred tax:

Origination and reversal of temporary differences 154,867 109,905



B. Reconciliation between income tax expense and accounting profit


2015 2014

Tax calculated based on profit before tax and statutory tax rate $ 659,692 $ 944,579

Temporary difference not recognized as deferred tax assets 4,754 ( 16,396)

Taxable loss not recognized as deferred tax assets 38,212 ( 156,160)

Additional 10% tax on undistributed earnings 3,302 15,283

Prior year income tax underestimate 1,372 88

Effect from different tax rates on temporary differences ( 302,371) ( 92,095)

Tax exempt income by tax regulation ( 245,420) ( 546,758)


C. Expiration dates of unused net operating loss carryforward and amounts of unrecognized deferred tax assets are as follows:

Year incurred Amount filed/ assessed

December 31, 2015

Unused amount Unrecognized deferred tax assets Usable until year

The Company:

2015 Accrued $ 65,945 $ 65,945 2025Taiwan Innovation Development Corp. :2013 Assessed 46,011 46,011 2023

2014 Filed 54,116 54,116 2024

2015 Accrued 152,184 152,184 2025Taiwan Envirotech Development Corp.:2015 Accrued 6,655 6,655 2025

Wind Lion Plaza Corp.:

2013 Assessed 26 26 2023

2014 Filed 87,108 87,108 2024

2015 Accrued 202,786 202,786 2025Hualien Culture Clubhouse Corp.:2014 Filed 386 386 2024

2015 Accrued 193 193 2025

$ 615,410 $ 615,410

Year incurred Amount filed/ assessed

December 31, 2014

Unused amount Unrecognized deferred tax assets Usable until year

Taiwan Innovation Development Corp.:2013 Filed $ 46,011 $ 46,011 2023

2014 Accrued 56,240 56,240 2024

Wind Lion Plaza Corp. :

2013 Filed 26 26 2023

2014 Accrued 87,108 87,108 2024Hualien Culture Clubhouse Corp.:2014 Accrued 386 386 2024

$ 189,771 $ 189,771

171


D. The amounts of deductible temporary differences that are not recognized as deferred tax assets are as follows:


Deductible temporary differences

Allowance for bad debts $ 1,905 $ 1,905

Interest expense 3,594 3,594

Allowance for sales return 11,225 11,228

Temporary difference on service revenue 31,248 26,601

Allowance for price decline on inventories 7,513 7,832

Unrealized impairment loss 153 423

Others 1,182 483

$ 56,820 $ 52,066

E. The Group’s deferred tax assets are deductible temporary differences arising from Taiwan Commerce Development Corp.’s taxable loss. As of December 31, 2015 and 2014, the amount of deferred tax assets was $23,270 and $33,142, respectively.

F. As of December 31, 2015 and 2014, the amount of deferred tax liabilities was $563,185 and $418,190, respectively. The land value increment tax originally applied to the Company’s Trust department in accordance with ‘Enterprise Merger and Acquisition Act’ was transferred to JihSun Bank. As of December 31, 2015 and 2014, the increment tax amounting to $15,868 will be paid when the land is transferred again, and the tax related accrual arising from the fair value of the other investment property was $547,317 and $402,322, respectively.

G. As of December 31, 2015, the Company’s income tax returns through 2013 have been assessed and approved by the Tax Authority.

H. Unappropriated retained earnings


Earnings generated in and before 1997 $ - $ -

Earnings generated in and after 1998

a.Unappropriated earnings assessed with 10% income tax 610,865 448,842

b.Unappropriated earnings not yet assessed with 10% income tax 2,073,096 6,969,975

$ 2,683,961 $ 7,418,817

As of December 31, 2015 and 2014, the balance of the imputation tax credit account was $21,250 and $31,283, respectively. The creditable tax rate was 0.63% for the year ended December 31, 2014 and is estimated to be 0.86% for the year ended December 31, 2015.

(30) Earnings per share

For the years ended December 31, 2015 and 2014, the calculation of earnings per share is as follows:


Amount after tax Weighted average number of ordinary shares outstanding (shares in thousands)

Earnings per share (in dollars)


Profit attributable to ordinary shareholders of the parent $ 2,040,076 699,277 $ 2.92


Assumed conversion of all

dilutive potential ordinary shares Employees’ bonus - 2,069

Convertible bonds 1,566 6,926




Amount after tax Weighted average number of ordinary shares outstanding (shares in thousands)

Earnings per share (in dollars)


Profit attributable to ordinary shareholders of the parent $ 5,312,165 718,579 $ 7.39


Assumed conversion of all

dilutive potential ordinary shares Employees’ bonus - 816


(31) Supplemental cash flow information

Investing activities with partial cash payments


2015 2014

Purchase of investment property $ 620,591 $ 971,991

Add: opening balance of accounts payable 208,299 207,768

Add: opening balance of notes payable 44,841 -

Less: ending balance of accounts payable ( 143,837) ( 208,299)

Less: ending balance of notes payable ( 7,046) ( 44,841)



2015 2014

Purchase of property, plant and equipment $ 447,220 $ 113,042

Add: opening balance of notes payable 67,277 -

Add: opening balance of accounts payable 11,074 -

Less: ending balance of notes payable ( 300,561) ( 67,277)

Less: ending balance of accounts payable ( 54,377) ( 11,074)


7. RELATED PARTY TRANSACTIONS (1) Significant related party transactions

A. Prepayments

As of December 31, 2015, the prepayments for compensation to the key management amounted to $6,667.

B. Endorsements and guarantees provided to related parties


Key management of the Group (Note) $ 8,719,230 $ 5,650,556

Note: Key management is the joint guarantor for the Group’s financing.

C. Others

Please refer to Note 6(27).

(2) Key management compensation


2015 2014

Salaries and other short-term employee benefits $ 89,371 $ 47,617

Termination benefits 641 471

$ 90,012 $ 48,088

173


8. PLEDGED ASSETS

Pledged asset December 31,

Purpose 2015 2014

Other current assets

- Demand deposits $ 28,185 $ 83,484 Long-term borrowings compensation account

- Demand deposits 17,007 16,981 Land compensation fee account

- Demand deposits 159,114 159,114 Guarantee for development projects

- Demand deposits 82,276 62,122 Guarantee for short-term borrowings

- Time deposits - 128,607 Guarantee for development projects and long- term borrowings

- Time deposits 75,531 - Guarantees for issuing letters of credit for loans used to purchase materials

- Time deposits 160 160 Guarantee for projects

- Time deposits 1,500 - Guarantee for borrowings

363,773 450,468

Other non-current assets

- Demand deposits 68,033 66,007 Guarantee for Kinmen BOT project

- Refundable deposits 78,962 21,079 Guarantee for projects and leases

- Land in Hsinchu 311,590 285,327 Guarantee for short-term borrowings

- Long-term prepaid rents 145,569 - Guarantee for short-term borrowings

604,154 372,413

Other receivables - Land development receivables 4,559,927 4,143,460 Long-term borrowings

Inventories 801,157 1,015,060 Guarantee for long-term and short-term borrowings and short-term notes and bills payable

Investment property 16,556,760 12,536,404 Guarantee for long-term borrowings, short- term notes and bills payable and bonds payable

Property, plant and equipment- Land and buildings 499,117 501,898 Guarantee for long-term and short-term borrowings

and short-term bills payable $ 23,384,888 $ 19,019,703

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

A. On January 21, 2008, Taiwan Innovation Development Corporation (TIDC) signed an engineering contract with Geng-Shin Green Engineering Co., Ltd. (Geng-Shin) to clear up the unsold land located at Kuang Hua Industrial Park 2nd Stage in Hualien. The total price of contract was $11,801. The clear-up project had been separated into 2 stages. The first stage had been completed and accepted on April 23, 2008. The project payment of the first stage had been paid already. However, at the end of the second stage, Geng-Shin failed to attach all the legal documents requested in the contract. TIDC refused to pay the remaining payment amounting to $7,344. Geng-Shin filed a legal claim against TIDC. TIDC counterclaimed that the aforementioned project had been delayed, which caused TIDC to spend an additional $318 for hiring workers to clear up the land. On April 12, 2010, according to the first instance verdict rendered by Taipei District Court, TIDC should pay $6,754 to Geng-Shin, plus interest calculated from November 16, 2008 to the settlement date, and that the counterclaim of TIDC was rejected. On May 22, 2012, Taiwan High Court reversed part of the verdict rendered by Taipei District Court for the part of payment required of TIDC in excess of $6,164, and dismissed the appeal of TIDC for other portions. The Supreme Court has abandoned the original verdict on October 3, 2013, and remanded the case to the High Court. The High Court has rendered a judgment that TIDC shall pay $5,430 along with prejudgment interests at 5% per annum from November 16, 2008 to the day of repayment, and denied other appeals of TIDC. TIDC filed an appeal to the Supreme Court in August 2015 and the case was denied. TIDC shall pay $5,430 along with prejudgment interests at 5% per annum from November 16, 2008 to the day of repayment to TIDC. TIDC claimed that Geng-Shin had not accomplished the services mentioned in the contract, so that TIDC could not finish the inspection level and make the payment. If the lawsuit would result in an unfavorable decision for TIDC, there is still some reserved deductible compensation payment for Geng-Shin. Therefore, TIDC has not yet estimated the expense.


(2) Commitments

A. As of December 31, 2015 and 2014, except for commitments mentioned in Notes 6 (8), (9) and (17), the Company’s aggregate commitments under the consignments for construction and services were $2,906,125 and $3,515,316, respectively. The Company’s aggregate payments under consignments above amounted to $1,931,640 and $2,206,906, respectively.

B. As Taiwan Commerce Development Corp. has applied to establish duty-free shops in Kinmen, in accordance with Kinmen’s regulations governing establishment of duty-free shops on outlying islands, after receiving the license, Taiwan Commerce Development Corp. shall pay fees based on 10% of its monthly sales to Kinmen Government.

10. SIGNIFICANT DISASTER LOSS None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE Please refer to Note 6(20) B(i) for the related information.

12. OTHERS (1) Operational policies

To improve the condition of significant amount of uncollected land development receivables, the Company consolidated its loans from several financial institutions into a 7-year long-term syndicated loan contract with a credit line of $16,500,000 in August 2005. After paying back loans over the years, the debt balance was considerably reduced. In order to expand business, the Company had signed a 5-year long-term syndicated loan contract with a credit line of $5,300,000 in August, 2012. The new syndicated loan was used for paying off the previous syndicated loan, and maintaining sufficient working capital. As of December 31, 2015, the syndicated loan amounted to $3,088,000. Since 2009, the Company has declared stock dividends for 4 consecutive years since the period of privatization, and completed its capital increase by $1,770,000 in October 2011. This indicates that the Company has the potential of maintaining a long-term stable profit margin to support the operations of the Company.

The Company is committed to a diversified land development and value innovation integrated to providing a high-quality lifestyle. The Company tries to infuse new value into the land with ubiquitous technology and green energy technology.

A. Value-oriented development strategies:

The Group adds value to the land through cultural creativity and technological innovation by integrating art as part of life and creating a sustainable healthy LOHAS park.

B. Sustainable development of the IOT and O2O with the cloud the source of value in the future:

As the Internet era changes, its future value will lie in the cloud. The arrival of the Internet of Things (IOT) era means that the reality must be combined with virtual simulation to integrate online-to-offline (O2O) and maximize market and business opportunities.

C. Consolidation of the development of Kinmen as the border trade center:

The visa-on-arrival policy in Kinmen has enabled the number of visitors from Mainland China to hit a record high. Implementation of increased duty-free shopping quota for people coming from Mainland China through Kinmen and the relaxation of Xiamen as a free trade zone further contributed to a steady growth in bilateral trade volume, the importation of excessive quantities of goods to Xiamen, and significantly increased bilateral trade with Xiamen and the West Coast Zone, consolidating the development of Kinmen as a border trade center.

D. Core values of sustainable enterprise:

Employing “green, intelligent, and cultural creativity” as core beliefs, we infuse the land with new value, creating a unique brand image, communicating our corporate philosophy and committing to the construction of high-quality LOHAS spaces for living.

175


E. Specialization within the Group

Pursuit of overall rationalization of the Group and further enhancement of enterprise synergy through interaction and cooperation of all employees within the Group.

F. The Company has combined the industrial zone with local uniqueness for innovation and increasing value and to further speed up the disposal of unleased and unsold land and collection for payments on behalf of others.

(2) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the balance sheet) less cash. Total capital is calculated as ‘equity’ as shown in the balance sheet plus net debt.

During 2015, the Group’s strategy, which was unchanged from 2014, was to maintain the gearing ratio under 50%. The gearing ratios at December 31, 2015 and 2014 were as follows:


Total borrowings $ 9,207,627 $ 7,757,648

Less: cash ( 2,622,966) ( 4,155,290)

Net debt 6,584,661 3,602,358

Total equity 17,440,945 15,739,364

Total capital $ 24,025,606 $ 19,341,722

Gearing ratio 27.41% 18.62%

(3) Financial instruments

A. Fair value information of financial instruments

Except for those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including notes receivable, accounts receivable, other receivables, long-term receivables, other financial assets, refundable deposits, short-term loans, short-term notes and bills payable, notes payable, accounts payable, other payables, long-term loans and guarantee deposits) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(4).

December 31, 2015




Bonds payable $ 1,489,265 $ - $ 1,518,831 $ -

December 31, 2014




Bonds payable $ 500,000 $ - $ 500,000 $ -

B. Financial risk management policies

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.


C. Significant financial risks and degrees of financial risks

(a) Market risk

The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency)

December 31, 2015

Foreign currency amount

(in thousands)

Exchange rate

Book value(NTD)

Sensitivity analysis

Degree ofvariation

Effect on profit

or loss

Effect on othercomprehensive

income

Financial assets Monetary items

RMB: NTD $ 427 4.995 $ 2,133 1% $ 21 $ -

Non-monetary items

RMB:NTD 9,465 4.995 47,276 1% - 473

Financial liabilities Monetary items

RMB:NTD $ 33 4.995 $ 165 1% $ 2 $ -

(Foreign currency: functional currency)

December 31, 2014

Foreign currency amount

(in thousands)

Exchange rate

Book value(NTD)

Sensitivity analysis

Degree ofvariation

Effect on profit

or loss

Effect on othercomprehensive

income

Financial assets Monetary items

RMB:NTD $ 269 5.092 $ 1,370 1% $ 14 $ -

Non-monetary items

RMB:NTD 10,127 5.092 51,567 1% - 52

For the years ended December 31, 2015 and 2014, there is no significant unrealized exchange gain (loss) on the Group’s monetary items.

(b) Credit risk

Credit risk refers to the risk of financial loss to the Group arising from default by the clients on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The counterparties are government organizations of all cities and counties with high credit quality, thus, there is no critical credit risk.

(c) Liquidity risk

Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.

177






Notes payable 316,887 - 316,887


Other payables 2,057,955 500,839 2,558,794

Bonds payable 19,200 1,537,091 1,556,291

Long-term borrowing (including current portion) 2,246,606 3,994,507 6,241,113




Notes payable 112,982 - 112,982


Other payables 2,582,817 478,961 3,061,778

Bonds payable 6,800 509,067 515,867

Long-term borrowing (including current portion) 590,139 6,046,561 6,636,700

(4) Fair value information

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3).

B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in bank debentures is included in Level 2.

Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in investment property is included in Level 3.

C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2015 and 2014 is as follows:

December 31,2015 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value

measurementsFinancial assets at fair value through profit or loss Debt securities $ - $ 4,000 $ - $ 4,000

Derivative financial instruments - 80 - 80


Total $ - $ 4,080 $ 18,267,391 $ 18,271,471


December 31,2014 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value

measurementsFinancial assets at fair value through profit or loss Debt securities $ - $ 4,000 $ - $ 4,000


Total $ - $ 4,000 $ 14,793,170 $ 14,797,170

Note: Investment property is measuredat fair value.

D. The methods and assumptions the Group used to measure fair value are as follows:

(a) The fair value of financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

(b) Under “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the Group appoints external valuers, by using the income approach to calculate the fair value of investment property. Related assumption and information of inputs are as follows:

i. Cash flow: Cash flow shall be valuated on the basis of existing lease contracts, rent at local market rates, or current market rents for similar comparable properties in the same location and condition, and overvalued and undervalued comparable properties shall be excluded. If there is a period-end value, the discounted present period-end value may be added.

ii. Analysis period: When there is no specified period for the income, the analysis period in principle shall not be longer than 10 years; when there is a specified period for the income, the income shall be estimated for the remainder of the specified period.

iii. Discount rate: The discount rate shall be determined using the risk premium approach only, with the calculation based on a certain interest rate, plus the estimate for the individual characteristics of the investment property. The language "based on a certain interest rate" means the interest rate may not be lower than the floating interest rate on a 2-year time deposit of a small amount, as posted by the Chunghwa Post Co. Ltd., plus 0.75 percentage points.

E. For the years ended December 31, 2015 and 2014, there was no transfer between Level 1 and Level 2.

F. For the movements of Level 3 for the years ended December 31, 2015 and 2014, please refer to Note 6(8).

G. For the years ended December 31, 2015 and 2014, there was no transfer into or out from Level 3.

H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Fair value atDecember 31,

2015 Valuation

technique Significant

unobservable input

Range(weighted average)

Relationshipof inputs to fair value

Investment property $ 18,267,391 Discounted

cash flowLong-term revenue

growth rate, discount rate

Notethe higher the long-term revenue growth rate, the higher the fair value; the higher the discount rate, the lower the fair value

Note: Details of the discount rate range are provided in Note 6(8).

13. SUPPLEMENTARY DISCLOSURES (1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

179


D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 5.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 6.

I. Trading in derivative instruments undertaken during the reporting periods: Conversion rights of convertible bonds. Please refer to Note 6(2) and (16).

J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 9.

B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION (1) General information

Management has determined the operating segments based on the reportable segments that are included in the reports reviewed by the Board of Directors and used to make strategic decisions.

The Group’s business composition, basis for segmentation and measurement of segment information did not change significantly during the period. The measurement of segment profit reported to the chief operating decision-maker is the same as of profit in the income statements. Internal transactions were eliminated.

(2) Information about segment profit or loss, assets and liabilities

The segment information provided to the Board of Directors for the reportable segments for the years ended December 31, 2015 and 2014 were as follows:

Year ended December 31, 2015:

Industrial park development Real estate

Marketing and

E-commerce ARKI

gallery hall Merchandise

and entertaiment

Total

Revenue of department $ 405,908 $ 23,691 $ 93 $ 1,866 $ 160,511 $ 592,069

Cost of department - ( 10,509) ( 3) ( 606) ( 119,298) ( 130,416)

Gross profit of department $ 405,908 $ 13,182 $ 90 $ 1,260 $ 41,213 $ 461,653

Segment assets (Note) $ - $ - $ - $ - $ - $ -

Segment liabilities (Note) $ - $ - $ - $ - $ - $ -

Year ended December 31, 2014:

Industrial park development Real estate

Marketing and

E-commerce ARKI

gallery hall Merchandise

and entertaiment

Total

Revenue of department $ 1,718,328 $ 9,030 $ 410 $ 1,629 $ 62,089 $ 1,791,486

Cost of department - ( 3,865) ( 548) ( 1,485) ( 55,163) ( 61,061)

Gross profit of department $ 1,718,328 $ 5,165 ($ 138) $ 144 $ 6,926 $ 1,730,425

Segment assets (Note) $ - $ - $ - $ - $ - $ -

Segment liabilities (Note) $ - $ - $ - $ - $ - $ -

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such information is not disclosed in the financial statements.


(3) Reconciliation for segment income (loss)

A reconciliation of reportable segment income or loss to the income/(loss) before tax from continuing operations for the years ended December 31, 2015 and 2014 are provided as follows:


2015 2014

Gross profit of operating department $ 461,653 $ 1,730,425

Operating expenses ( 838,495) ( 773,316)

Financial costs ( 69,425) ( 15,692)

Gain on fair value adjustment of investment property 2,640,321 4,547,595

Others 5,092 ( 28,456)

Profit before tax-operating department $ 2,199,146 $ 5,460,556

(4) Information on products and services

Revenues from external customers are mainly industrial park development, real estate lease and sales. Breakdown of the revenue from all sources is as follows:


2015 2014

Construction revenue $ 649 $ 1,298


Revenue from merchandise and entertainment 160,511 62,089

Service revenue from industrial park 405,908 1,718,328

Other operating revenue 1,959 2,039

$ 592,069 $ 1,791,486

(5) Geographical information

The Group’s operating revenues for 2015 and 2014 were earned in Taiwan. As of December 31, 2015 and 2014, the non-current assets belonging to a mainland China subsidiary amounted to $41,146 and $45,620, respectively. Other non-current assets belong to Taiwan.

(6) Major customer information

Major customer information of the Group for the years ended December 31, 2015 and 2014 is as follows:


2015 2014

Revenue Segment Revenue Segment

Kaohsiung City Government $ - Industrial Park Development $ 30,759 Industrial Park

Development

Hualien County Government 36,589 Industrial Park Development 32,184 Industrial Park

Development

Taichung City Government 357,323 Industrial Park Development 1,644,439 Industrial Park

Development

6. Financial Difficulties of the Company and its Affiliates in the Most Recent Years: None


Table 1





Is a related party

Maximumoutstanding


2015（Note 3）

Balance atDecember

31,2015

（Note 8）

Actual amount

drawn downInterest

rateNature of

loan（Note 4）



Reasonfor short-


Allowance

fordoubtfulaccounts




granted（Note 7）

FootnoteItem Value


















Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with

stockholders, prepayments, temporary payments, etc. Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2015. Note 4: The column of ‘Nature of loan’ shall fill in ‘Business transaction or ‘Short-term financing’. (1) Business relationship is ‘1’. (2) Short-term financing is ‘2’. Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of

business transactions occurred between the creditor and borrower in the current year. Note 6: Fill in purpose of loan when nature of loan is for short-term financing, for example, repayment of loan, acquisition of

equipment, working capital, etc. Note 7: Fill in limit on loans granted to a single party and ceiling on total loans granted as prescribed in the creditor company’s

“Procedures for Provision of Loans”, and state each individual party to which the loans have been provided and the calculation for ceiling on total loans granted in the footnote.

183


Table 1





Is a related party

Maximumoutstanding


2015（Note 3）

Balance atDecember

31,2015

（Note 8）

Actual amount

drawn downInterest

rateNature of

loan（Note 4）



Reasonfor short-


Allowance

fordoubtfulaccounts




granted（Note 7）

FootnoteItem Value


















(1) Ceiling on total loans granted to others is 50% of the Company's net assets; limit on loans granted to a single party is 20% of the Company's net assets.

(2) Ceiling on total loans granted to others is 40% of the TIDC's net assets; limit on loans granted to a single party is 40% of TIDC's net assets.

Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has authorized the chairmanto loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.


Table 2



Number(Note 1)

Endorser/guarantor




Maximumoutstanding



2015（Note 4）


guaranteeamount at

December 31,2015

（Note 5）




collateral


guarantee amount to


guarantor company




parent company






China（Note 7）













Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six

categories; fill in the number of category each case belongs to: (1) Having business relationship. (2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed

subsidiary. (3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/

guaranteed company. (4) The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/

guarantor subsidiary. (5) Mutual guarantee of the trade as required by the construction contract. (6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in

proportion to its ownership.

Table 3











Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities

measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

185


Table 2



Number(Note 1)

Endorser/guarantor




Maximumoutstanding



2015（Note 4）


guaranteeamount at

December 31,2015

（Note 5）




collateral


guarantee amount to


guarantor company




parent company






China（Note 7）













Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s “Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.

(1) Ceiling on total endorsements/guarantees is 50% of the Company's net asset; limit on endorsements/guarantees to a single party is 30% of the Company's net assets.

(2) Ceiling on total endorsements/guarantees is 90% of TIDC's net assets; limit on endorsements/guarantees to a single party is 90% of TIDC's net assets.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period. Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the

banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company. Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by

subsidiary to listed parent company, and provision to the party in Mainland China.

Table 3












Table 4




Generalledger

accountCounterparty

(Note 2)

Relationshipwith




December 31, 2015




shares Amount




Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave

the columns blank. Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they

individually reach NT$300 million or 20% of paid-in capital or more.

Table 5





counterparty












Note 1: If terms of related-party transactions are different from third-party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns.

Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Table 6









Company $ 183,131 0.96 time $ - - $ 14,349 $-

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties⋯.


187


Table 4




Generalledger

accountCounterparty

(Note 2)

Relationshipwith




December 31, 2015




shares Amount





Note 5: The Company has capitalised its loans and paid cash to invest in TIDC, amounting to $650,000 and $600,000 in March and September 2015, respectively, and received stock dividends of 326,812 thousand shares of TIDC's in December 2015.

Table 5





counterparty













Table 6









Company $ 183,131 0.96 time $ - - $ 14,349 $-


Table 7




(Note 2)

Transaction














Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the

number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

Table 8






31, 2015





31, 2015
















189


Table 7




(Note 2)

Transaction














(1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based

on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.(Transactions less than 1% are not disclosed.)

Note 5: The above transactions were based on agreements with the counterparties. Note 6: Based on the sales rate and progress of construction in contract.

Table 8






31, 2015





31, 2015




















31, 2015





31, 2015












Table 9






method（Note 1）




2015




Accumulatedamount


31, 2015


2015

Ownership heldby




yearended December

31,2015



31, 2015

Accumulatedamount

of investmentincome


December 31,2015

Footnote

Remitted toMainland

China










191





31, 2015





31, 2015












Table 9






method（Note 1）




2015




Accumulatedamount


31, 2015


2015

Ownership heldby




yearended December

31,2015



31, 2015

Accumulatedamount

of investmentincome


December 31,2015

Footnote

Remitted toMainland

China










VII.�

Review�of�Financial

Conditions�and�Performance,

Operating�Results,�and�Risk

Management

1. Financial Condition

2. Financial Performance

3. Cash Flow

4. Effect of Major Capital Expenditures in 2015 on Financial Operations

5. 2015 Investment Policy, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year

6. Risk Management

7. Other Important Matters


1. Financial Condition (1) Main Reasons and Impact of Any Material Change in the Company’s Assets, Liabilities, or

Shareholders’ Equity during the Past Two Fiscal Years 　　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　 2015 2014

Variance

Amount Percentage(％ )

Current assets 9,604,072 10,675,490 (1,071,418) (10.04)

Non-current assets 20,940,506 16,927,923 4,012,583 23.70

Total assets 30,544,578 27,603,413 2,941,165 10.66

Current liabilities 9,365,675 8,639,098 726,577 8.41

Non-current liabilities 3,737,958 3,224,951 513,007 15.91

Total liabilities 13,103,633 11,864,049 1,239,584 10.45

Capital Stock 7,258,813 6,791,103 467,710 6.89

Capital surplus 316,057 324,608 (8,551) (2.63)

Retained Earnings 10,318,347 9,052,436 1,265,911 13.98

Other equity 5,734 6,738 (1,004) (14.90)

Treasury stock (471,595) (440,271) (31,324) 7.11

Total stockholders’ equity attributable to parent 17,427,356 15,734,614 1,692,742 10.76

Non-controlling interest 13,589 4,750 8,839 186.08

Total equity 17,440,945 15,739,364 1,701,581 10.81

(2) Description of Material Changes:

The value of each of the items below has changed by 10% or more over the previous period and the amount of change is above NT$100 million:

A. Current Assets: Decline in current assets for this period is mostly attributable to reduced working capital resulting from the purchase of investment real estate property as well as operating expenditures.

B. Non-current liabilities: Increase in non-current liabilities was mainly due to increase in long-term borrowing.

C. Non-current Liabilities: Increase in non-current liabilities for this period is mostly due to measures taken for the increase of corporate bonds.

D. Retained earnings: Change was due to the decrease of profit generated in 2014; refer to Section 2. Operation Results for analysis.

195

VII REVIEW OF FINANCIAL CONDITIONS AND PERFORMANCE, OPERATING RESULTS, AND RISK MANAGEMENT

2. Financial Performance Main reasons for the major changes to operating income, net operating profit and Net PBIT over the last two years,

expected volume of sales and its basis, and response plans to address the possible impact on the Company’s future financial operations. 　　 Unit: NT$ thousand

　　　　　　　　　　　　　　　　　　　YearItem　　　　　　　　　　　　　　　　　　　 2015 2014 Amount of

changePercentage of

change (%)

Operating revenue 592,069 1,791,486 (1,199,417) (66.95)

Operating Costs 130,416 61,061 69,355 113.58

Operating profit (loss) 461,653 1,730,425 (1,268,772) (73.32)

Operating profit (loss), net 461,653 1,730,425 (1,268,772) (73.32)

Operating Expenses 838,495 773,316 65,179 8.43

Operating income (loss) (376,842) 957,109 (1,333,951) (139.37)

Non-operating revenue and expenses 2,575,988 4,503,447 (1,927,459) (42.80)

Income (loss) before tax 2,199,146 5,460,556 (3,261,410) (59.73)

Income tax expense (benefit) 159,541 148,541 11,000 7.41

Net income (loss) from continuing operations 2,039,605 5,312,015 (3,272,410) (61.60)

Net income (loss) 2,039,605 5,312,015 (3,272,410) (61.60)

Other comprehensive income (loss), net (1,004) 1,753 (2,757) (157.27)

Total consolidated income 2,038,601 5,313,768 (3,275,167) (61.64)

Net income (loss) attributable to parent 2,040,076 5,312,165 (3,272,089) (61.60)

Net income (loss) attributable to non-controlling interest (471) (150) (321) 214.00

Total comprehensive income (loss) attributable to parent 2,039,072 5,313,918 (3,274,846) (61.63)

Total comprehensive income (loss) attributable to non-controlling interest (471) (150) (321) 214.00

Analysis of changes in proportion:

The value of each of the items below has changed by 10% or more over the previous period and the amount of change is above NT$100 million:

A. Decrease in operating revenue: Mostly due to reduction in service revenues for this year.

B. Decrease in Operating profit: Overall gross profits for this year declined due to reduction in service revenues, despite increased gross profits in product sales generated from the Wind Lion Duty Free Plaza.

C. Declining operating profits: refer to declining operating profits due to increasing overhead costs from the operation of the Wind Lion Duty Free Plaza.

D. Declining non-operating revenue and expenses: refer to dwindling value appreciation benefits as the subsequent valuation of real estate investment shall be recognized with the fair value model.


3. Cash Flow Liquidity Analysis of the Past Two Years

　　　　　　　　　　　　　　　　　　　　Year Item　　　　　　　　　　　　　　　　　　　　 2015 2014 Variance (%) Percentage of

change (%)

Cash flow ratio (%) (18.06) 15.17 (33.23) (219.05)

Net cash flow adequacy ratio (%) - - - -

Cash reinvestment ratio (%) (63.64) 28.57 (92.21) (322.75)

(1) Analysis of cash flow change in 2015:

A. The decrease of both cash flow ratio and cash reinvestment ratio was due to decrease in net cash flow from operating activities.

B. The formula for calculating cash flow adequacy ratio was not applicable for the Company has not adopted IFRSs for five years.

(2) Improvement Plan for Insufficient Liquidity: None.

(3) Cash Flow Analysis for the Coming Year: 　　 Unit: NT$ thousand

Cash balance at beginning of period

Net cash inflow from operating

activities

Net cash inflow from investment

and financing activities

Cash balanceCapital resources for inadequate cash

Investment plans Financing plans

2,342,412 (652,078) 1,724,601 3,414,935 - -

Analysis of cash flow change in 2016:1. Operating activities: Payables and expenses associated with the planned development of industrial parks as well as company-

owned land that are expected to result in cash outflow of approximately NT$652 million. 2. Investment activities: Planned investment in the development of company-owned assets that are expected to result in cash

outflow of NT$1,312 million.3. Financing activities: Anticipated financing activities mostly intended for the repayment of bank loans are expected to result in

cash inflow of NT$413 million.4. It is expected that in the coming year cash will be adequate and it is unlikely that insufficient liquidity will be a problem.

4. Effect of Major Capital Expenditures in 2015 on Financial Operations: None.5. 2015 Investment Policy, Main Causes for Profits or Losses, Improvement Plans

and the Investment Plans for the Coming Year (1) Reinvestment Policy:

In response to the integration between virtual and physical business operation trends as well as the need to provide Taiwanese consumers with fresh and delicious dining options, the Company has created joint ventures "FLOUR & SALT" and "THE BUN SHOP", a honeycomb-style business service model based on Internet APP stores while incorporating regional brick and mortar outlets to provide consumers with tangible experiences and services.

(2) Reason for Profitability:

TIDC's revenue comes mainly from business activities derived from the Company, which include integrated marketing for the Group, development project planning and consultancy services. The after-tax earnings per share for 2015 is NT$2.47, mainly due to mark-to-market valuation of real estate investment, by which fair value is recognized, and earnings are adjusted accordingly.

(3) Plans for Improvement:

TIDC will continue to focus on cultural creative marketing, application of smart technologies, resource integration and green development to help the Company expand its innovative business and endeavors.

(4) Investment Plans for the Coming Year:

Depending on the overall development of the industry, the economic and business cycles, and capital requirements and operational conditions of TIDC and its invested businesses, the company will infuse cash into TIDC to expand its operations and sources of revenue.

197

VII REVIEW OF FINANCIAL CONDITIONS AND PERFORMANCE, OPERATING RESULTS, AND RISK MANAGEMENT

6. Risk Management: (1) Effects of Changes in Interest Rate and Exchange Rate and Inflation on the Company’s Finance,

and Future Response Measures

A. Interest rate: In light of the steady increase in consumer prices in Taiwan as well as a slower pace in global economic recovery, the Central Bank continues to uphold a lax monetary policy and interest rate reduction policy in 2016, which have no significant impact on the Company.

B. Exchange rate: The Company is in the housing and real estate industry serving mainly the domestic market. Thus exchange rate fluctuations have no material impact on the Company.

C. Inflation: With the pressure of inflation eased, real estate has always been regarded as the best weapon to fight inflation and circumvent risks. Such notion aids the sale of the Company’s land in industrial parks and real estate assets.

D. Response measures: Upon assessment, it is determined that the risks stated above have no significant impact on the Company loss or profit. The Company shall, however, endeavor to gain the latest market information in order to respond in a timely manner should the need arise.

(2) Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions:

Currently the Company does not possess any high-risk or highly leveraged investments. In the future, if the Company engages in lending to other parties, providing endorsements and guarantees or trading derivative instruments, the Company shall conduct these transactions in accordance with the provisions of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies,” “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” and regulations that apply to the Company.

(3) Future Research and Development Projects and Corresponding budget: Refer to page 59.

(4) Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales:

The new "Consolidated Income Tax System for House and Land＂ recently promulgated by the Ministry of Finance increases the tax rate for sale of housing. The amended Article 5 of the House Tax Act limits the number of self-use houses which enjoy favorable property tax rate to 3 and stipulates that local governments may establish differential tax rates based on the number of houses owned by the owner, which will increase the tax burden for owners of houses not for self use. Both moves by the government are expected to adversely impact the sale and prices of real estate in the market. The Central Bank cut interest rates by 0.125% three times in a row in September and December 2015 and March 24, 2016 and relaxed the "selective credit control" of real estate loan to mitigate the impact of consolidated housing and land tax on the real estate market.

In addition, the Spatial Planning Act, which was promulgated on January 6, 2016, demarcates functional zoning, establishes use permit system that newly established (or expanded) urban plans or development projects shall be limited to those located in "rural-urban development areas" and the areas shall be demarcated following comprehensive review of spatial planning where change of zoning for individual projects are not allowed. This new measure will change significantly the urban expansion mode in the past and switch to compact development where urban development that used to focus on the periphery of a city will be reverted back to the renewal of urban center.

Response measures against market risk: Emphasize the ideas of “green, cultural creativity and intelligence＂ and incorporate eco-friendliness, creativity and technology in development projects to create LOHAS space of high quality that appeals to consumers.

Response measures against interest rate fluctuation: The Company will liaise with various large banks and financial institutions to obtain favorable interest rates in order to lower the burden on companies and consumers for land and housing purchases.

(5) Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales: None.

(6) The Impact of Changes in Corporate Image on the Corporate Risk Management, and the Company’s Response Measures: None.


(7) Expected Benefits from, Risk Relating to and Response to Merger and Acquisition Plans: None.

(8) Expected Benefits from, Risk Relating to and Response to Factory and Expansion Plans: None.

(9) Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration:

In 2015, the client that accounted for more than 10% of operating revenues in the Company's income statement was Taichung City Government, reaching 60.35%. It is evident that for 2015, major sources of revenue came from sales of real estate properties and the development of industrial parks. In order to expand revenue sources, the Company has been aggressively pushing forward renovation projects for industrial parks as well as the development of its owned assets,in an attempt to lower risks associated with concentration of sales.

(10) Effects of, Risks Relating to and Response to Large Share Transfer or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholding of over 10%: None.

(11) Effects of, Risks Relating to and Response to Changes in Control over the Company: None.

(12) Litigation or Non-litigation Matters: None.

(13) Other Major Risks: None.

7. Other Important Matters: None.

VIII. Special Disclosures

1. Summary of Affiliated Companies

2. Private Placement of Securities in Years 2015 to present

3. The Shares in the Company Held or Disposed by Subsidiaries in Years 2015 to present

4. Other Supplementary Matters

5. Matters that Have Significantly Affected Shareholders’ Equity and Prices of Securities Pursuant to Item 2, Subparagraph 2, Article 36 of Securities Exchange Law in Years 2015 to present


1. Summary of Affiliated Companies (1) Consolidated Operation Report Date: December 31,2015

A. Organization chart of affiliates

B. Profile of affiliates 　　 Unit: NT$ thousand

Name of corporation Date of establishment Address Paid-in capital Major operating or producing

items

Taiwan Innovation Development Corporation 2006.05.17 13F-3, No. 51, Hengyang Rd., Taipei 7,118,116 Urban renewal integration service

Marketing

Hsinchu Hill Garden Corporation 201101.26 14F, No. 51, Hengyang Rd., Taipei 1,000 Development of Hsinchu Hsinpu

Eco-community

Taiwan Midtown Development Corporation 2012.10.19 14F-1, No. 51, Hengyang Rd., Taipei 1,000 Development and investment

business

Taiwan LanYang Development Corporation 2014.08.05 13F-3, No. 51, Hengyang Rd., Taipei 29,000 Yilan area development business

Taiwan Commerce Development Corporation 2009.10.28 No.8-6, Zhongshan Rd., Jinhu

Township, Kinmen County 2,001,110Development of Prosperous Kinmen Property management General merchandise import business

Taiwan Envirotech Development Corporation 2010.06.30 13F-3, No. 51, Hengyang Rd., Taipei 30,000 Information and construction

technology business

Taiwan City Development Corporation 2010.06.23 13F-3, No. 51, Hengyang Rd., Taipei 1,000 Urban renewal integration

business

Hualien Culture Clubhouse Corporation 2010.08.27 No.388, Zhongyuan Rd., Hualien City 44,340 Development of Impression

Hualien

Hualien Ocean Forum Corporation 2010.09.09 14F, No. 51, Hengyang Rd., Taipei 1,000 Development of Impression

Hualien

Taikai Xiamen Trading Corporation 2010.10.20

Room 615, Technology Building, No. 800, Sunban N. Rd., Houxi Township, Jimei District, Xiamen

64,417(US$2,200,000) Trade and agency business

Nanguowoo Corporation 2012.08.16 13F-3, No. 51, Hengyang Rd., Taipei 10,000 Real estate development and sale

Wind Lion Plaza Corporation 2012.08.17 No.8-6, Zhongshan Rd., Jinhu

Township, Kinmen County 300,000 Shopping mall operation and management

Taiwan Talent Development Corporation 2012.11.21 13F-3, No. 51, Hengyang Rd., Taipei 3,000 Manpower recruitment business

Taiwan Wind Lion Travel Service Corporation 2014.09.24 7F-7, No. 51, Hengyang Rd., Taipei 10,000 Tourism and travel business

Kinmen Forum Corporation 103.12.12 No.8-6, Zhongshan Rd., Jinhu

Township, Kinmen County 3,000Operation, management and conference business of hotels in Kimen

Taiwan C

omm

erce D

evelopment C

orporation

Taiwan E

nvirotech D

evelopment C

orporation

Taiwan C

ity D

evelopment C

orporation

Hualien C

ulture Clubhouse

Corporation

Hualien O

cean Forum

Corporation

Taikai Xiam

en Trading C

orporation

Nanguow

oo Corporation

Wind Lion P

laza C

orporation

Taiwan Talent

Developm

ent Corporation

Taiwan W

ind Lion travel service C

orporation

Kinmen Forum

C

orporation

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Percentage100%

Taiwan Land Development Corporation

Hsinchu Hill Garden Corporation

Taiwan Midtown Development Corporation


Taiwan LanYang Development Corporation

Percentage 100%

Percentage 51%Percentage 100%Percentage 100%Percentage 100%

201

VIII SPECIAL DISCLOSURES

C. The information of identical shareholders presumed to have control and subsidiary relationship: Not applicable.

D. Industries covered by the operations of all affiliates: Business operated by the Company and its affiliates cover the following industries: buildings and construction, urban renewal integration, real estate development, rental, and leasing, general merchandise import and information technology.

E. Collaboration with the Company: Taiwan Land Development Corporation (TLDC) engages in agency business of industrial parks development and asset development and management, and urban renewal. TLDC entrusts TIDC to conduct urban renewal integration and marketing services, and commissions Taiwan Innovation Development Co. to conduct construction contracting services and information management operations for the Group. Hsinchu Hill Garden Corporation, Taiwan Midtown Development Corporation, Taiwan Commerce Development Corporation, Hualien Culture Clubhouse Corporation, Hualien Ocean Forum Corporation and Taikai Xiamen Trading Corporation, Nanguowoo Corporation, Wind Lion Plaza Corporation and Taiwan Talent Development Corporation are independently operated corporations.

F. Names and shareholdings or capital increase status of directors, supervisors, and presidents of affiliates

Unit: No. of shares; %

Name of corporation Title Name or representativeHolding

Shares Percentage (%)


Chairman Taiwan Land Development Corporation Representative: Chiu, Fu-Sheng 711,811,629 100%

Vice Chairman Taiwan Land Development Corporation Representative: Lian, Tai-Sheng 711,811,629 100%

Director Taiwan Land Development Corporation Representative: Chiu, Yu-Yun 711,811,629 100%

Director Taiwan Land Development Corporation Representative: Luo, Chi-Cheng 711,811,629 100%

Director Taiwan Land Development Corporation Representative: Lin, Chih-Hua 711,811,629 100%

Director Taiwan Land Development Corporation Representative: Huang, Kuo-Chun 711,811,629 100%

Director Taiwan Land Development Corporation Representative: Kuo, Nein Hsiung 711,811,629 100%

Director Taiwan Land Development CorporationRepresentative: Ko, Cheng-Heng 711,811,629 100%

Director Taiwan Land Development CorporationRepresentative: Chan, Kwok-Wai 711,811,629 100%

Supervisor Taiwan Land Development Corporation Representative: Yeh, Hui-Ling 711,811,629 100%

Supervisor Taiwan Land Development Corporation Representative: Lin, Hung-Min 711,811,629 100%

Hsinchu Hill Garden Corporation

Chairman Taiwan Land Development Corporation Representative: Chiu, Fu-Sheng 100,000 100%

Director Taiwan Land Development Corporation Representative: Lian, Tai-Sheng 100,000 100%

Director Taiwan Land Development Corporation Representative: Cheng, Chi-Li 100,000 100%

Supervisor Taiwan Land Development Corporation Representative: Yeh, Hui-Ling 100,000 100%

Taiwan Midtown Development Corporation

Chairman Taiwan Land Development Corporation Representative: Chiu, Fu-Sheng 100,000 100%

Director Taiwan Land Development Corporation Representative: Lian, Tai-Sheng 100,000 100%

Director Taiwan Land Development Corporation Representative: Kuo, Nein Hsiung 100,000 100%

Supervisor Taiwan Land Development Corporation Representative: Lin, Hung-Min 100,000 100%




Taiwan LanYang Development Corporation

Chairman Hwawei International Innovation Co., Ltd. Representative: Li, Yu-Kuang 676,000 24.5%

Director Hwawei International Innovation Co., Ltd. Representative: Li, Wei-Hua 676,000 24.5%

Director Wu, Chi-Ming 50,000 5%

Director Taiwan Land Development Corporation Representative: Chiu, Fu-Sheng 1,479,000 51%

Director Taiwan Land Development Corporation Representative: Kuo, Tsung Hsiung 1,479,000 51%

Director Taiwan Land Development Corporation Representative: Luo, Chi-Cheng 1,479,000 51%

Director Taiwan Land Development Corporation Representative: Cheng, Chi-Li 1,479,000 51%

Supervisor Lin, Chao-Chin 195,000 19.5%

Supervisor Taiwan Innovation Development Corporation Representative: Yeh, Hui-Ling 0 0%

Taiwan Commerce Development Corporation

Chairman Taiwan Innovation Development CorporationRepresentative: Chiu, Fu-Sheng 200,111,016 100%

Director Taiwan Innovation Development CorporationRepresentative: Lian, Tai-Sheng 200,111,016 100%

Director Taiwan Innovation Development CorporationRepresentative: Kuo, Nein Hsiung 200,111,016 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Lin, Hung-Min 200,111,016 100%

Taiwan Envirotech Development Corporation



Director Taiwan Innovation Development CorporationRepresentative: Kow, Fu-Lin 3,000,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Cheng, Chi-Li 3,000,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Lin, Chih-Hua 3,000,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Huang, Kuo-Chun 3,000,000 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Lin, Hung-Min 3,000,000 100%

Taiwan City Development Corporation

Chairman Taiwan Innovation Development CorporationRepresentative: Chiu, Fu-Sheng 100,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Lian, Tai-Sheng 100,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Cheng, Chi-Li 100,000 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Lin, Hung-Min 100,000 100%

Hualien Culture Clubhouse Corporation




Supervisor Taiwan Innovation Development CorporationRepresentative: Yeh, Hui-Ling 4,434,000 100%

203

VIII SPECIAL DISCLOSURES



Hualien Ocean Forum Corporation



Director Taiwan Innovation Development CorporationRepresentative: Cheng, Chi-Li 100,000 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Yeh, Hui-Ling 100,000 100%

Taikai Xiamen Trading Corporation

Chairman Taiwan Innovation Development CorporationRepresentative: Chiu, Fu-Sheng － 100%

Director Taiwan Innovation Development CorporationRepresentative: Kuo, Nein Hsiung － 100%

Director Taiwan Innovation Development CorporationRepresentative: Smart Chiang － 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Yeh, Hui-Ling － 100%

Nanguowoo Corporation



Director Taiwan Innovation Development CorporationRepresentative: Kuo, Nein Hsiung 100,000 100%


Wind Lion Plaza Corporation



Director Taiwan Innovation Development CorporationRepresentative: Kuo, Nein Hsiung 30,000,000 100%


Taiwan Talent Development Corporation



Director Taiwan Innovation Development CorporationRepresentative: Kuo, Nein Hsiung 600,000 100%

Supervisor Taiwan Innovation Development CorporationRepresentative: Lin, Hung-Min 600,000 100%

Taiwan Wind Lion Travel Service Corporation


Director Taiwan Innovation Development CorporationRepresentative: Luo, Chi-Chen 1,000,000 100%



Kinmen Forum Corporation


Director Taiwan Innovation Development CorporationRepresentative: Luo, Chi-Chen 300,000 100%

Director Taiwan Innovation Development CorporationRepresentative: Kuo, Tsung Hsiung 300,000 100%



(2) Operation of Affiliates

December 31, 2015; Unit: NT$ thousand

Name of corporation Capital (paid-in)

Total assets

Total liabilities Net worth Operating

revenueOperating

incomeNet income

(loss)(after tax)

Earnings per share

(NT$)(after tax)

Taiwan Innovation Development Corporation 7,118,116 12,710,937 1,636,530 11,074,407 95,282 35,641 1,620,039 2.47

Hsinchu Hill Garden Corporation 1,000 673 - 673 - (63) (61) (0.62)

Taiwan Midtown Development Corporation 1,000 783 - 783 - (63) (61) (0.61)

Taiwan LanYang Development Corporation 29,000 27,831 100 27,731 - (977) (962) (0.74)

Taiwan Commerce Development Corporation 2,001,110 4,890,549 2,252,139 2,638,410 168,324 55,256 59,674 0.41

Taiwan Envirotech Development Corporation 30,000 276,214 231,781 44,433 257,510 5,240 1,380 0.46

Taiwan City Development Corporation 1,000 631 - 631 - (96) (96) (0.96)

Hualien Culture Clubhouse Corporation 44,340 65,462 19,887 45,575 93 (610) (361) (0.08)

Hualien Ocean Forum Corporation 1,000 388 - 388 - (63) (62) (0.62)

Taikai Xiamen Trading Corporation 64,417 47,441 166 47,275 10 (5,926) (6,532) -

Nanguowoo Corporation 10,000 9,013 311 8,702 1,876 199 205 0.21

Wind Lion Plaza Corporation 300,000 85,848 78,748 7,100 139,458 (203,152) (202,786) (7.49)

Taiwan Talent Development Corporation 6,000 3,072 1 3,071 - (443) (443) (1.36)

Taiwan Wind Lion Travel Service Corporation 10,000 9,912 5 9,907 - (64) (29) ( 0.03)

Kinmen Forum Corporation 3,000 2,994 - 2,994 - (11) (6) (0.02)

(3) Consolidated Financial Statement of Affiliates: Refer to page 130.

2. Private Placement of Securities in Years 2015 to present: None3. The Shares in the Company Held or Disposed by Subsidiaries in Years 2015 to

present: None.4. Other Supplementary Matters: None.5. Matters that Have Significantly Affected Shareholders’ Equity and Prices of

Securities Pursuant to Item 2, Subparagraph 2, Article 36 of Securities Exchange Law in Years 2015 to present: None.

台灣土地開發股份有限公司 | 抓住未來 提前實現 台開黃金五十年€¦ ·...

Documents

台灣土地開發股份有限公司 | 抓住未來提前實現台開黃金五十年€¦ ·...