yfy inc. (formerly yuen foong yu paper mfg. co., ltd.) and ... · yfy inc. (formerly yuen foong yu...

YFY Inc. (Formerly Yuen Foong Yu Paper Mfg. Co., Ltd.) and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2015 and 2014 and Independent Auditors’ Report

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DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance

with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and

Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2015 are

all the same as the companies required to be included in the consolidated financial statements of parent

and subsidiary companies as provided in International Financial Reporting Standard No. 10,

“Consolidated Financial Statements.” Relevant information that should be disclosed in the consolidated

financial statements of affiliates has all been disclosed in the consolidated financial statements of parent

and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial

statements of affiliates.

Very truly yours,

YFY INC.

(Formerly Yuen Foong Yu Paper Mfg. Co., Ltd.)

By:

MELODY CHIU

Chairman

March 18, 2016

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

YFY Inc.

We have audited the accompanying consolidated balance sheets of YFY Inc. (the “Company,”

formerly Yuen Foong Yu Paper Mfg. Co., Ltd.) and its subsidiaries as of December 31, 2015 and

2014, and the related consolidated statements of comprehensive income, changes in equity and

cash flows for the years then ended. These consolidated financial statements are the responsibility

of the Company’s management. Our responsibility is to express an opinion on these consolidated

financial statements based on our audits. However, we did not audit the financial statements for

2015 and 2014 of Jupiter Prestige Group Holdings Limited and its subsidiaries, Lotus Ecoscings &

Engineering Co., Ltd., Cupid InfoTech Co., Ltd., YFY Biotech Management Company, Systax

Communication (H.K.) Ltd. and Ever Growing Agriculture Biotech Co., Ltd., and the financial

statements for 2014 of CHP International (BVI) Corporation and its subsidiaries, and Hwa Fong

Investment Co.; all of these companies are consolidated subsidiaries. The financial statements of

these subsidiaries were audited by other auditors, whose reports have been furnished to us, and our

opinion, insofar as it relates to the amounts included for these subsidiaries, is based solely on the

reports of the other auditors. The assets of these subsidiaries as of December 31, 2015 and 2014

were about 1% (NT$1,145,190 thousand) and 9% (NT$10,163,884 thousand), respectively, of total

consolidated assets. The net sales of these subsidiaries for 2015 and 2014 were about 1%

(NT$696,948 thousand) and 5% (NT$2,750,272 thousand), respectively, of total consolidated net

sales. In addition, the financial statements as of and for the years ended December 31, 2015 and

2014 of Taiwan Genome Sciences Co., Ltd., an equity-method investee of the Company, were

audited by other auditors. Thus, our opinion, insofar as it relates to the calculation of the

Company’s share in this investee’s profit or loss and other comprehensive income, is based solely

on the report of the other auditors. As of December 31, 2015 and 2014, the aggregate carrying

values of this investee were NT$3,962 thousand and NT$3,864 thousand, respectively. Included

in the Company’s net comprehensive income for 2015 and 2014 were the Company’s equity of

NT$97 thousand in this investee’s net profit and an equity of NT$553 thousand in its net loss,

respectively.

We conducted our audits in accordance with the Regulations Governing the Auditing and

Attestation of Financial Statements by Certified Public Accountants and auditing standards

generally accepted in the Republic of China. Those rules and standards require that we plan and

perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the consolidated financial statements. An

audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall consolidated financial statement presentation. We

believe that our audits and the reports of the other auditors provide a reasonable basis for our

opinion.

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In our opinion, based on our audits and the reports of the other auditors, the consolidated financial

statements referred to above present fairly, in all material respects, the consolidated financial

position of YFY Inc. and its subsidiaries as of December 31, 2015 and 2014, and their consolidated

financial performance and their consolidated cash flows for the years then ended, in conformity

with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and

International Financial Reporting Standards, International Accounting Standards, IFRIC

Interpretations, and SIC Interpretations endorsed by the Financial Supervisory Commission of the

Republic of China.

We have also audited the financial statements of the parent company, YFY Inc., as of and for the

years ended December 31, 2015 and 2014, on which we have issued a modified unqualified report.

March 25, 2016

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial

position, financial performance and cash flows in accordance with accounting principles and

practices generally accepted in the Republic of China and not those of any other jurisdictions.

The standards, procedures and practices to audit such consolidated financial statements are those

generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial

statements have been translated into English from the original Chinese version prepared and used

in the Republic of China. If there is any conflict between the English version and the original

Chinese version or any difference in the interpretation of the two versions, the Chinese-language

auditors’ report and consolidated financial statements shall prevail.

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YFY INC. (FORMERLY YUEN FOONG YU PAPER MFG. CO., LTD.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015 AND 2014

(In Thousands of New Taiwan Dollars)

2015 2014

ASSETS Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Notes 4 and 6) $ 2,380,644 2 $ 2,773,107 2

Financial assets at fair value through profit or loss (Notes 4 and 7) 987,404 1 610,498 1

Available-for-sale financial assets (Notes 4 and 8) 4,274,542 4 5,445,583 5

Debt investments with no active market (Notes 4, 6 and 30) 1,014,100 1 2,098,257 2

Notes receivable (Notes 4, 11 and 30) 3,490,802 3 2,562,471 2

Accounts receivable (Notes 4 and 11) 11,075,094 10 10,513,311 9

Accounts receivable from related parties (Notes 4 and 29) 17,605 - 229,671 -

Inventories (Notes 4 and 12) 9,761,552 8 9,295,393 8

Biological assets (Notes 4 and 13) 3,622,185 3 2,990,129 3

Prepayments 1,183,304 1 947,127 1

Other current assets (Notes 4, 9, 29 and 30) 1,907,664 2 860,772 1

Total current assets 39,714,896 35 38,326,319 34

NON-CURRENT ASSETS

Financial assets at fair value through profit or loss, net of current portion (Notes 4 and 7) - - 282,799 -

Available-for-sale financial assets, net of current portion (Notes 4 and 8) 9,709,107 9 11,909,801 11

Financial assets measured at cost (Notes 4 and 10) 1,733,666 2 1,644,056 1

Debt investments with no active market, net of current portion (Notes 4 and 24) 400,000 - - -

Investments accounted for using the equity method (Notes 4 and 15) 6,814,794 6 7,030,903 6

Property, plant and equipment (Notes 4, 16 and 30) 47,178,242 42 46,616,218 42

Investment properties (Notes 4, 17 and 30) 2,803,012 2 2,599,734 2

Goodwill (Notes 4 and 5) 507,114 - 487,566 -

Deferred tax assets (Notes 4 and 23) 551,817 - 546,040 1

Long-term prepayments for lease (Note 22) 1,206,625 1 1,098,119 1

Prepayments for equipment 2,029,249 2 878,480 1

Other non-current assets (Note 22) 742,378 1 873,774 1

Total non-current assets 73,676,004 65 73,967,490 66

TOTAL $ 113,390,900 100 $ 112,293,809 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Notes 18 and 30) $ 10,403,060 9 $ 12,266,682 11

Short-term bills payable (Note 18) 11,279,300 10 6,151,138 6

Notes payable 2,002,570 2 96,601 -

Accounts payable 6,363,477 6 5,820,407 5

Accounts payable to related parties (Note 29) 70,321 - 107,104 -

Other payables (Note 25) 2,702,884 2 2,555,281 2

Current tax liabilities (Notes 4 and 23) 175,543 - 179,788 -

Current portion of long-term borrowings and bonds payable (Notes 18, 19 and 30) 448,250 1 1,727,645 2

Other current liabilities (Notes 4, 7 and 9) 1,540,399 1 1,145,705 1

Total current liabilities 34,985,804 31 30,050,351 27

NON-CURRENT LIABILITIES

Long-term borrowings, net of current portion (Notes 18 and 30) 28,002,204 25 27,613,190 25

Deferred tax liabilities (Notes 4 and 23) 3,396,715 3 3,399,296 3

Net defined benefit liabilities (Notes 4 and 20) 1,558,220 1 1,232,893 1

Other non-current liabilities 170,929 - 162,797 -

Total non-current liabilities 33,128,068 29 32,408,176 29

Total liabilities 68,113,872 60 62,458,527 56

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 21)

Share capital 16,603,715 15 16,603,715 15

Capital surplus 685,256 - 618,282 -

Retained earnings

Legal reserve 3,191,920 3 3,131,658 3

Special reserve 4,031,432 3 4,031,432 4

Unappropriated earnings 5,500,298 5 6,038,592 5

Total retained earnings 12,723,650 11 13,201,682 12

Other equity 5,533,599 5 9,332,893 8

Total equity attributable to owners of the Company 35,546,220 31 39,756,572 35

NON-CONTROLLING INTERESTS 9,730,808 9 10,078,710 9

Total equity 45,277,028 40 49,835,282 44

TOTAL $ 113,390,900 100 $ 112,293,809 100

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

(With Deloitte & Touche audit report dated March 25, 2016)

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YFY INC. (FORMERLY YUEN FOONG YU PAPER MFG. CO., LTD.) AND

SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2015

2014

(Audited after

Restatement)

Amount % Amount %

OPERATING REVENUE (Notes 4 and 29)

Sales $ 55,459,099 87 $ 53,834,783 88

Other operating revenue 8,120,898 13 7,061,614 12

Total operating revenue 63,579,997 100 60,896,397 100

OPERATING COSTS (Notes 3, 12, 20, 22 and 29)

Cost of goods sold 47,540,458 75 46,519,741 77

Other operating cost 5,374,667 8 4,983,261 8

Total operating costs 52,915,125 83 51,503,002 85

GROSS PROFIT 10,664,872 17 9,393,395 15

GAIN (LOSS) ARISING FROM CHANGES IN FAIR

VALUE LESS COSTS TO SELL BIOLOGICAL

ASSETS (Notes 4 and 13) (740) - 33,001 -

OPERATING EXPENSES (Notes 3, 20, 22 and 29)

Selling and marketing 5,113,942 8 5,180,565 8

General and administrative 3,716,004 6 3,493,007 6

Research and development 148,439 - 123,225 -

Total operating expenses 8,978,385 14 8,796,797 14

PROFIT FROM OPERATIONS 1,685,747 3 629,599 1

NON-OPERATING INCOME AND EXPENSES

Finance costs (Notes 4 and 22) (892,141) (1) (871,811) (1)

Share of profit of associates (Notes 4 and 15) 150,480 - 235,851 -

Interest income 247,177 - 234,261 -

Dividend income 602,366 1 436,264 1

Other income (Note 29) 457,906 1 463,607 1

Loss on disposal of property, plant and equipment (8,742) - (37,698) -

Gain on disposal of investments (Notes 4, 26 and 29) 195,881 - 158,133 -

Foreign exchange gain (loss) (603,262) (1) 145,734 -

Other losses (88,126) - (94,668) -

(Continued)

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SUBSIDIARIES




2015

2014

(Audited after

Restatement)

Amount % Amount %

Loss arising on financial instruments at FVTPL

(Notes 4 and 28) $ (71,842) - $ (41,786) -

Impairment loss recognized on financial assets

(Notes 4 and 10) (48,206) - (9,955) -

Total non-operating income and expenses (58,509) - 617,932 1

PROFIT BEFORE INCOME TAX 1,627,238 3 1,247,531 2

INCOME TAX EXPENSE (Notes 3, 4 and 23) (445,044) (1) (383,474) (1)

NET PROFIT FOR THE YEAR 1,182,194 2 864,057 1

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 3, 4 and 21)

Items that will not be reclassified subsequently to

profit or loss:

Remeasurement of defined benefit plans (306,598) (1) (114,623) -

Share of the other comprehensive income (loss) of

associates (3,798) - 6,638 -

(310,396) (1) (107,985) -

Items that may be reclassified subsequently to profit

or loss:

Exchange differences on translating foreign

operations (258,802) - 1,742,460 3

Unrealized gain (loss) on available-for-sale

financial assets (3,402,530) (5) 3,955,972 7

Cash flow hedges 16,221 - (2,999) -

Share of the other comprehensive income (loss) of

associates (306,049) (1) 825,688 1

(3,951,160) (6) 6,521,121 11

Other comprehensive income (loss) for the year,

net of income tax (4,261,556) (7) 6,413,136 11

TOTAL COMPREHENSIVE INCOME (LOSS) FOR

THE YEAR $ (3,079,362) (5) $ 7,277,193 12

(Continued)

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SUBSIDIARIES




2015

2014

(Audited after

Restatement)

Amount % Amount %

NET PROFIT ATTRIBUTABLE TO:

Owners of the Company $ 501,904 1 $ 594,779 1

Non-controlling interests 680,290 1 269,278 -

$ 1,182,194 2 $ 864,057 1

TOTAL COMPREHENSIVE INCOME (LOSS)

ATTRIBUTABLE TO:

Owners of the Company $ (3,611,713) (6) $ 6,685,733 11

Non-controlling interests 532,351 1 591,460 1

$ (3,079,362) (5) $ 7,277,193 12

EARNINGS PER SHARE (New Taiwan dollars;

Note 24)

Basic $ 0.30 $ 0.36

Diluted $ 0.30 $ 0.36


(With Deloitte & Touche audit report dated March 25, 2016) (Concluded)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Equity Attributable to Owners of the Company

Other Equity

Exchange Unrealized

Differences on Gain (Loss) on

Share Capital Retained Earnings Translating Available-for-

Share Capital Surplus Unappropriated Foreign sale Financial Cash Flow Non-controlling

(Thousands) Amount Treasury Stock Form Merger Other Total Legal Reserve Special Reserve Earnings Total Operations Assets Hedges Total Interests Total Equity

BALANCE AT JANUARY 1, 2014 1,660,372 $ 16,603,715 $ 14,947 $ 293,124 $ 150,814 $ 458,885 $ 3,070,603 $ 4,031,432 $ 6,252,108 $ 13,354,143 $ 1,247,564 $ 1,935,199 $ (4,074 ) $ 33,595,432 $ 9,973,410 $ 43,568,842

Appropriation of the 2013 earnings

Legal reserve - - - - - - 61,055 - (61,055 ) - - - - - - -

Cash dividends distributed by the Company - - - - - - - - (664,148 ) (664,148 ) - - - (664,148 ) - (664,148 )

Cash dividends distributed by subsidiaries - - - - - - - - - - - - - - (196,020 ) (196,020 )

Adjustments for the changes in equity in associates - - - - 2,959 2,959 - - (19,805 ) (19,805 ) - - - (16,846 ) (988 ) (17,834 )

Partial acquisition of interests in subsidiaries - - - - 63,990 63,990 - - - - - - - 63,990 125,229 189,219

Adjustments for the changes in equity in subsidiaries - - - - 92,448 92,448 - - (37 ) (37 ) - - - 92,411 (414,381 ) (321,970 )

Net profit for the year ended December 31, 2014 - - - - - - - - 594,779 594,779 - - - 594,779 269,278 864,057

Other comprehensive income for the year ended December 31,

2014, net of income tax - - - - - - - - (63,250 ) (63,250 ) 1,756,546 4,399,331 (1,673 ) 6,090,954 322,182 6,413,136

Total comprehensive income for the year ended December 31,

2014 - - - - - - - - 531,529 531,529 1,756,546 4,399,331 (1,673 ) 6,685,733 591,460 7,277,193

BALANCE AT DECEMBER 31, 2014 1,660,372 16,603,715 14,947 293,124 310,211 618,282 3,131,658 4,031,432 6,038,592 13,201,682 3,004,110 6,334,530 (5,747 ) 39,756,572 10,078,710 49,835,282

Appropriation of the 2014 earnings

Legal reserve - - - - - - 60,262 - (60,262 ) - - - - - - -

Cash dividends distributed by the Company - - - - - - - - (664,148 ) (664,148 ) - - - (664,148 ) - (664,148 )

Cash dividends distributed by subsidiaries - - - - - - - - - - - - - - (296,799 ) (296,799 )

Adjustments for the changes in equity of associates - - - - 42,082 42,082 - - (1,465 ) (1,465 ) - - - 40,617 2,644 43,261

Partial acquisition of interests in subsidiaries - - - - 19,287 19,287 - - - - - - - 19,287 (577,930 ) (558,643 )

Adjustments for the changes in equity of subsidiaries - - - - 5,605 5,605 - - - - - - - 5,605 (8,168 ) (2,563 )

Net profit for the year ended December 31, 2015 - - - - - - - - 501,904 501,904 - - - 501,904 680,290 1,182,194

Other comprehensive income for the year ended December 31,

2015, net of income tax - - - - - - - - (314,323 ) (314,323 ) (280,019 ) (3,532,903 ) 13,628 (4,113,617 ) (147,939 ) (4,261,556 )

Total comprehensive loss for the year ended December 31, 2015 - - - - - - - - 187,581 187,581 (280,019 ) (3,532,903 ) 13,628 (3,611,713 ) 532,351 (3,079,362 )

BALANCE AT DECEMBER 31, 2015 1,660,372 $ 16,603,715 $ 14,947 $ 293,124 $ 377,185 $ 685,256 $ 3,191,920 $ 4,031,432 $ 5,500,298 $ 12,723,650 $ 2,724,091 $ 2,801,627 $ 7,881 $ 35,546,220 $ 9,730,808 $ 45,277,028


(With Deloitte & Touche audit report dated March 25, 2016)

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SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



2015

2014 (Audited

after

Restatement)

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 1,627,238 $ 1,247,531

Adjustments for:

Depreciation and amortization expenses 3,473,770 3,241,007

Impairment loss recognized on accounts receivable 1,705 123,655

Net loss on fair value change of financial instruments at fair value

through profit or loss 71,842 41,786

Finance costs 892,141 871,811

Interest income (247,177) (234,261)

Dividend income (602,366) (436,264)

Share of profit of associates (150,480) (235,851)

Loss on disposal of property, plant and equipment 8,742 37,698

Net gain on disposal of investments (195,881) (158,133)

Impairment loss on financial assets 48,206 9,955

Write-down (reversal of write-down) of inventories 31,070 (45,247)

Net unrealized loss (gain) on foreign currency exchange 814,093 (219,980)

Loss (gain) on changes in fair value less cost to sell biological assets 740 (33,001)

Other items 2,565 -

Changes in operating assets and liabilities

Notes receivable (922,158) (187,212)

Accounts receivable (437,193) (1,568,289)

Accounts receivable from related parties 390,531 (86,304)

Inventories (456,431) (79,328)

Biological assets (706,480) (165,964)

Prepayments (217,627) (2,875)

Other current assets (951,780) 49,928

Notes payable 1,855,576 92,387

Accounts payable 422,900 296,565

Accounts payable to related parties (555,219) 194,758

Other payables 113,671 40,709

Other current liabilities 572,849 94,399

Net defined benefit liabilities 16,387 (35,505)

Cash generated from operations 4,901,234 2,853,975

Interest received 170,970 240,689

Dividends received 756,741 508,642

Interest paid (876,497) (708,715)

Income tax paid (453,938) (444,838)

Net cash generated from operating activities 4,498,510 2,449,753

(Continued)

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SUBSIDIARIES




2015

2014 (Audited

after

Restatement)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of financial instruments at fair value through profit or loss $ (18,660,044) $ (14,810,185)

Proceeds of the sale of financial instruments at fair value through profit

or loss 18,502,089 14,800,791

Purchase of available-for-sale financial assets (32,588) (1,639,635)

Proceeds on sale of available-for-sale financial assets 88,582 1,260,984

Purchase of debt investments with no active market (400,000) (734,935)

Proceeds on sale of debt investments with no active market 1,053,998 -

Purchase of financial assets measured at cost (261,237) (530,306)

Proceeds on sale of financial assets measured at cost 157,156 30,104

Proceeds of the return of capital upon investees’ capital reduction on

financial assets measured at cost 23,670 29,386

Payments to acquire financial assets for hedging (7,205) -

Proceeds on sale of financial assets for hedging - 3,828

Proceeds on sale of investments accounted for using the equity method 574 -

Acquisition of subsidiaries (50,092) (85,608)

Net cash outflow on disposal of subsidiaries (6,775) (87,059)

Proceeds on return of capital on investments accounted for using the

equity method - 1,400

Payments for property, plant and equipment (4,602,832) (4,886,516)

Proceeds from disposal of property, plant and equipment 55,502 237,621

Payments for investment properties (13,219) (17,344)

Proceeds from the disposal of investment properties 89,075 113,215

Increase in prepayments for equipment (1,439,026) (441,997)

Increase in prepayments for lease (188,715) (113,099)

Decrease (increase) in other non-current assets 158,566 (271,760)

Net cash used in investing activities (5,532,521) (7,141,115)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of short-term borrowings (1,717,438) (1,085,975)

Proceeds from short-term bills payable 5,108,369 687,341

Repayments of bond payables (1,250,000) (1,250,000)

Proceeds of long-term borrowings 140,186 6,646,695

Decrease in other non-current liabilities (16,870) (8,571)

Cash dividends paid (664,148) (664,148)

Decrease in non-controlling interest (953,395) (525,203)

Net cash generated from financing activities 646,704 3,800,139

(Continued)

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SUBSIDIARIES




2015

2014 (Audited

after

Restatement)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE

OF CASH HELD IN FOREIGN CURRENCIES $ (5,156) $ 97,764

NET DECREASE IN CASH AND CASH EQUIVALENTS (392,463) (793,459)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 2,773,107 3,566,566

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 2,380,644 $ 2,773,107


(With Deloitte & Touche audit report dated March 25, 2016) (Concluded)

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SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

YFY Inc. (the “Company,” formerly Yuen Foong Yu Paper Mfg. Co., Ltd.) was incorporated in Kaohsiung

in February 1950. The Company’s shares have been listed on the Taiwan Stock Exchange (TSE) since

February 1977.

The Company originally manufactured, packaged, tested and sold various integrated circuit products. To

increase its competitiveness and sales through organization restructuring and specialization, the Company

spun off the assets, liabilities, and operations of its consumer products and packaging segments to its

subsidiaries, YFY Consumer Products Co., Ltd. in October 2007 and YFY Packaging Inc. in September

2005.

In addition, the Company spun off the assets, liabilities and operations of its paper and cardboard business

segment to Chung Hwa Pulp Co., Ltd. (CHPC) and acquired the shares issued by CHPC on October 1,

2012. After this transaction, CHPC became a subsidiary of the Company, and the Company became an

investment holding company, with investment and holding as its main business.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan

dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 18,

2016.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports

by Securities Issuers and the 2013 version of the International Financial Reporting Standards (IFRS),

International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS

(SIC) endorsed by the FSC

Rule No. 1030029342 and Rule No. 1030010325 issued by the Financial Supervisory Commission

(FSC) on April 3, 2014 stipulated that the Group should apply the 2013 version of IFRS, IAS, IFRIC

and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the

Regulations Governing the Preparation of Financial Reports by Securities Issuers starting January 1,

2015.

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Except for the following, whenever applied, the initial application of the amendments to the

Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 IFRSs

version would not have any material impact on the Group’s accounting policies:

1) IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries

and associates. In general, the disclosure requirements in IFRS 12 are more extensive; please refer

to Notes 14 and 15 for related disclosures.

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

The amendments to IAS 1 requires items of other comprehensive income to be grouped into those

items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified

subsequently to profit or loss. Income taxes on related items of other comprehensive income are

grouped on the same basis. Under current IAS 1, there were no such requirements.

The Group retrospectively applied the above amendments starting in 2015. Items not expected to

be reclassified to profit or loss are remeasurements of the defined benefit plans. Items expected to

be reclassified to profit or loss are the exchange differences on translating foreign operations,

unrealized gain (loss) on available-for-sale financial assets, cash flow hedges, and share of the other

comprehensive income (except the share of the remeasurements of the defined benefit plans) of

subsidiaries and associates accounted for using the equity method. However, the application of the

above amendments will not have any impact on the net profit for the year, other comprehensive

income for the year (net of income tax), and total comprehensive income for the year.

3) Revision to IAS 19 “Employee Benefits”

Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair

value of plan assets when they occur, and hence eliminates the “corridor approach” permitted under

current IAS 19 and accelerate the recognition of past service costs. The revision requires all

remeasurements of the defined benefit plans to be recognized immediately through other

comprehensive income in order for the net pension asset or liability to reflect the full value of the

plan deficit or surplus.

Furthermore, the interest cost and expected return on plan assets used in current IAS 19 are replaced

with a “net interest” amount, which is calculated by applying the discount rate to the net defined

benefit liability or asset. In addition, the revised IAS 19 introduces certain changes in the

presentation of the defined benefit cost, and also includes more extensive disclosures.

On initial application of the revised IAS 19, the changes in cumulative employee benefit costs as of

December 31, 2013 resulting from the retrospective application are not adjusted to cumulative

employee benefit cost. In addition, in preparing the consolidated financial statements for the year

ended December 31, 2015, the Group elected not to present 2014 comparative information about the

sensitivity of the defined benefit obligation.

- 14 -

The impact in the prior year is set out below:

As Originally

Stated

Adjustments

Arising from

Initial

Application Restated

Impact on total comprehensive income for

the year ended December 31, 2014

Operating costs $ (51,504,502) $ 1,500 $ (51,503,002)

Operating expenses (8,788,421) (8,376) (8,796,797)

Income tax expense (384,643) 1,169 (383,474)

Total effect on net loss for the year (60,677,566) (5,707) (60,683,273)

Items that will not be reclassified to profit

or loss:

Remeasurements of defined benefit

plan (120,330) 5,707 (114,623)

Total effect on other comprehensive

income for the year, net of income tax (120,330) 5,707 (114,623)

Total effect on total comprehensive

income for the year $ (60,797,896) $ - $ (60,797,896)

Net profit attributable to:

Owners of the Company $ (6,304)

Non-controlling interests 597

$ (5,707)

Impact on earnings per share:

For the year ended December 31, 2014

Basic $ 0.36 $ - $ 0.36

Diluted $ 0.36 $ - $ 0.36

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

On March 10, 2016, the FSC announced the scope of IFRSs to be endorsed and will take effect from

January 1, 2017. Within this scope are all IFRSs that had been issued by the IASB before January 1,

2016 and have effective dates on or before January 1, 2017, and outside this scope are those IFRS that

are not yet effective as of January 1, 2017, such as IFRS 9 “Financial Instruments” and IFRS 15

“Revenue from Contracts with Customers,” and those with undetermined effective dates. In addition,

the FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the

consolidated financial statements were authorized for issue, the FSC had not yet announced the

effective dates of other new, amended and revised standards and interpretations.

- 15 -

The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the

FSC.

New IFRSs

Effective Date

Announced by IASB (Note 1)

Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2)

Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014

Annual Improvements to IFRSs 2012-2014 Cycle January 1, 2016 (Note 3)

IFRS 9 “Financial Instruments” January 1, 2018

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of

IFRS 9 and Transition Disclosures”

January 1, 2018

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets

between an Investor and its Associate or Joint Venture”

To be determined by IASB

Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:

Applying the Consolidation Exception”

January 1, 2016

Amendment to IFRS 11 “Accounting for Acquisitions of Interests in

Joint Operations”

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

Amendment to IAS 1 “Disclosure Initiative” January 1, 2016

Amendment to IAS 7 “Disclosure Initiative” January 1, 2017

Amendments to IAS 12 “Recognition of Deferred Tax Assets for

Unrealized Losses”

January 1, 2017

Amendments to IAS 16 and IAS 38 “Clarification of Acceptable

Methods of Depreciation and Amortization”

January 1, 2016

Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” January 1, 2016

Amendment to IAS 19 “Defined Benefit Plans: Employee

Contributions”

July 1, 2014

Amendment to IAS 27 “Equity Method in Separate Financial

Statements”

January 1, 2016

Amendment to IAS 36 “Impairment of Assets: Recoverable Amount

Disclosures for Non-financial Assets”

January 1, 2014

Amendment to IAS 39 “Novation of Derivatives and Continuation of

Hedge Accounting”

January 1, 2014

IFRIC 21 “Levies” January 1, 2014

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on

or after their respective effective dates.

Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or

after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition

date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the

remaining amendments are effective for annual periods beginning on or after July 1, 2014.

Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that

occur in annual periods beginning on or after January 1, 2016; the remaining amendments are

effective for annual periods beginning on or after January 1, 2016.

- 16 -

The initial application of the above New IFRSs, whenever applied, would not have any material impact

on the Group’s accounting policies, except for the following:

IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39

“Financial Instruments: Recognition and Measurement” are subsequently measured at amortized

cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated

below.

For the Group’s debt instruments that have contractual cash flows that are solely payments of

principal and interest on the principal amount outstanding, their classification and measurement are

as follows:

1) For debt instruments, if they are held within a business model whose objective is to collect the

contractual cash flows, the financial assets are measured at amortized cost and are assessed for

impairment continuously with impairment loss recognized in profit or loss, if any. Interest

revenue is recognized in profit or loss by using the effective interest method;

2) For debt instruments, if they are held within a business model whose objective is achieved by

both the collecting of contractual cash flows and the selling of financial assets, the financial

assets are measured at fair value through other comprehensive income (FVTOCI) and are

assessed for impairment. Interest revenue is recognized in profit or loss by using the effective

interest method, and other gain or loss shall be recognized in other comprehensive income,

except for impairment gains or losses and foreign exchange gains and losses. When the debt

instruments are derecognized or reclassified, the cumulative gain or loss previously recognized

in other comprehensive income is reclassified from equity to profit or loss.

Except for above, all other financial assets are measured at fair value through profit or loss.

However, the Group may make an irrevocable election to present subsequent changes in the fair

value of an equity investment (that is not held for trading) in other comprehensive income, with

only dividend income generally recognized in profit or loss. No subsequent impairment

assessment is required, and the cumulative gain or loss previously recognized in other

comprehensive income cannot be reclassified from equity to profit or loss.

The impairment of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit

Losses Model”. The credit loss allowance is required for financial assets measured at amortized

cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising

from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and

financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required

for a financial asset if its credit risk has not increased significantly since initial recognition. A loss

allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has

increased significantly since initial recognition and is not low. However, a loss allowance for full

lifetime expected credit losses is required for accounts receivable that do not constitute a financing

transaction.

For purchased or originated credit-impaired financial assets, the Group takes into account the

expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate.

Subsequently, any changes in expected losses are recognized as a loss allowance with a

corresponding gain or loss recognized in profit or loss.

- 17 -

Hedge accounting

The main changes in hedge accounting amended the application requirements for hedge accounting

to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes

include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening

the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging

derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing

retrospective effectiveness assessment with the principle of economic relationship between the

hedging instrument and the hedged item.

Except for the above impact, as of the date the consolidated financial statements were authorized for

issue, the Group is continuously assessing the possible impact that the application of other standards

and interpretations will have on the Group’s financial position and financial performance, and will

disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations

Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed by the

FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for

financial instruments that are measured at fair values.

The fair value measurements are grouped into Levels 1 to 3 on the basis of the degree to which the fair

value measurement inputs are observable and the significance of the inputs to the fair value

measurement in its entirety; inputs by level are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

3) Level 3 inputs are unobservable inputs on the asset or liability.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;

2) Assets expected to be realized within twelve months after the reporting period; and

3) Cash and cash equivalents, unless the asset is restricted from being exchanged or used to settle a

liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;

- 18 -

2) Liabilities due to be settled within twelve months after the reporting period, even if an agreement to

refinance, or to reschedule payments, on a long-term basis is completed after the reporting period

and before the consolidated financial statements are authorized for issue; and

3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least

twelve months after the reporting period. Terms of a liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Company and the

entities controlled by the Company.

Income and expenses of subsidiaries acquired or disposed of during the period are included in the

consolidated statement of profit or loss and other comprehensive income from the effective date of

acquisition or up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policies into line with those used by the Company.

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

The total comprehensive income of subsidiaries is attributed to the owners of the Company and to the

non-controlling interests even if this attribution results in the non-controlling interests having a deficit

balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control

over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s

interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in

the subsidiaries. Any difference between the amount by which the noncontrolling interests are

adjusted and the fair value of the consideration paid or received is recognized directly in equity and

attributed to the owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is

calculated as the difference between (i) the aggregate of the fair value of the consideration received and

any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii)

the assets (including any goodwill) and liabilities and any noncontrolling interests of the former

subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all

amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as

would be required if the Group had directly disposed of the related assets or liabilities.

The fair value of any investment retained in the former subsidiary at the date when control is lost is

regarded as the fair value on initial recognition for subsequent accounting under IAS 39 “Financial

Instruments: Recognition and Measurement,” or, when applicable, as the cost on initial recognition of

an investment in an associate.

See Note 14 and Tables 8 and 9 for more information on subsidiaries (including the percentage of

ownership and main business).

- 19 -

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs

are generally recognized in profit or loss as incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any

noncontrolling interests in the acquiree, and the fair value of the acquirer’s previously held equity

interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired

and the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the

identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the

amount of any noncontrolling interests in the acquiree and the fair value of the acquirer’s previously

held interest in the acquiree, the excess are recognized immediately in profit or loss as a bargain

purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate

share of the entity’s net assets in the event of liquidation may be initially measured either at fair value

or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s

identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

Other types of non-controlling interests are measured at fair value.

Where the consideration the Group transfers in a business combination includes assets or liabilities

resulting from a contingent consideration arrangement, the contingent consideration is measured at its

acquisition-date fair value and considered as part of the consideration transferred in a business

combination. Changes in the fair value of the contingent consideration that qualify as measurement

period adjustments are adjusted retrospectively, with the corresponding adjustments being made against

goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise

from additional information obtained during the measurement period about facts and circumstances that

existed as of the acquisition date. Measurement period does not exceed one year from the acquisition

date.

f. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other

than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange

prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated

at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or

translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated

at the rates prevailing at the date when the fair value was determined. Exchange differences arising on

the retranslation of non-monetary items are included in profit or loss for the period except for exchange

differences arising from the retranslation of non-monetary items in respect of which gains and losses are

recognized directly in other comprehensive income, in which case, the exchange differences are also

recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s

foreign operations (including of the subsidiaries and associates operations in other countries or

currencies used different with the Company) are translated into New Taiwan dollars using exchange

rates prevailing at the end of each reporting period. Income and expense items are translated at the

average exchange rates for the period. Exchange differences arising are recognized in other

comprehensive income attributed to the owners of the Company and noncontrolling interests as

appropriate.

- 20 -

On the disposal of a foreign operation involving loss of control over a subsidiary or loss of significant

influence over an associate, all of the exchange differences accumulated in equity in respect of that

operation attributable to the owners of the Company are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over

the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to

noncontrolling interests of the subsidiary and is not recognized in profit or loss. For all other partial

disposals, the proportionate share of the accumulated exchange differences recognized in other

comprehensive income is reclassified to profit or loss.

g. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the

lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be

appropriate to group similar or related items. Net realizable value is the estimated selling price of

inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are

recorded at weighted-average cost on the balance sheet date.

h. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted

thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the

subsidiary. The Company also recognizes the changes in the Company’s share of the equity of

subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company’s losing

control over the subsidiary are equity transactions. The Company recognizes directly in equity any

difference between the carrying amount of the investment and the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which

includes any carrying amount of the investment accounted for by the equity method and long-term

interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company

continues recognizing its share of further losses.

Any acquisition cost in excess of the Company’s share of the net fair value of the identifiable assets and

liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within

the carrying amount of the investment and is not amortized. If the Company’s share of the net fair

value of the identifiable assets and liabilities exceeds the acquisition cost, this excess is recognized

immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the

recoverable amount as estimated on the basis of the a subsidiary’s entire financial statements.

Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the

recoverable amount of the investment subsequently increases, the Company recognizes a reversal of

impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that

would have been recognized (net of amortization or depreciation) had no impairment loss been

recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a

subsequent period.

- 21 -

When the Company loses control of a subsidiary, it recognizes the investment retained in the former

subsidiary at its fair value at the date when control is lost. The difference between the fair value of the

retained investment plus any consideration received and the carrying amount of previous investment at

the date when control is lost is recognized as gain or loss in profit or loss. In addition, the Company

accounts for all amounts previously recognized in other comprehensive income in relation to that

subsidiary on the same basis as would have been required had the Company directly disposed of the

related assets or liabilities.

Profits or losses resulting from downstream transactions are fully eliminated only in the parent

company’s financial statements. Profits and losses resulting from upstream transactions and

transactions between subsidiaries are also recognized only in the parent company’s financial statements

to the extent of interests in the subsidiaries that are not related to the Company.

i. Investment in associates

An associate is an entity over which the Group has significant influence and that is not a subsidiary.

Under the equity method, investments in an associate are initially recognized at cost and adjusted

thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the

associate. The Group also recognizes the changes in the Group’s share of equity of associates.

Any acquisition cost in excess of the Group’s share of the net fair value of the identifiable assets and

liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within

the carrying amount of the investment and is not amortized. If the Group’s share of the net fair value

of the identifiable assets and liabilities exceeds acquisition cost, after reassessment, this excess is

recognized immediately in profit or loss.

When the Group subscribes for additional new shares of the associate at a percentage different from its

existing ownership percentage, the resulting carrying amount of the investment differs from the amount

of the Group’s proportionate interest in the associate. The Group records such a difference as an

adjustment to investments, with the corresponding amount charged or credited to capital surplus -

changes in the Group’s share of equity of associates. If the Group’s ownership interest is reduced due

to the additional subscription of the new shares of associate, the proportionate amount of the gains or

losses previously recognized in other comprehensive income in relation to that associate is reclassified

to profit or loss on the same basis as would be required if the investee had directly disposed of the

related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital

surplus recognized from investments accounted for by the equity method is insufficient, the shortage is

debited to retained earnings.

When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in

that associate (which includes any carrying amount of the investment accounted for by the equity

method and long-term interests that, in substance, form part of the Group’s net investment in the

associate), the Group discontinues recognizing its share of further losses. Additional losses and

liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive

obligations, or made payments on behalf of that associate.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single

asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized

forms part of the carrying amount of the investment. Any reversal of that impairment loss is

recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be

an associate. Any retained investment is measured at fair value at that date and the fair value is

regarded as its fair value on initial recognition as a financial asset. The difference between the

previous carrying amount of the associate attributable to the retained interest and its fair value is

included in the determination of the gain or loss on disposal of the associate. The Group accounts for

- 22 -

all amounts previously recognized in other comprehensive income in relation to that associate on the

same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When a group entity transacts with its associate, profits and losses resulting from the transactions with

the associate are recognized in the Group’ consolidated financial statements only to the extent of

interests in the associate that are not related to the Group.

j. Property, plant and equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and

subsequent accumulated impairment loss.

Properties, plant and equipment in the course of construction are carried at cost, less any recognized

impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization.

Such assets are depreciated and classified to the appropriate categories of property, plant and equipment

when completed and ready for intended use.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each

significant part is depreciated separately. The estimated useful lives, residual values and depreciation

method are reviewed at the end of each reporting period, with the effect of any changes in estimate

accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds

and the carrying amount of the asset is recognized in profit or loss.

k. Investment properties

Investment properties are properties held to earn rentals or for capital appreciation. Investment

properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial

recognition, investment properties are measured at cost less accumulated depreciation and accumulated

impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the

carrying amount of the asset is included in profit or loss.

l. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of

acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating

units or groups of cash-generating units (referred to as cash-generating units) that is expected to benefit

from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more

frequently when there is an indication that the unit may be impaired, by comparing its carrying amount,

including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a

cash-generating unit was acquired in a business combination during the current annual period, that unit

shall be tested for impairment before the end of the current annual period. If the recoverable amount

of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to

reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit

pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized

directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent

periods.

- 23 -

m. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and

intangible assets, excluding goodwill, to determine whether there is any indication that those assets

have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is

estimated in order to determine the extent of the impairment loss. When it is not possible to estimate

the recoverable amount of an individual asset, the Company estimates the recoverable amount of the

cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual

cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for

impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable

amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying

amount of the asset or cash-generating unit is reduced to its recoverable amount, and the resulting

impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating

unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying

amount that would have been determined had no impairment loss been recognized for the asset or

cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

n. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the

contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are

directly attributable to the acquisition or issue of financial assets and financial liabilities (other than

financial assets and financial liabilities at fair value through profit or loss) are added to or deducted

from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair

value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

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

date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at fair value

through profit or loss, available-for-sale financial assets, and loans and receivables.

i. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are stated at fair value, with any gains or

losses arising on remeasurement recognized in profit or loss. The net gain or loss

recognized in profit or loss does not incorporate any dividend on the financial asset. Fair

value determination is described in Note 28.

- 24 -

Investments in equity instruments under financial assets at fair value through profit or loss

that do not have a quoted market price in an active market and whose fair value cannot be

reliably measured and derivatives that are linked to and must be settled by delivery of such

unquoted equity instruments are subsequently measured at cost less any identified

impairment loss at the end of each reporting period and are presented in a separate line item

as financial assets carried at cost. If, in a subsequent period, the fair value of the financial

assets can be reliably measured, the financial assets are remeasured at fair value. The

difference between the carrying amount and the fair value is recognized in profit or loss.

ii. Available-for-sale financial assets

Available-for-sale financial assets are nonderivatives that are either designated as

available-for-sale or are not classified as loans and receivables or financial assets at fair

value through profit or loss.

Available-for-sale financial assets are measured at fair value. Dividends on

available-for-sale equity investments are recognized in profit or loss. Other changes in the

carrying amount of available-for-sale financial assets are recognized in other comprehensive

income and will be reclassified to profit or loss when the investment is disposed of or is

determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the

Group’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active

market and whose fair value cannot be reliably measured and derivatives that are linked to

and must be settled by delivery of such unquoted equity investments are measured at cost

less any identified impairment loss at the end of each reporting period and are presented in a

separate line item as financial assets carried at cost. If, in a subsequent period, the fair

value of the financial assets can be reliably measured, the financial assets are remeasured at

fair value. The difference between carrying amount and fair value is recognized in other

comprehensive income on financial assets. Any impairment losses are recognized in profit

and loss.

iii. Loans and receivables

Loans and receivables (including notes receivables, accounts receivable, cash and cash

equivalent and debt investments with no active market) are measured at amortized cost

using the effective interest method, less any impairment, except for short-term receivables

when the effect of discounting is immaterial.

Cash equivalent includes time deposits and repurchase agreements collateralized by bonds

with original maturities within three months from the date of acquisition, highly liquid,

readily convertible to a known amount of cash and be subject to an insignificant risk of

changes in value. These cash equivalents are held for the purpose of meeting short-term

cash commitments.

b) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators

of impairment at the end of each reporting period. Financial assets are considered to be

impaired when there is objective evidence that, as a result of one or more events that occurred

after the initial recognition of the financial asset, the estimated future cash flows of the

investment have been affected.

- 25 -

For financial assets carried at amortized cost, such as notes receivable and accounts receivable,

assets are assessed for impairment on a collective basis even if they were assessed not to be

impaired individually. Objective evidence of impairment for a portfolio of receivables could

include the Group’s past experience of collecting payments, as well as observable changes in

national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is

the difference between the asset’s carrying amount and the present value of estimated future

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

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the

impairment loss decreases and the decrease can be related objectively to an event occurring after

the impairment was recognized, the previously recognized impairment loss is reversed through

profit or loss to the extent that the carrying amount of the investment at the date the impairment

is reversed does not exceed what the amortized cost would have been had the impairment not

been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of

the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant

financial difficulty of the issuer or counterparty, breach of contract, such as a default or

delinquency in interest or principal payments, it becoming probable that the borrower will enter

bankruptcy or financial re-organization, or the disappearance of an active market for that

financial asset because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or

losses previously recognized in other comprehensive income are reclassified to profit or loss in

the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit

or loss are not reversed through profit or loss. Any increase in fair value subsequent to an

impairment loss is recognized in other comprehensive income. In respect of available-for-sale

debt securities, the impairment loss is subsequently reversed through profit or loss if an increase

in the fair value of the investment can be objectively related to an event occurring after the

recognition of the impairment loss.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the

difference between the asset’s carrying amount and the present value of the estimated future

cash flows discounted at the current market rate of return for a similar financial asset. Such

impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all

financial assets with the exception of notes receivable and accounts receivable, where the

carrying amount is reduced through the use of an allowance account. When a notes receivable

and accounts receivable are considered uncollectible, it is written off against the allowance

account. Subsequent recoveries of amounts previously written off are credited against the

allowance account. Changes in the carrying amount of the allowance account are recognized

in profit or loss except for uncollectible notes receivable and accounts receivable that are written

off against the allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows

from the asset expire, or when it transfers the financial asset and substantially all the risks and

rewards of ownership of the asset to another party.

- 26 -

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying

amount and the sum of the consideration received and receivable and the cumulative gain or

loss that had been recognized in other comprehensive income is recognized in profit or loss.

2) Financial liabilities

a) Subsequent measurement

Except for financial liabilities at fair value through profit or loss, all the financial liabilities are

measured at amortized cost using the effective interest method. Financial liabilities are

classified as at fair value through profit or loss when the financial liability is either held for

trading or it is designated as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or

losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized

in profit or loss does not incorporate any interest or dividend paid on the financial liability.

Fair value is determined in the manner described in Note 28.

b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the

consideration paid, including any non-cash assets transferred or liabilities assumed, is

recognized in profit or loss.

3) Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to foreign exchange

rate risks, including foreign exchange contracts.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into

and are subsequently remeasured to their fair value at the end of each reporting period. The

resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated

and effective as a hedging instrument, in which event the timing of the recognition in profit or loss

depends on the nature of the hedge relationship. When the fair value of derivative financial

instruments is positive, the derivative is recognized as a financial asset; when the fair value of

derivative financial instruments is negative, the derivative is recognized as a financial liability.

o. Hedge accounting

The Group designates certain hedging instruments as cash flow hedges. Hedges of foreign exchange

risk on firm commitments are accounted for as cash flow hedges.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash

flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective

portion is recognized immediately in profit or loss.

The associated gains or losses that were recognized in other comprehensive income are reclassified

from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item

in the same period when the hedged item affects profit or loss. If a hedge of a forecast transaction

subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated

gains and losses that were recognized in other comprehensive income are removed from equity and are

included in the initial cost of the non-financial asset or non-financial liability.

- 27 -

Hedge accounting is discontinued prospectively when the Group revokes the designated hedging

relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no

longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument

that has been previously recognized in other comprehensive income from the period when the hedge

was effective remains separately in equity until the forecast transaction occurs. When a forecast

transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized

immediately in profit or loss.

p. Provisions

Provisions, including those arising from the contractual obligation at the best estimate of the discounted

cash flow of the consideration required to settle the present obligation at the end of the reporting period,

taking into account the risks and uncertainties surrounding the obligation.

q. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced

for estimated customer returns, rebates and other similar allowances. Sales returns are recognized at

the time of sale provided the seller can reliably estimate future returns and recognizes a liability for

returns based on past experience and other relevant factors.

1) Sale of goods

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

a) The Group has transferred to the buyer the significant risks and rewards of ownership of the

goods;

b) The Group retains neither continuing managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold;

c) The amount of revenue can be measured reliably;

d) It is probable that the economic benefits associated with the transaction will flow to the Group;

and

e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group does not recognize sales revenue on materials delivered to subcontractors because this

delivery does not involve a transfer of risks and rewards of materials ownership.

2) Rendering of services

Revenue from a contract to provide services is recognized by reference to the stage of completion of

the contract or when services are provided.

3) Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment

has been established provided that it is probable that the economic benefits will flow to the Group

and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits

will flow to the Group and the amount of income can be measured reliably. Interest income is

accrued on a time basis, by reference to the principal outstanding and at the effective interest rate

applicable.

- 28 -

r. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets

are added to the cost of those assets, until such time as the assets are substantially ready for their

intended use or sale.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which

they are incurred.

s. Employee benefits

1) Short-term employee benefits

Liabilities recognized for short-term employee benefits are measured at the undiscounted amount of

the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when

employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined

benefit retirement benefit plans are determined using the projected unit credit method. Service

cost (including current service cost) and net interest on the net defined benefit liability (asset) are

recognized as employee benefits expense in the period they occur. Remeasurement, comprising

actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other

comprehensive income in the period in which they occur. Remeasurement recognized in other

comprehensive income is reflected immediately in retained earnings and will not be reclassified to

profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined

benefit plan. Any surplus resulting from this calculation is limited to the present value of any

refunds from the plans or reductions in future contributions to the plans.

t. Taxation

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

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided

for as income tax in the year the shareholders approve to retain the earnings.

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

provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and

liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax

assets are generally recognized for all deductible temporary differences and unused loss carry

forward to the extent that it is probable that taxable profits will be available against which those

deductible temporary differences can be utilized.

- 29 -

Deferred tax liabilities are recognized for taxable temporary differences associated with investments

in subsidiaries and associates, except where the Group is able to control the reversal of the

temporary difference and it is probable that the temporary difference will not reverse in the

foreseeable future. Deferred tax assets arising from deductible temporary differences associated

with such investments and interests are only recognized to the extent that it is probable that there

will be sufficient taxable profits against which to utilize the benefits of the temporary differences

and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and

reduced to the extent that it is no longer probable that sufficient taxable profits will be available to

allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also

reviewed at the end of each reporting period and recognized to the to the extent that it has become

probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the

period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that

have been enacted or substantively enacted by the end of the reporting period. The measurement

of deferred tax liabilities and assets reflects the tax consequences that would follow from the

manner in which the Group expects, at the end of the reporting period, to recover or settle the

carrying amount of its assets and liabilities.

3) Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are

recognized in other comprehensive income or directly in equity, in which case, the current and

deferred tax are also recognized in other comprehensive income or directly in equity respectively.

u. Biological assets

Biological assets are measured at cost plus transaction costs on initial recognition, and subsequently

measured at fair value less costs to sell. The gains and losses arising from the change in fair value less

costs to sell are recognized in profit or loss when they are incurred.

Agricultural produce harvested from biological assets is initially measured at fair value less costs to sell

at the point of harvest, subsequently transferred to inventory and accounted for accordingly.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Group's accounting policies, management is required to make judgments, estimates

and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other

sources. The estimates and associated assumptions are based on historical experience and other factors

that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimate is revised if the revision affects only that period

or in the period of the revision and future periods if the revision affects both current and future periods.

- 30 -

a. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the

cash-generating units to which goodwill has been allocated. The value in use calculation requires

management to estimate the future cash flows expected to arise from the cash-generating unit and a

suitable discount rate in order to calculate present value. Where the actual future cash flows are less

than expected, a material impairment loss may arise.

As of December 31, 2015 and 2014, the book value of goodwill are $507,114 thousand and $487,566

thousand, respectively.

b. Income taxes

Due to the unpredictability of future profit streams, the carrying amount of deferred tax assets in

relation to unused tax losses, unused tax credits and deductible temporary differences are not

recognized as deferred tax assets, please refer to Note 23.

The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable

temporary differences will be available. In cases where the actual future profits generated are less than

expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or

loss for the period in which such a reversal takes place.

c. Fair value of financial instruments

As described in Note 28, the Group’s management uses its judgment in selecting an appropriate

valuation technique for financial instruments that do not have quoted market price in an active market.

Valuation techniques commonly used by market practitioners are applied. For derivative financial

instruments, assumptions were based on quoted market rates adjusted for specific features of the

instruments. The Group’s management believes that the chosen valuation techniques and assumptions

used are appropriate in determining the fair value of financial instruments.

d. Impairment of property, plant and equipment

The impairment of equipment in relation to the production of was based on the recoverable amount of

those assets, which is the higher of fair value less costs to sell or value-in-use of those assets. Any

changes in the market price or future cash flows will affect the recoverable amount of those assets and

may lead to recognition of additional or reversal of impairment losses.

e. Recognition and measurement of defined benefit plans

Net defined benefit liabilities (assets) and the resulting defined benefit costs under defined benefit

pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise

the discount rate, rate of employee turnover, and future salary increase, etc. Changes in economic

circumstances and market conditions will affect these assumptions and may have a material impact on

the amount of the expense and the liability.

f. Biological assets

On initial recognition and at the end of the reporting period, biological assets are measured at fair value

less costs to sell. Fair value is the amount at which an asset could be exchanged, or a liability settled,

between knowledgeable, willing parties in an arm’s-length transaction. Costs to sell refer to transport

and other costs incurred to take the assets to the market. Estimations of fair value and costs to sell

may be significantly influenced by changes in market conditions.

- 31 -

6. CASH AND CASH EQUIVALENTS

December 31

2015 2014

Cash on hand $ 7,189 $ 446,682

Checking accounts and demand deposits 1,730,707 1,475,692

Cash equivalents

Time deposits 597,748 814,733

Repurchase agreements collateralized by bonds 45,000 36,000

$ 2,380,644 $ 2,773,107

The market interest rates for time deposits with original maturities of more than 3 months, which have been

reclassified to debt investments with no active market, were 0.71% to 4.35% and 0.88% to 4.80% per

annum, respectively, as of December 31, 2015 and 2014.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31

2015 2014

Financial assets at FVTPL - current

Financial assets held for trading

Derivative financial assets

Exchangeable bonds $ 295,084 $ -

Foreign exchange forward contracts 530 245

Nonderivative financial assets

Mutual funds 598,595 489,817

Domestic quoted shares 93,195 120,436

$ 987,404 $ 610,498

Financial assets at FVTPL - non-current

Financial assets held for trading

Derivative financial assets

Exchangeable bonds $ - $ 282,799

Financial liabilities at FVTPL - current

(accounted as other current liabilities)

Financial liabilities held for trading

Derivative financial liabilities

Foreign exchange forward contracts $ 2,435 $ 7,153

- 32 -

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge

accounting were as follows:

Currency Maturity Date

Notional Amount

(In Thousands)

December 31, 2015

Buy EUR:USD 2016.01.14 EUR2,305

Buy JPY:USD 2016.01.07-2016.01.29 JPY217,600

Sell USD:NTD 2016.01.05-2016.01.29 USD15,510

Sell JPY:NTD 2016.01.12 JPY17,000

December 31, 2014

Buy EUR:USD 2015.01.15 EUR2,433

Buy JPY:USD 2015.01.30 JPY10,168

Sell USD:NTD 2015.01.15-2015.02.24 USD15,900

Sell JPY:NTD 2015.01.09-2015.01.20 JPY55,000

The Group entered into foreign exchange forward contracts during 2015 and 2014 to manage exposures to

exchange rate fluctuations of foreign currency denominated assets and liabilities.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

December 31

2015 2014

Current

Domestic investments

Listed shares $ 4,274,542 $ 5,445,583

Non-current

Domestic investments

Listed shares $ 9,709,107 $ 11,909,801

9. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING

December 31

2015 2014

Derivative financial assets under hedge accounting - current

(accounted as other current assets)

Foreign exchange forward contracts $ 23,189 $ -

Derivative financial liabilities under hedge accounting - current

(accounted as other current liabilities)

Foreign exchange forward contracts $ - $ 153

- 33 -

The Group’s hedge strategy is to enter foreign exchange forward contracts to avoid its foreign currency

exposure to certain foreign currency receipts and payments and to manage its foreign currency exposure in

relation to foreign currency forecast sales and purchases. When forecast sales and purchases actually take

place, the carrying amounts of the non-financial hedged items will be adjusted accordingly.

The terms of the foreign exchange forward contracts were negotiated to match the terms of the respective

designated hedged items. The outstanding foreign exchange forward contracts at the end of the reporting

period were as follows:

Currency Maturity Date

Notional Amount

(In Thousands)

December 31, 2015

Buy EUR:NTD 2016.01.04-2016.03.09 EUR22,613

Buy USD:NTD 2016.01.14-2016.03.17 USD15,713

December 31, 2014

Buy EUR:NTD 2015.01.15 EUR375

10. FINANCIAL ASSETS MEASURED AT COST

December 31

2015 2014

Non-current

Domestic and foreign unlisted shares $ 1,616,258 $ 1,559,519

Domestic emerging market shares 78,176 46,451

Foreign beneficiary certificates 39,232 38,086

$ 1,733,666 $ 1,644,056

Classified according to financial asset measurement categories

Available-for-sale financial assets $ 1,733,666 $ 1,644,056

Management believed that the above unlisted equity investments held by the Group, whose fair value

cannot be reliably measured due to the range of reasonable fair value estimates was so significant; therefore

they were measured at cost less impairment at the end of reporting period.

The Group recognized impairment losses on financial assets measured at cost of $48,206 thousand in 2015

and $9,955 thousand in 2014.

- 34 -

11. NOTES RECEIVABLES AND ACCOUNTS RECEIVABLE

December 31

2015 2014

Notes receivable

Notes receivable $ 3,497,816 $ 2,569,926

Less: Allowance for impairment loss (7,014) (7,455)

$ 3,490,802 $ 2,562,471

Accounts receivable

Accounts receivable $ 11,365,501 $ 10,807,599

Less: Allowance for impairment loss (290,407) (294,288)

$ 11,075,094 $ 10,513,311

Notes receivable and accounts receivable were generated by operating activities.

In determining the recoverability of a accounts receivable, the Group considered any change in the credit

quality of the accounts receivable since the date credit was initially granted to the end of the reporting

period. The Group did transactions with a large number of unrelated customers; no concentration of credit

risk was observed on these transactions.

The aging of receivables was as follows:

December 31

2015 2014

Up to 90 days (including not past due) $ 14,259,276 $ 12,963,929

91-180 days 85,802 144,659

181-360 days 226,885 66,998

Over 1 year 291,354 201,939

$ 14,863,317 $ 13,377,525

The above aging schedule was based on the past due date.

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

December 31

2015 2014

Up to 90 days $ 874,701 $ 1,480,184

91-180 days 75,339 99,222

181 days-360 days 129,270 32,285

Over 1 year 179,692 68,417

$ 1,259,002 $ 1,680,108

The above aging schedule was based on the past due date.

- 35 -

For the accounts receivable that were past due at the end of the reporting period, the Group did not

recognize an allowance for impairment loss, because there was no significant change in credit quality and

the amounts were still considered recoverable. The Group held collaterals or other credit enhancements

for these receivables.

The movements of the allowance for doubtful accounts receivable were as follows:

Balance at January 1, 2015 $ 301,743

Add: Impairment losses recognized on receivables 1,705

Deduct: Amounts written off during the period as uncollectible (11,027)

Foreign exchange translation gains and losses 5,000

Balance at December 31, 2015 $ 297,421


Add: Impairment losses recognized on receivables 123,655

Deduct: Amounts written off during the period as uncollectible (39,845)

Foreign exchange translation gains and losses 5,013


The aging of individually impaired receivables was as follows:

December 31

2015 2014

Up to 90 days $ 26,112 $ 52,469

91-180 days 10,463 45,437

181-360 days 97,615 34,713

Over 1 year 111,662 133,522

$ 245,852 $ 266,141

The above aging of accounts receivable before deducting the allowance for impairment was presented

based on the past due date.

The carrying amount of notes receivable pledged as collateral for the portion of guarantees provided on

certain commitments was disclosed in Note 30.

12. INVENTORIES

December 31

2015 2014

Finished and purchased goods $ 4,827,539 $ 4,757,803

Work in process 3,858,927 3,614,580

Materials 1,073,469 916,551

Construction-in-progress 1,617 6,459

$ 9,761,552 $ 9,295,393

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2015 and 2014

included inventory write-downs of $31,070 thousand and reversal of inventory write-downs of $45,247

thousand, respectively. Previous write-downs were reversed as a result of increased selling prices.

- 36 -

13. BIOLOGICAL ASSETS

For the Year Ended December 31

2015 2014

Balance at January 1 $ 2,990,129 $ 2,842,999

Increases due to planting 845,818 165,964

Gain (loss) arising from changes in fair value less costs to sell (740) 33,001

Decreases due to harvest (139,338) (216,091)

Net exchange differences (73,684) 164,256

Balance at December 31 $ 3,622,185 $ 2,990,129

The Group’s biological assets are eucalyptus located in Guangdong Province, Zhaoqing city. The

eucalyptus is mainly grown for paper manufacturing.

The fair values of biological assets (before deducting costs to sell) were as follows:

Eucalyptus

(Level 3)

Balance at January 1, 2015 $ 3,072,341

Recognized in profit or loss - unrealized (770)

Net exchange differences - recognized in other comprehensive income (75,781)

Increases due to planting 879,610

Decreases due to harvest (144,905)

Balance at December 31, 2015 $ 3,730,495

14. SUBSIDIARIES

a. Subsidiaries included in the consolidated financial statements (diagram of investment structure of the

Group in December 31, 2015, please refer to Table 1):

Proportion of Ownership

December 31

Investor Investee Main Business 2015 2014 Remark

YFY Inc. Chung Hwa Pulp Corporation Manufacture and sale of pulp 56.90 56.90

YFY International BVI Corp. Investment and holding 100.00 100.00

YFY Global Investment BVI Corp. Investment and holding 100.00 100.00

YFY Consumer Products Co., Ltd. Production and sale of high quality paper and

paper - related merchandise

100.00 100.00

Shin Foong Chemical Industry Co.,

Ltd.

Production and sale of SBR (styrene butadiene

rubber) latex

56.70 56.70

China Color Printing Co., Ltd. Design and print of magazines, posters and

books

49.70 49.70 7)

YFY Venture Capital Investment Co.,

Ltd.

Investment and holding 100.00 100.00

Effion Enertech Co., Ltd. To operate cogeneration and provide power

technology

49.00 49.00

YFY Capital Co., Ltd. Sale of paper and paper-related merchandise 100.00 100.00

YFY Operation Management

Consulting Co., Ltd.

Consulting 100.00 100.00

Union Paper Co., Ltd. Manufacture and sale of paper 18.90 18.90 7)

YFY Paradigm Investment Co., Ltd. Investment and holding 100.00 100.00

San Ying Enterprise Co., Ltd. Design and construct water processing

construction and environmental facilities

100.00 100.00

Lotus Ecoscings & Engineering Co.,

Ltd.

Construction of sewage treatment plants and

incinerators

100.00 100.00

Eihoyo Shoji Co., Ltd. Trade of paper, chemical material and

machinery

100.00 100.00

(Continued)

- 37 -


December 31


Yuen Yan Paper Container Co., Ltd. Sale and manufacture of corrugated paper and

materials

50.90 50.90

Cupid InfoTech Co., Ltd. a. To provide service in information software

and information processing.

b. Wholesale of information software and

electric appliance.

100.00 100.00

YFY International BVI YFY Cayman Co., Ltd. Investment and holding 100.00 100.00

Corp. Guangdong Ding Feng Pulp & Paper

Co., Ltd.

The marketing business of pulp, writing and

printing paper, and wood free.

40.00 40.00

Zhaoqing Ding Feng Forestry Ltd. Seedling cultivation and sales, reforestation,

sales-cum-forest logging and other forestry,

processing and transportation.

13.50 13.50

Hwa Fong Paper (H.K.) Ltd. Sale and print of paper merchandise 100.00 100.00

YFY BioTechnology (Kunshan) Co.,

Ltd.

To promote agriculture skills and operate in

trade of agriculture products

- 52.20 8)

Systax Communication (H.K.) Ltd. Sale and print of paper merchandise 100.00 100.00

YFY Paper Mfg. (Jiangyin) Co., Ltd. Manufacture, sale and print of cardboard and

paper

94.00 94.00

Yuen Foong Yu Blue Economy

Natural Resource (Yangzhou) Co.,

Ltd.

Development the technology of agricultural

resource recycling

100.00 100.00

YFY Biopulp Technology Limited Investment and holding 60.00 60.00

Yuen Foong Yu Blue

Economy Natural

Resource (Yangzhou)

Co., Ltd.

YFY Firstpak Packaging (YangZhou)

Co., Ltd.

General trade 70.00 70.00 1)

YFY Mauritius Corp. YFY Paper Mfg. (Yangzhou) Co.,

Ltd.

Manufacture and sale of paper 85.50 85.50

YFY Packaging (Yangzhou)

Investment Co., Ltd.


YFY Paper Enterprise (Qingdao) Co.,

Ltd.

Manufacture and sale of paper and card board 100.00 100.00

YFY Paper Enterprise (Kunshan) Co.,

Ltd.


YFY Paper Enterprise (Zhongshan)

Co., Ltd.


YFY Paper Enterprise (Guangzhou)

Co., Ltd.


YFY Paper Enterprise (Dongguan)

Co., Ltd.


YFY Paper Enterprise (Tianjin) Co.,

Ltd.


YFY Paper Enterprise (Suzhou) Co.,

Ltd.


YFY Paper Enterprise (Xiamen) Co.,

Ltd.


YFY Paper Enterprise (Shanghai)

Co., Ltd.


YFY Paper Enterprise (Jiaxing) Co.,

Ltd.


YFY Paper Enterprise (Nanjing) Co.,

Ltd.


YFY Paper Enterprise (Fuzhou) Co.,

Ltd.


YFY Packaging

(Yangzhou)


YFY Paper Mfg. (Yangzhou) Co.,

Ltd.

Manufacture and sale of paper 14.50 14.50

Hwa Fong Paper (H.K.)

Ltd.

Shenzhen Systax Paper Co., Ltd. Sale of paper merchandise and import/export

business

100.00 100.00

YFY Cayman Co., Ltd. YFY International Labuan Co., Ltd. Investment and holding 100.00 100.00

YFY Mauritius Corp. Investment and holding 60.00 60.00

YFY Packaging Capital Corp. Investment and holding 100.00 - 2)

YFY International Labuan YFY Jupiter (BVI) Inc. Investment and holding 38.62 39.15

Co., Ltd. YFY Packaging Inc. Production and sale of high-quality craft paper

and corrugated paper

100.00 100.00

YFY Jupiter (BVI) Inc. Mobius 105 Ltd. Investment and holding 100.00 100.00

YFY Jupiter Ltd. Design of packaging and sale of paper 100.00 100.00

Jupiter Prestige Group Holdings

Limited


YFY Jupiter US, Inc. Design of packaging and sale of paper 100.00 100.00

Mobius 105 (HK) Ltd. Design of packaging and sale of paper 100.00 100.00

YFY Jupiter US, Inc. Innovativ Packaging Worldwide, LLC Design of packaging and sale of paper 51.00 - 3)

Mobius 105 Ltd. YFY Jupiter (Shenzhen) Ltd. Design of packaging and sale of paper 100.00 100.00

YFY Jupiter (Shenzhen)

Ltd.

Kunshan YFY Jupiter Green

Packaging Ltd.

Design of packaging and sale of paper 100.00 100.00

YFY Jupiter Supply Chain

Management Services (Shenzhen)

Limited

Design of packaging and sale of paper 100.00 - 10)

(Continued)

- 38 -


December 31


Jupiter Prestige Group Rimagine Limited Investment and holding 100.00 100.00

Holdings Limited Jupiter Prestige Group Europe Ltd. Graphic design 100.00 100.00

Jupiter Prestige Group Australia PTY

Ltd.

Graphic design 100.00 100.00

Opal BPM Limited Design of process system and assistance of

graphic design

82.50 82.50

Foster and Balyis (Prestige) Ltd. Graphic design - 33.30 9)

Jupiter Prestige Group North America

Inc. (formerly YFY Jupiter Inc.)

Design of packaging and sale of paper 100.00 100.00

Rimagine Limited Rimagine Group Limited Investment and holding 100.00 100.00

Rimagine Design (Shanghai) Co.,

Ltd.

Photograph 100.00 100.00

Jupiter Prestige Group

Europe Ltd.

Jupiter Prestige Group Asia Ltd. Graphic design 100.00 100.00

Opal BPM Limited Opal BPM India Private Limited Workflow system coding 100.00 - 12)

YFY Paper Enterprise

(Guangzhou) Co., Ltd.

Kunshan YFY Advertising and

Printing Co., Ltd.

Design and print of advertisements 50.00 50.00


(Xiamen) Co., Ltd.

Kunshan YFY Advertising and

Printing Co., Ltd.

Design and print of advertisements 50.00 50.00

Kunshan YFY Advertising

and Printing Co., Ltd.

Shanghai YFY Advertising and

Printing Co., Ltd.

Printing service of publications 51.00 51.00

YFY Packaging Inc. YFY Packaging (BVI) Corp. Investment and holding 100.00 100.00

Pek Crown Paper Co., Ltd. Manufacture and sale of containers 66.80 66.80

YFY Packaging (BVI)

Corp.

YFY Mauritius Corp. Investment and holding 40.00 40.00

YFY Global Investment YFY RFID Co., Ltd. Investment and holding 100.00 100.00

BVI Corp. YFY Jupiter (BVI) Inc. Investment and holding 38.62 39.15

YFY RFID Technologies Co., Ltd. Investment and holding 100.00 100.00

YFY RFID Co., Ltd. Arizon RFID Technology (Yangzhou)

Co., Ltd.

Sale and design RFID (radio frequency

identification) products

100.00 100.00

Arizon RFID Technology

(Yangzhou) Co., Ltd.

Yeon Technologies (Yang Zhou) Co.,

Ltd.

Sale and design RFID (radio frequency


100.00 - 4)

YFY RFID Technologies

Co., Ltd.

Yeon Technologies Co., Ltd. Sale and design of RFID (radio frequency


100.00 100.00

YFY Consumer Products

Co., Ltd.

Yuen Foong Yu Comsumer Products

Investment Limited (formerly

Trifaith Ltd.)


Ever Growing Agriculture Biotech

Co., Ltd.

Wholesale of agriculture products 55.40 55.40

Livebricks Inc. Information processing services 75.00 75.00

Yuen Foong Shop Company Limited Sale of paper 50.00 100.00 5)

Yuen Foong Yu

Comsumer Products

Investment Limited

(formerly Trifaith Ltd.)

YFY Investment Co., Ltd. Investment and holding and sale of paper 100.00 100.00

YFY Investment Co., Ltd. YFY Family Paper (Beijing) Co., Ltd. Manufacture and sale of tissue paper and

napkins

100.00 100.00

YFY Family Care (Kunshan) Co.,

Ltd.

Manufacture and sale of tissue paper and

napkins

100.00 100.00

Yuen Foong Yu Consumer Product


Manufacture and sale of high quality tissue

paper and napkin

100.00 100.00

YFY Capital Co., Ltd. Chung Hwa Pulp Corporation Manufacture and sale of pulp 0.10 0.10

YFY Venture Capital Effion Enertech Co., Ltd. Sale and manufacture of TFT-LCD 1.00 1.00

Investment Co., Ltd. Chung Hwa Pulp Corporation Manufacture and sale of pulp 0.64 - 11)

Effion Enertech Co., Ltd. YFY Capital Holdings Corp. Investment and holding 100.00 100.00

YFY Capital Holdings

Corp.

YFY (Shanghai) Financial Services

Co., Ltd.

Export factoring, domestic factoring, business

factoring and related consulting services,

develop credit risk management platform.

100.00 100.00

YFY Paradigm Investment Union Paper Co., Ltd. Manufacture and sale of paper 4.00 4.00 7)

Co., Ltd. YFY Biotech Management Company Consulting 100.00 100.00

Chung Hwa Pulp Corporation Pulp and paper production, trading and forestry

business

0.70 0.70

Yuen Foong Shop Company Limited Sale of paper 50.0 - 5)

Yuen Foong Shop

Company Limited

Shanghai YFY International Trade

Co., Ltd.

General trade 100.0 - 6)

Lotus Ecoscings &

Engineering Co., Ltd.

Yuen Yan Paper Container Co., Ltd. Sale and manufacture of corrugated paper and

materials

0.07 0.07

Shin Foong Chemical Industry Co.,

Ltd.

Production and sale of SBR (styrene butadiene

rubber) latex

0.01 0.01

Pek Crown Paper Co., Ltd. Manufacture and sale of containers 0.03 0.03

Chung Hwa Pulp Corporation Pulp and paper production, trading and forestry

business

0.01 0.01

San Ying Enterprise Co.,

Ltd.

Kunshan Actview Carbon

Technology Co., Ltd.

Manufacture and sale of active carbon 66.40 66.40

Chung Hwa Pulp CHP International (BVI) Corporation Investment and holding 100.00 100.00

Corporation Effion Enertech Co., Ltd. To operate cogeneration and provide power

technology

49.00 49.00

Hwa Fong Investment Co., Ltd. Investment and holding 100.00 100.00

(Continued)

- 39 -


December 31


CHP International (BVI)

Corporation

Guangdong Ding Feng Pulp & Paper

Co., Ltd.

Pulp and paper production, trading and forestry

business

60.00 60.00



processing and transportation

20.20 20.20

Hwa Fong Investment Co.,

Ltd.

Effion Enertech Co., Ltd. To operate cogeneration and provide power

technology

1.00 1.00

Kuang Hwa Fertilizer Limited

Company

To produce fertilizer 100.00 100.00

Guangdong Ding Feng

Pulp & Paper Co., Ltd.




66.30 66.30

(Concluded)

Remarks:

1) YFY Firstpak Packaging (YangZhou) Co., Ltd. was established in August 2014, and the verification

of its capital was completed by a local CPA in November 2014; it was then included in the

consolidated financial statements.

2) YFY Packing Capital Corp. was established in January 2015 and has been included in the

consolidated financial statements since then.

3) YFY Jupiter US, Inc. acquired 51% of ownership of Innovativ Packaging Worldwide, LLC in

March 2015, and the latter has been included in the consolidated financial statements since then.

4) Arizon RFID Technology (Yangzhou) Co., Ltd. acquired 100% of ownership of Yeon Technologies

(Yang Zhou) Co., Ltd. in April 2015, and the latter has been included in the consolidated financial

statements since then.

5) YFY Paradigm Investment Co., Ltd. acquired 50% of ownership of Yuen Foong Shop Company

Limited by buying its newly issued shares in January 2015.

6) Shanghai YFY International Trade Co., Ltd. was established in May 2015 and has been included in

the consolidated financial statements since then.

7) China Color Printing Co., Ltd. and Union Paper Co., Ltd. were deemed as subsidiaries because the

Group had actual control over them even if the Group held less than 50% equity interests in each of

the subsidiaries’ voting shares.

8) YFY International BVI Corp. disposed of 100% of ownership of YFY BioTechnology (Kunshan)

Co., Ltd. in August 2015 and has been excluded from the consolidated financial statements since

then.

9) The Group lost control over Foster and Balyis (Prestige) Ltd. in July 2015; hence this investment

has been reclassified to investments accounted for using the equity method and has been excluded

from the consolidated financial statements since then.

10) YFY Jupiter Supply Chain Management Services (Shenzhen) Limited was established in July 2015

and has been included in the consolidated financial statements since then.

11) YFY Venture Capital Investment Co., Ltd. acquired 0.64% of ownership of Chung Hwa Pulp

Corporation in December 2015.

12) Opal BPM India Private Limited was established in October 2015 and has been included in the

consolidated financial statements since then.

- 40 -

b. Details of subsidiaries that have material non-controlling interests

Proportion of Ownership and

Voting Rights Held by

Non-controlling Interests

December 31

Name of Subsidiary 2015 2014

Chung Hwa Pulp Corporation 41.62% 42.26%

See Table 8 and Table 9 for the information on place of incorporation and principal place of business.

The summarized financial information below represents amounts before intragroup eliminations:

Chung Hwa Pulp Corporation and subsidiaries

December 31

2015 2014

Current assets $ 13,080,307 $ 13,785,306

Non-current assets 17,345,832 15,698,716

Current liabilities (7,770,394) (6,257,192)

Non-current liabilities (3,553,031) (3,274,549)

Equity 19,102,714 19,952,281

Consolidated adjustments 94,109 94,109

Adjusted equity $ 19,196,823 $ 20,046,390

Equity attributable to:

Owners of Chung Hwa Pulp Corporation $ 9,692,265 $ 10,070,031

Non-controlling interests of Chung Hwa Pulp Corporation 6,911,301 7,371,359

Non-controlling interests of Chung Hwa Pulp Corporation’s

subsidiaries 2,593,257 2,605,000

$ 19,196,823 $ 20,046,390


2015 2014

Revenue $ 20,990,843 $ 21,144,930

Profit for the year $ 845,778 $ 11,677

Other comprehensive income for the year (379,152) 851,116

Total comprehensive income for the year $ 466,626 $ 862,793

Profit attributable to:

Owners of Chung Hwa Pulp Corporation $ 450,202 $ 18,044

Non-controlling interests of Chung Hwa Pulp Corporation 329,515 9,452


subsidiaries 66,061 (15,819)

$ 845,778 $ 11,677

(Continued)

- 41 -


2015 2014

Total comprehensive income attributable to:

Owners of Chung Hwa Pulp Corporation $ 276,197 $ 424,668

Non-controlling interests of Chung Hwa Pulp Corporation 202,172 310,836


subsidiaries (11,743) 127,289

$ 466,626 $ 862,793

Net cash inflow (outflow) from:

Operating activities $ 1,559,761 $ 734,265

Investing activities (1,609,449) (1,038,206)

Financing activities 21,066 300,665

Effects of exchange rate changes (2,811) 6,773

Net cash inflow (outflow) $ (31,433) $ 3,497

Dividends paid to non-controlling interest $ 51,681 $ -

Return of capital reduction paid to non-controlling interest $ 504,137 $ -

(Concluded)

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

December 31

2015 2014

Material associates

E Ink Holdings Inc. $ 4,573,588 $ 4,572,971

Associates that are not individually material 2,241,206 2,457,932

$ 6,814,794 $ 7,030,903

a. Material associates

Proportion of Ownership and

Voting Rights

December 31

Name of Associate 2015 2014

E Ink Holdings Inc. 16.2% 16.2%

Refer to Table 8 “Information on Investees” for the nature of activities, principal place of business and

country of incorporation of the associates.

The investments in E Ink Holdings Inc. was accounted for by the equity method since the Group had

significant influence over E Ink Holdings Inc. even if the Company held less than 20% of the investee’s

voting shares.

- 42 -

In 2013, the Group increased its investment in E Ink Holdings Inc. by buying 40,000 thousand shares of

the investee’s privately placed common shares for $658,000 thousand. Under related regulations,

privately placed common shares should not be transferred within three years from the date of

acquisition. The other rights and obligations are the same as those of common stocks.

Fair values of investments in associates for which there are published price quotation are summarized as

follows (exclude the privately placed common shares), based on the closing price of those investments

at the balance sheet date:

December 31

Name of Associate 2015 2014

E Ink Holdings Inc. $ 2,664,104 $ 2,112,000

The summarized financial information below represents amounts shown in the associates’ financial

statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes:

E Ink Holdings Inc.

December 31

2015 2014

Current assets $ 13,730,805 $ 15,882,253

Non-current assets 19,694,421 23,114,071

Current liabilities (6,036,805) (9,112,824)

Non-current liabilities (804,891) (3,328,026)

Equity 26,583,530 26,555,474

Non-controlling interests 96,281 120,524

$ 26,679,811 $ 26,675,998

Proportion of the Group’s ownership 16.2% 16.2%

Equity attributable to the Group $ 4,320,128 $ 4,319,511

Goodwill 253,460 253,460

Carrying amount $ 4,573,588 $ 4,572,971


2015 2014

Operating revenue $ 13,306,503 $ 13,498,720

Profit from continuing operations $ 2,429,173 $ 1,942,431

Loss from discontinued operations (1,861,568) (1,888,222)

Net profit for the year 567,605 54,209

Other comprehensive income (481,085) 934,274

Total comprehensive income for the year $ 86,520 $ 988,483

- 43 -

b. Aggregate information of associates that are not individually material


2015 2014

The Group’s share of:

Net profit for the year $ 70,849 $ 225,968

Other comprehensive income (228,994) 671,863

Total comprehensive income for the year $ (158,145) $ 897,831

Except for E Ink Holdings Inc., Taiwan Global BioFund Co., Ltd., Willpower Industry Ltd., Taiwan

Genome Sciences Co., Ltd. and YFY Bio Technology (Yangzhou) Co., Ltd., investments accounted for

by the equity method and the share of profit or loss and other comprehensive income of those

investments were calculated based on the unaudited financial statements. Management believes there

is no material impact on the equity method accounting or the calculation of the share of profit or loss

and other comprehensive income, from the financial statements of associates that have been audited.

16. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Buildings

Machinery and

Equipment

Miscellaneous

Equipment

Construction

in Progress Total

Cost

Balance at January 1, 2015 $ 12,582,215 $ 12,613,268 $ 56,033,446 $ 10,910,167 $ 1,069,701 $ 93,208,797

Additions 525 119,936 1,418,482 494,978 2,568,911 4,602,832 Acquisitions through business

combinations - - - 2,832 - 2,832

Disposals - (36,640 ) (462,328 ) (187,115 ) - (686,083 ) Effect of foreign currency

exchange differences - (171,709 ) (563,847 ) (86,466 ) (20,225 ) (842,247 ) Transfer out through disposal

of subsidiaries - (133,351 ) (9,940 ) (44,122 ) (740 ) (188,153 )

Transfer to investment property (252,589 ) (19,745 ) - - - (272,334 ) Others 18,639 482,933 419,169 117,653 (766,078 ) 272,316

Balance at December 31, 2015 $ 12,348,790 $ 12,854,692 $ 56,834,982 $ 11,207,927 $ 2,851,569 $ 96,097,960

Accumulated depreciation

and impairment

Balance at January 1, 2015 $ 2,985 $ 5,389,369 $ 33,985,472 $ 7,214,753 $ - $ 46,592,579

Depreciation expense - 398,498 2,283,015 663,209 - 3,344,722 Acquisitions through business

combinations - - - 866 - 866


exchange differences - (42,607 ) (210,549 ) (40,061 ) - (293,217 )

Transfer out through disposal of subsidiaries - (78,726 ) (6,281 ) (30,337 ) - (115,344 )

Transfer to investment property - (13,643 ) - - - (13,643 )

Balance at December 31, 2015 $ 2,985 $ 5,635,143 $ 35,645,766 $ 7,635,824 $ - $ 48,919,718

Carrying amounts at December 31, 2015 $ 12,345,805 $ 7,219,549 $ 21,189,216 $ 3,572,103 $ 2,851,569 $ 47,178,242

(Continued)

- 44 -

Freehold Land Buildings

Machinery and

Equipment

Miscellaneous

Equipment

Construction

in Progress Total

Cost

Balance at January 1, 2014 $ 12,606,756 $ 10,181,431 $ 47,427,418 $ 9,199,041 $ 7,724,618 $ 87,139,264 Additions - 2,093,947 7,938,354 1,602,384 (6,748,169 ) 4,886,516

Disposals (24,033 ) (50,520 ) (639,727 ) (124,196 ) - (838,476 )

Effect of foreign currency exchange differences (508 ) 388,742 1,314,569 324,769 93,252 2,120,824

Others - (332 ) (7,168 ) (91,831 ) - (99,331 )

Balance at December 31, 2014 $ 12,582,215 $ 12,613,268 $ 56,033,446 $ 10,910,167 $ 1,069,701 $ 93,208,797

Accumulated depreciation

and impairment

Balance at January 1, 2014 $ 2,985 $ 4,958,546 $ 31,831,167 $ 6,470,635 $ - $ 43,263,333

Depreciation expense - 359,695 2,136,047 591,167 - 3,086,909


exchange differences - 96,762 438,183 280,992 - 815,937

Others - (332 ) (6,891 ) (20,674 ) - (27,897 )

Balance at December 31, 2014 $ 2,985 $ 5,389,369 $ 33,985,472 $ 7,214,753 $ - $ 46,592,579

Carrying amounts at

December 31, 2014 $ 12,579,230 $ 7,223,899 $ 22,047,974 $ 3,695,414 $ 1,069,701 $ 46,616,218

(Concluded)

The above items of property, plant and equipment were depreciated on a straight-line basis over the

estimated useful life of the asset:

Buildings

Main buildings 15-55 years

Others 3-50 years

Machinery and equipment 3-20 years

Miscellaneous equipment 3-50 years

17. INVESTMENT PROPERTIES

Cost


Transfer from property, plant and equipment 272,334

Transfer from prepayment for equipment 4,017

Additions 13,219

Disposals (78,514)


Accumulated depreciation and impairment


Transfer from property, plant and equipment 13,643

Depreciation expense 6,603

Disposals (12,468)


Carrying amounts at December 31, 2015 $ 2,803,012

(Continued)

- 45 -

Cost


Additions 17,344

Disposals (96,174)

Other 512


Accumulated depreciation and impairment


Depreciation expense 7,178

Disposals (413)


Carrying amounts at December 31, 2014 $ 2,599,734

(Concluded)

The fair values of the investment properties owned by the Group were $7,119,275 thousand and $6,827,195

thousand as of December 31, 2015 and 2014, respectively. The valuation was made by the Company

using market transaction prices for similar properties and not by independent qualified professional valuers.

The rental incomes were $39,279 thousand for 2014 and $33,482 thousand for 2015.

The investment properties held by the Group were depreciated over their estimated useful lives of 20 to 55

years, using the straight-line method.

The Group owns freehold interests in all of its investment property.

18. BORROWINGS

a. Short-term borrowings

December 31

2015 2014

Bank credit loans and letter of credit loans $ 10,107,635 $ 10,779,132

Bank mortgage loans 295,425 1,487,550

$ 10,403,060 $ 12,266,682

As of December 31, 2015 and 2014, the interest rate of short-term borrowings was 0.80%-4.37% per

annum and 1.06%-6.41% per annum, respectively.

b. Short-term bills payable

Short-term bills payable are commercial papers due within one year. Interest rates on these bills

payable were 0.46%-1.54% and 0.66%-1.41% as of December 31, 2015 and 2014, respectively.

- 46 -

c. Long-term borrowings

December 31

2015 2014

Long-term bank loans $ 28,450,454 $ 27,771,440

Long-term bills payable - 319,828

28,450,454 28,091,268

Less: Current portion 448,250 478,078

$ 28,002,204 $ 27,613,190

Long-term bank loans included secured, credit and syndicated loans. Credit and secured loans are

repayable in one lump-sum payment. Interests on these loans were 1.11%-3.78% and 1.16%-3.61% as

of December 31, 2015 and 2014, respectively; syndicated loan are repayable at a certain percentage

from April 2011 to December 2019. Interest is payable monthly, with the interest rate were

1.45%-1.93% and 1.63%-1.93% as of December 31, 2015 and 2014, respectively.

Long-term bills payable in December 31, 2014 will due in February 2015. Interest rates on these bills

payable were 1.41%.

19. BONDS PAYABLE

The Company issued five-year secured bonds amounting to $2,500,000 thousand in June 2010, with

principal repayment at 50 percent each on the fourth and fifth years of the issue date. Interest is payable

yearly, at a fixed rate of 1.4%.

The Group issued three-year bonds amounting to RMB300 million in November 2011, with 3.10% interest

rate. Interest payments are paid off on a half-year basis. The principal repayment was made in February

2014.

The carrying amount of current portion of bonds payable was $1,249,567 thousand as of December 31,

2014.

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and certain subsidiaries of the Group adopted a pension plan under the Labor Pension

Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes

monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The Company and certain subsidiaries of the Group have defined benefit plans based on the Labor

Standards Law are operated by the government. Pension benefits are calculated on the basis of the

length of service and average monthly salaries of the six months before retirement. The Company and

certain subsidiaries contribute certain percentages to salaries and wages to a pension fund administered

by the pension fund monitoring committee. Pension contributions are deposited in the Bank of

Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds (the

“Bureau”) under the Ministry of Labor; the Group has no right to influence the fund investment policy

and strategy.

- 47 -

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans

were as follows:

December 31

2015 2014

Present value of defined benefit obligation $ 3,741,865 $ 3,647,766

Fair value of plan assets (2,183,645) (2,414,873)

Net defined benefit liability $ 1,558,220 $ 1,232,893

Movements in net defined benefit liability were as follows:

Present Value

of the Defined

Benefit

Obligation

Fair Value of

the Plan Assets

Net Defined

Benefit

Liability

Balance at January 1, 2015 $ 3,647,766 $ (2,414,873) $ 1,232,893

Service cost

Current service cost 58,947 - 58,947

Past service cost and loss on settlements 4,646 - 4,646

Net interest expense (income) 77,124 (60,851) 16,273

Recognized in profit or loss 140,717 (60,851) 79,866

Remeasurement

Return on plan assets (excluding amounts

included in net interest) - 138,332 138,332

Actuarial loss - changes in demographic

assumptions 156 - 156

Actuarial loss - changes in financial

assumptions 160,252 - 160,252

Actuarial loss - experience adjustments 70,655 - 70,655

Recognized in other comprehensive income 231,063 138,332 369,395

Contributions from the employer - (121,687) (121,687)

Benefits paid (275,434) 275,434 -

Liabilities extinguished on settlement (2,247) - (2,247)

Balance at December 31, 2015 $ 3,741,865 $ (2,183,645) $ 1,558,220

Balance at January 1, 2014 $ 3,785,482 $ (2,654,736) $ 1,130,746

Service cost

Current service cost 71,285 - 71,285

Net interest expense (income) 73,746 (52,591) 21,155

Recognized in profit or loss 145,031 (52,591) 92,440

Remeasurement

Return on plan assets (excluding amounts

included in net interest) - 47,082 47,082

Actuarial gain - changes in financial

assumptions (81,143) - (81,143)

Actuarial loss - experience adjustments 172,162 - 172,162

Recognized in other comprehensive income 91,019 47,082 138,101

Contributions from the employer - (111,733) (111,733)

Benefits paid (357,105) 357,105 -

Liabilities extinguished on settlement (16,661) - (16,661)

Balance at December 31, 2014 $ 3,647,766 $ (2,414,873) $ 1,232,893

- 48 -

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit

plans is as follows:


2015 2014

Operating costs $ 52,658 $ 59,721

Operating expenses 27,208 32,719

$ 79,866 $ 92,440

The Group is exposed to the following risks on its defined benefit plans:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,

bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the

mandated management. In addition, based on relevant regulations, the return generated by plan

assets should not be below the interest rate for a two-year time deposit with local banks.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of the

defined benefit obligations; however, this decrease will be partially offset by an increase in the

return on the plan’s debt investments.

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the

future salaries of plan participants. Thus, an increase in the salaries of the plan participants will

increase the present value of the defined benefit obligations.

The actuarial valuations of the present value of the defined benefit obligation were carried out by

qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were

as follows:

December 31

2015 2014

Discount rates 1.75% 2.25%

Expected rates of salary increase 1.00-1.50% 1.00-1.50%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other

assumptions will remain constant, the present value of the defined benefit obligation would increase

(decrease) as follows:

December 31,

2015

Discount rates

0.125% increase $ (40,467)

0.125% decrease $ 41,601

Expected rates of salary increase

0.125% increase $ 41,681

0.125% decrease $ (40,880)

- 49 -

The sensitivity analysis presented above might not have been representative of the actual change in the

present value of the defined benefit obligation because it was unlikely that the changes in assumptions

had occurred in isolation of one another, i.e., some of the assumptions might have been correlated.

December 31

2015 2014

The expected contributions to the plan for the next year $ 1,177,308 $ 493,325

The average duration of the defined benefit obligation 6.8-12.0 years 7.4-12.1 years

21. EQUITY

a. Ordinary shares

December 31

2015 2014

Numbers of shares authorized (in thousand) 2,200,000 2,200,000

Shares authorized $ 22,000,000 $ 22,000,000

Number of shares issued and fully paid (in thousand) 1,660,372 1,660,372

Shares issued $ 16,603,715 $ 16,603,715

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

dividends.

b. Capital surplus

Depending on the source, capital surplus may be used in these ways: (1) arising from shares issued in

excess of par (including share premium from issuance of common shares for merger, treasury share

transactions, and excess of the consideration received over the carrying amount of the subsidiaries’ net

assets during disposal or acquisition) - may be used to offset a deficit; in addition, when the Company

has no deficit, this capital surplus may be distributed as cash dividends, or may be transferred to share

capital once a year within a certain percentage of the Company’s capital surplus; (2) arising from the

effect of changes in ownership interest in a subsidiary due to equity transactions other than actual

disposal or acquisition - may be used to offset a deficit.; (3) arising from changes in equity in associates

- may be used in compliance with related regulations if the capital surplus source is either of the

foregoing two sources.

c. Retained earnings and dividend policy

The Company’s Articles of Incorporation provide that annual net income, less any prior years’ deficit,

should be appropriated as follows:

1) 10% as legal reserve;

2) Special capital reserve in accordance with relevant laws or regulations, if needed;

3) Dividends, less than 10%;

4) No more than 2% as remuneration to directors and supervisors; and no less than 1‰ as bonus to

employees; and

5) The remainder to be distributed to the shareholders.

- 50 -

In making its dividend policy, the Company takes into account future capital expenditures and working

capital requirements. Based on this policy, dividends should be distributed as follows:

1) At least 20% as cash dividends; and

2) Remainder, as stock dividends. If there is a requirement of capital expenditures, the Company

may distribute only stock dividends.

Under the May 2015 amendments to the Company Act, the recipients of dividends and bonuses are

limited to shareholders and do not include employees. The consequential amendments to the

Company’s Articles of Incorporation, which were proposed by the Company’s board of directors on

December 16, 2015, are subject to the approval by the shareholders in their meeting on June 15, 2016.

For information on the accrued employees’ compensation and remuneration to directors and supervisors

and the actual appropriations, please refer to employee benefit expense in Note 22,c.

Under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and

the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of

IFRSs”, the Company should appropriate or reverse to a special reserve.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s

paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the

legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to

capital or distributed in cash.

Except for non-ROC resident shareholders, all shareholders are allowed a tax credit equal to their

proportionate share of the income tax paid by the Company; however, based on the revised Article 66-6

of the Income Tax Law effective January 1, 2015, the creditable ratio for individual shareholders

residing in the Republic of China will be half of the original creditable ratio.

The appropriations of earnings for 2014 and 2013 approved in the shareholders’ meetings on June 30,

2015 and June 17, 2014, respectively were as follows:

Dividends Per Share

(NT$)

Appropriation of Earnings For the Year Ended

For the Year Ended December 31 December 31

2014 2013 2014 2013

Legal reserve $ 60,262 $ 61,055 $ - $ -

Cash dividends 664,148 664,148 0.4 0.4

The appropriations of earnings for 2015 had been proposed by the Company’s board of directors on

March 24, 2016. The appropriations and dividends per share were as follows:

Appropriation

of Earnings

Dividends Per

Share (NT$)

Legal reserve $ 50,190 $ -

Cash dividends 498,111 0.3

- 51 -

The appropriations of earnings are subject to the resolution of the shareholders’ meeting to be held on

June 15, 2016.

Information on the appropriations of earning for 2015, employees’ compensation, and remuneration to

directors were proposed by the Company’s board of directors is available on the Market Observation

Post System website of the Taiwan Stock Exchange.

d. Others equity items

Exchange

Differences

Arising on

Translating

the Foreign

Operations

Unrealized

Gain (Loss) on

Available-for-

sale Financial

Assets

Cash Flow

Hedge Total

2015

Balance at January 1 $ 3,004,110 $ 6,334,530 $ (5,747) $ 9,332,893

Exchange differences arising on

translating the foreign

operations (261,449) - - (261,449)

Unrealized gain on

available-for-sale financial

assets - (3,263,942) - (3,263,942)

Cash flow hedge - - 13,628 13,628

Share of associates accounted

for using the equity method (18,570) (268,961) - (287,531)

Balance at December 31 $ 2,724,091 $ 2,801,627 $ 7,881 $ 5,533,599

2014

Balance at January 1 $ 1,247,564 $ 1,935,199 $ (4,074) $ 3,178,689

Exchange differences arising on

translating the foreign

operations 1,594,086 - - 1,594,086

Unrealized gain on

available-for-sale financial

assets - 3,789,904 - 3,789,904

Cash flow hedge - - (1,673) (1,673)

Share of associates accounted

for using the equity method 162,460 609,427 - 771,887

Balance at December 31 $ 3,004,110 $ 6,334,530 $ (5,747) $ 9,332,893

- 52 -

e. Noncontrolling interests


2015 2014

Balance at January 1 $ 10,078,710 $ 9,973,410

Attributable to noncontrolling interests:

Share of profit (loss) for the year 680,290 269,278

Cash Dividend (296,799) (196,020)

Exchange difference arising on translation of foreign entities 2,647 148,374

Unrealized gains on available-for-sale financial assets (138,588) 166,068

Loss on fair value changes of cash flow hedges 2,593 (1,326)

Actuarial loss on defined benefit plans 4,100 (45,040)

Share of other comprehensive income of associates accounted

for using the equity method (18,691) 54,106

Adjustment relating to changes in equity of associates

accounted for using the equity method 2,644 (988)

Adjustment for the changes in equity of subsidiaries (8,168) (414,381)

Proceed of the return of capital on investments accounted for

using the equity method (510,737) -

Disposal or acquisition of subsidiaries (67,193) 125,229

Balance at December 31 $ 9,730,808 $ 10,078,710

22. NET PROFIT

a. Finance costs


2015 2014

Interest on bank loans $ 905,574 $ 874,843

Less: Amounts included in the cost of qualifying assets (13,433) (3,032)

$ 892,141 $ 871,811

Information about capitalized interest was as follows:


2015 2014

Capitalization rate 1.30-2.16% 0.96-1.66%

b. Depreciation and amortization


2015 2014

Property, plant and equipment $ 3,344,722 $ 3,086,909

Investment property 6,603 7,178

$ 3,351,325 $ 3,094,087

Long-term prepayments for lease and other non-current assets $ 122,445 $ 146,920

(Continued)

- 53 -


2015 2014

An analysis of deprecation by function

Operating costs $ 3,073,568 $ 2,853,290


$ 3,351,325 $ 3,094,087

An analysis of amortization by function

Operating costs $ 60,369 $ 44,842


$ 122,445 $ 146,920

(Concluded)

c. Employee benefit expense


2015 2014

Post-employment benefits

Defined contribution plans $ 157,763 $ 168,500

Defined benefit plans 79,866 92,440

237,629 260,940

Other employee benefits 7,168,374 6,747,055

Total employee benefit expense $ 7,406,003 $ 7,007,995

An analysis of employee benefit expense by function

Operating costs $ 4,161,250 $ 3,994,076

Operating expenses 3,244,753 3,013,919

$ 7,406,003 $ 7,007,995

The current Articles of Incorporation of the Company stipulate the distribution of bonus to employees

and remuneration to directors and supervisors at the rates of no less than 0.1% and no higher than 2%,

respectively, of net income (net of the bonus and remuneration). For the year ended December 31,

2014, the bonus to employees and the remuneration to directors and supervisors were estimated at $285

thousand and $5,630 thousand, respectively.

To be in compliance with the Company Act as amended in May 2015 and the December 2015 decision

of the Company’s Board of Directors, the proposed amended Articles of Incorporation of the Company

stipulate the distribution of employees’ compensation and remuneration to directors and supervisors at

the rates of no less than 0.1% and no higher than 2%, respectively, of net profit before income tax,

employees’ compensation, and remuneration to directors and supervisors. For the year ended

December 31, 2015, the employees’ compensation and the remuneration to directors and supervisors

were $488 thousand and $5,635 thousand, respectively. The employees’ compensation and

remuneration to directors and supervisors in cash for the year ended December 31, 2015 were approved

by the Company’s board of directors on March 18, 2016 and are subject to the approval of the

amendments to the Company’s Articles of Incorporation by the shareholders in their meeting on June

15, 2016; in this shareholders’ meeting, a report of compensation and remuneration distribution will be

submitted to the shareholders.

- 54 -

Material differences between the estimated amounts and the amounts proposed by the board of directors

on or before the date the annual consolidated financial statements are authorized for issue are adjusted

in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts

after the annual consolidated financial statements are authorized for issue, the differences are recorded

as a change in accounting estimate.

The bonuses to employees and remuneration to directors and supervisors for 2014 and 2013, which

have been approved in the shareholders’ meetings on June 30, 2015 and June 17, 2014, respectively,

were as follows:


2014 2013

Cash Bonus Cash Bonus

Bonus to employees $ 285 $ 383

Remuneration of directors and supervisors 5,630 5,630

There was no difference between the amounts of the bonus to employees and the remuneration to

directors and supervisors proposed by the board of directors and approved in the shareholders’ meetings

on June 30, 2015 and June 17, 2014 and the amounts recognized in the consolidated financial

statements for the years ended December 31, 2014 and 2013, respectively.

Information on the employees’ compensation and remuneration to directors and supervisors approved

by the Company’s board of directors in 2016 and bonus to employees, directors and supervisors

approved in the shareholders' meetings in 2015 and 2014 are available on the Market Observation Post

System website of the Taiwan Stock Exchange.

23. INCOME TAXES

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:


2015 2014

Current tax

In respect of the current year $ (368,395) $ (391,237)

Land value increment tax - (172)

In respect of prior periods (23,108) 17,672

Deferred tax

In respect of the current year (53,541) (9,737)

Income tax expense recognized in profit or loss $ (445,044) $ (383,474)

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


2015 2014

Profit before tax from continuing operations $ 1,627,238 $ 1,247,531

(Continued)

- 55 -


2015 2014

Income tax expense calculated at the statutory rate $ (276,630) $ (212,080)

Nondeductible expenses in determining taxable income (123,655) (67,889)

Five-year tax-exempt 30,564 15,208

Tax-exempt income 210,140 166,063

Adjustment items in determining taxable income (347,375) (157,052)

Land value increment tax - (172)

Additional income tax on unappropriated earnings (403) (30,955)

Investment tax credits 22,578 17,390

Effect of different tax rate of group entities operating in other

jurisdictions 62,845 (131,659)

Adjustments for prior years’ tax (23,108) 17,672

Income tax expense recognized in profit or loss $ (445,044) $ (383,474)

(Concluded)

The applicable tax rate used above is the corporate tax rate of 17% payable by the Group in ROC, while

the applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities

operating in other jurisdictions are based on the tax laws in those jurisdictions.

As the status of 2016 appropriations of earnings is uncertain, the potential income tax consequences of

2015 unappropriated earnings are not reliably determinable.

b. Income tax recognized in other comprehensive income


2014 2013

Deferred tax

In respect of the current year:

Related to remeasurement of defined benefit obligation $ 62,797 $ 23,478

Related to share of the other comprehensive income of

associates 778 (1,360)

Share of other comprehensive income $ 63,575 $ 22,118

c. Current tax assets and liabilities

December 31

2015 2014

Deferred tax assets

Defined benefit obligation $ 257,007 $ 211,571

Loss carryforwards 168,738 175,150

Allowance for doubtful accounts 22,182 15,809

Investment credits 20,059 39,600

Payable for annual leave 15,683 13,792

Unrealized loss on investments 10,642 6,805

Others 57,506 83,313

$ 551,817 $ 546,040

(Continued)

- 56 -

December 31

2015 2014

Deferred tax liabilities

Land value increment tax $ 3,313,015 $ 3,313,015

Others 83,700 86,281

$ 3,396,715 $ 3,399,296

(Concluded)

d. Deductible temporary differences, unused loss carryforwards and unused investment credits for which

no deferred tax assets have been recognized in the consolidated balance sheets

December 31

2015 2014

Loss carryforwards

Expiry in 2015 $ - $ 2,106

Expiry in 2016 381,507 381,507

Expiry in 2017 593,388 593,388

Expiry in 2018 499,371 542,983

Expiry in 2019 1,575,637 1,602,875

Expiry in 2020 1,640,130 1,640,130

Expiry in 2021 19,318 19,318

Expiry in 2022 206,413 24,393

Expiry in 2023 32,310 723,011

Expiry in 2024 74,403 178,425

Expiry in 2025 50,824 -

$ 5,073,301 $ 5,708,136

Investment credits

Newly emerging, important and strategic industries $ 152,894 $ 71,427

Investments in areas of scanty natural resources or slow

development 10,424 10,424

$ 163,318 $ 81,851

e. Information about unused investment credits and unused loss carry-forward

As of December 31, 2015, investment tax credits comprised:

Laws and Statutes Tax Credit Source

Remaining

Creditable

Amount

Expiry

Year

Statute for Upgrading Industries Newly emerging, important and

strategic industries

$ 152,894 2016

Investments in areas of scanty natural

resources or slow development

30,483

2018

$ 183,377

- 57 -

Loss carryforwards as of December 31, 2015 comprised of:

Unused Amount Expiry Year

$ 381,507 2016

593,388 2017

499,371 2018

1,575,637 2019

1,650,590 2020

23,367 2021

229,941 2022

854,334 2023

192,478 2024

60,342 2025

$ 6,060,955

f. Integrated income tax

December 31

2015 2014

Unappropriated earnings

Generated on and after January 1, 1998 $ 5,500,298 $ 6,038,592

Imputation credits accounts $ 628,445 $ 498,174


2015

(Expected) 2014

Creditable ratio for distribution of earning 11.43% 8.75%

Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation

credits allocated to ROC resident shareholders of the Company was calculated based on the creditable

ratio as of the date of dividend distribution. The actual imputation credits allocated to shareholders of

the Company was based on the balance of the Imputation Credit Accounts (ICA) as of the date of

dividend distribution. Therefore, the expected creditable ratio for the 2015 earnings may differ from

the actual creditable ratio to be used in allocating imputation credits to the shareholders.

g. Income tax assessments

Final Approved Year

The Company 2010

Chung Hwa Pulp Co., Ltd. 2013

Hwa Fong Investments Co., Ltd. 2013

Effion Enertech Co., Ltd. 2013

YFY Packaging Inc. 2013

YFY Consumer Products Co., Ltd. 2010

Shin Foong Chemical Industry Co., Ltd. 2013

China Color Printing Co., Ltd. 2013

YFY Capital Co., Ltd. 2012

Union Investment Co., Ltd. 2012

(Continued)

- 58 -

Final Approved Year

YFY Venture Capital Investment Co., Ltd. 2013

YFY Paradigm Investment Co., Ltd. 2013

Lotus Ecoscings & Engineering Co., Ltd. 2013

Yuen Yan Paper Container Co., Ltd. 2013

San Ying Enterprise Co., Ltd. 2013

Cupid InfoTech Co., Ltd. 2013

Ever Growing Agriculture Biotech Co., Ltd. 2012

Pek Crown Paper Co., Ltd. 2013

Yeon Technologies Co., Ltd. 2013

YFY Biotech Management Company 2013

Kuang Hwa Fertilizer Limited Company 2013

YFY Operation Management Consulting Co., Ltd. 2013

Livebricks Inc. 2014

(Concluded)

24. EARNINGS PER SHARE

Unit: NT$ Per Share


2015 2014

Basic earnings per share $ 0.30 $ 0.36

Diluted earnings per share $ 0.30 $ 0.36

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings

per share from continuing operations were as follows:

Net Profit for the Year


2015 2014

Profit for the period attributable to owners of the Company $ 501,904 $ 594,779

Earnings used in the computation of diluted earnings per share $ 501,904 $ 594,779

Weighted average number of ordinary shares outstanding (in thousand shares):


2015 2014

Weighted average number of ordinary shares in computation of basic

earnings per share 1,660,372 1,660,372

Effect of potentially dilutive ordinary shares:

Bonus issue to employees 58 33

Weighted average number of ordinary shares used in the

computation of diluted earnings per share 1,660,430 1,660,405

- 59 -

If the Group offered to settle bonuses paid to employees in cash or shares, the Group assumed the entire

amount of the bonus would be settled in shares and the resulting potential shares were included in the

weighted average number of shares outstanding used in the computation of diluted earnings per share, if the

effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted

earnings per share until the shareholders resolve the number of shares to be distributed to employees at their

meeting in the following year.

25. BUSINESS COMBINATIONS

a. Subsidiaries acquired

Principal Activity

Date of

Acquisition

Proportion of

Voting

Equity

Interests

Acquired (%)

Consideration

Transferred

Innovativ Packaging

Worldwide, LLC

Design of packaging and

sale of paper

March 2015 51.0 $ 7,199

Yeon Technologies (Yang

Zhou) Co., Ltd.

Sale and design of RFID

(radio frequency


April 2015 100.0 $ 45,076

Jupiter Prestige Group

Holdings Limited and

its subsidiaries

Design of packaging, sale

of paper, and graphic

design

May 2014 57.0 $ 293,717

In 2014 and 2015, the Group acquired Innovativ Packaging Worldwide, LLC, Yeon Technologies

(Yang Zhou) Co., Ltd., and Jupiter Prestige Group Holdings Limited and its subsidiaries in order to

continue the expansion of the Group’s operation.

b. Considerations transferred


2015 2014

Innovativ

Packaging

Worldwide,

LLC

Yeon

Technologies

(Yang Zhou)

Co., Ltd.

Jupiter Prestige

Group Holdings

Limited and Its

Subsidiaries

Cash $ 7,199 $ 45,076 $ 106,803

Spin-off of the subsidiaries’ net assets at fair

value (Note 1) - - 82,134

Contingent consideration arrangement

(Note 2) - - 104,780

$ 7,199 $ 45,076 $ 293,717

Note 1: Rimagine Group Limited and Jupiter Prestige Group North America Inc.

Note 2: Under the acquisition contract, the Group should pay an additional US$3,471 thousand if all

the terms of the agreement were met by Jupiter Prestige Group Holdings Limited and its

subsidiaries during a certain period. Management thought it was probable that this payment

would be required.

- 60 -

As of December 31, 2015, the unpaid consideration was $53,570 thousand (US$1,632 thousand,

accounted for as other payables, used the exchange rate as of December 31, 2015).

c. Assets acquired and liabilities incurred at the date of acquisition

Innovativ

Packaging

Worldwide,

LLC

Yeon

Technologies

(Yang Zhou)

Co., Ltd.

Jupiter Prestige

Group Holdings

Limited and Its

Subsidiaries

Current assets

Cash $ 1,873 $ 310 $ 21,195

Accounts receivable 3,969 30,113 104,842

Inventories 1,834 26,035 91,554

Other current assets 19,537 20,485 10,949

Non-current assets

Property, plant and equipment 1,309 657 33,327

Current liabilities

Short-term borrowings (15,739) - - -

Accounts and other payables (11,265) (34,914) (35,680)

Other current liabilities (1,518) (34,525) (59,632)

$ - $ 8,161 $ 166,555

d. Non-controlling interests

The non-controlling interest (43% ownership interest) recognized at the acquisition date was measured

at the fair value of assets acquired and liabilities incurred and the book value of the net assets of the

subsidiaries that were spun off.

e. Goodwill arising on acquisition

Innovativ

Packaging

Worldwide,

LLC

Yeon

Technologies

(Yang Zhou)

Co., Ltd.

Jupiter Prestige

Group Holdings

Limited and Its

Subsidiaries

Consideration transferred $ 7,199 $ 45,076 $ 293,717

Plus: Non-controlling interests (43% in

Jupiter Prestige Group Holdings Limited

and its subsidiaries) - - - 91,430

Less: Fair value of identifiable net assets

acquired - (8,161) (166,555)

Goodwill arising on acquisition $ 7,199 $ 36,915 $ 218,592

Goodwill arose in the acquisition of Innovativ Packaging Worldwide, LLC, Yeon Technologies (Yang

Zhou) Co., Ltd., and Jupiter Prestige Group Holdings Limited and its subsidiaries because the cost of

the combination included a control premium. In addition, the consideration paid for the combination

effectively included amounts in relation to the benefit of expected synergies, revenue growth, and future

market development. These benefits were not recognized separately from goodwill because they did

not meet the recognition criteria for identifiable intangible assets.

The total amount of acquisition goodwill was not deductible for tax purposes.

- 61 -

f. Net cash outflow on acquisition of subsidiaries


2015 2014

Innovativ

Packaging

Worldwide,

LLC

Yeon

Technologies

(Yang Zhou)

Co., Ltd.

Jupiter Prestige

Group Holdings

Limited and Its

Subsidiaries

Consideration paid in cash $ 7,199 $ 45,076 $ 211,583

Less: Cash balances acquired (1,873) (310) (21,195)

Less: Investment payable (accounted for as

other payables) - - (104,780)

$ 5,326 $ 44,766 $ 85,608

g. Impact of acquisitions on the results of the Group

There acquirees’ operating results from the acquisition date to the consolidated financial reporting date

had no impact on the Group’s financial performance.

26. DISPOSAL OF SUBSIDIARIES

In May 2014 and August 2014, the Company and its wholly owned subsidiary, YFY BioTechnology

(Kunshan) Co., Ltd. (“YFY Kunshan”), agreed to sell their interests in YFY Biotech Co., Ltd. (wholly

owned by the Company) and its subsidiaries, and in Qimin Restaurant (Shanghai) Co., Ltd. (wholly owned

by YFY Kunshan) and its subsidiaries, respectively. This sale resulted in loss of control over their

respective direct subsidiaries.

In August 2015, YFY International BVI Corp. disposed of its entire equity interests in YFY BioTechnology

(Kunshan) Co., Ltd.

In July 2015, Jupiter Prestige Group Europe Ltd. lost its control over Foster and Balyis (Prestige) Ltd.;

hence, this investment was reclassified under investments accounted for using the equity method and has

been excluded from the consolidated financial statements since then.

a. Analysis of assets and liabilities on the date control was lost

YFY Biotech

Co., Ltd. and

Its

Subsidiaries

Qimin

Restaurant

(Shanghai)

Co., Ltd. and

Its

Subsidiaries

Foster and

Balyis

(Prestige) Ltd.

YFY

BioTechnology

(Kunshan) Co.,

Ltd.

Current assets

Cash and cash equivalents $ 84,675 $ 2,384 $ 1,676 $ 5,099

Debt investments with no

active market - - - 23,907

Accounts and notes

receivable 28,716 1,780 6,823 150,920

Inventories 78,104 189 - 62,737

Prepayments - - 919 17,617

Other current assets 25,706 4,130 4,888 66,726

(Continued)

- 62 -

YFY Biotech

Co., Ltd. and

Its

Subsidiaries

Qimin

Restaurant

(Shanghai)

Co., Ltd. and

Its

Subsidiaries

Foster and

Balyis

(Prestige) Ltd.

YFY

BioTechnology

(Kunshan) Co.,

Ltd.

Non-current assets

Property, plant and

equipment $ 23,511 $ 5,143 $ $ 2,721 $ 70,088

Other non-current assets 76,460 2,387 - 2,389

Current liabilities

Borrowings (125,000) - - (374,160)

Accounts payable (62,904) (73,109) (1,329) (18,532)

Other payables (36,517) (650) - -

Other current liabilities (107,922) - (3,940) (187,388)

Net assets disposed of $ (15,171) $ (57,746) $ 11,758 $ (180,597)

(Concluded)

b. Gain on disposal of subsidiaries

On the date of loss of control, the Group reclassified YFY Biotech Co., Ltd. and its subsidiaries to

financial assets measured at cost measured at the fair value of its remaining investments. The

differences between the fair value and the book value of the remaining investments on the date of loss

of control were recognized in profit or loss. In addition, for all of amounts related to the subsidiaries

that were recognized in other comprehensive income, the accounting treatments were consistent with

those of the subsidiaries as if the related assets and liabilities were directly sold by these subsidiaries.

As a result, the gain on disposal of YFY Biotech Co., Ltd. and its subsidiaries recognized was $14,705

thousand (accounted for as gain on disposal of investments).

The proceeds of the disposal of Qimin Restaurant (Shanghai) Co., Ltd. and its subsidiaries were $0, and

the recognized gain on the disposal of investments was $57,552 thousand.

The proceeds of the disposal of YFY BioTechnology (Kunshan) Co., Ltd. were $0, and the recognized

gain on the disposal of investments was $108,104 thousand.

c. Net cash outflow on disposal of subsidiary


2015 2014

Consideration received in cash and cash equivalents $ - $ -

Less: Cash and cash equivalents disposed of (6,775) (87,059)

$ (6,775) $ (87,059)

27. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going

concerns while maximizing the return to stakeholders through the optimization of the debt and equity

balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash

equivalents) and equity of the Group (comprising issued capital, reserves, retained earnings, other equity

and noncontrolling interests).

- 63 -

28. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

The management of the Group considers that the carrying amounts of financial assets and financial

liabilities recognized in the consolidated financial statements approximate their fair values or their fair

values cannot be reliably measured.

b. Fair value of financial instruments that are measured at fair value on a recurring basis

1) Fair value hierarchy

December 31, 2015

Level 1 Level 2 Level 3 Total

Financial assets at FVTPL

Derivative financial

assets $ - $ 530 $ 295,084 $ 295,614

Nonderivative financial

assets held for trading 691,790 - - 691,790

$ 691,790 $ 530 $ 295,084 $ 987,404

Financial assets held for

hedging $ - $ 23,189 $ - $ 23,189

Available-for-sale financial

assets

Securities listed in ROC

Equity securities $ 13,983,649 $ - $ - $ 13,983,649

Financial liabilities at

FVTPL


liabilities $ - $ 2,435 $ - $ 2,435

December 31, 2014


Financial assets at FVTPL


assets $ - $ 245 $ 282,799 $ 283,044

Nonderivative financial

assets held for trading 610,253 - - 610,253

$ 610,253 $ 245 $ 282,799 $ 893,297

Available-for-sale financial

assets

Securities listed in ROC

Equity securities $ 17,355,384 $ - $ - $ 17,355,384

(Continued)

- 64 -


Financial liabilities at

FVTPL


liabilities $ - $ 7,153 $ - $ 7,153

Financial liabilities held for

hedging $ - $ 153 $ - $ 153

(Concluded)

There were no transfers between Levels 1 and 2 for the years ended December 31, 2015 and 2014.

2) Reconciliation of Level 3 fair value measurements of financial instruments


Financial Assets

at FVTPL


Total gains or losses

In profit or loss 12,285



Financial Assets

at FVTPL


Total gains or losses

In profit or loss 22,870


The total gains or losses for the years ended December 31, 2015 and 2014 included a gain of

$12,285 thousand and $22,870 thousand relating to assets measured at fair value on Level 3 fair

value measurement and held at the end of reporting date (accounted as loss on arising on financial

instruments at FVTPL).

3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value

measurement

Financial Instruments Valuation Techniques and Inputs

Derivatives - foreign currency

forward contracts

Each determined using the average exchange rates (i.e.,

difference between the highest and the lowest exchange rates)

(a) For a certain period by the counterparties’ financial

institutions in accordance with the Reuters quoting system, or

(b) Daily for spot exchange rates quoted by financial

institutions.

- 65 -

4) Valuation techniques and inputs used to make Level 3 fair value measurement

The fair value of exchangeable bonds is determined using the applicable valuation model as well as

the value analysis report provided by a financial institution, for which the significant unobservable

inputs used are the net asset value of each share, interest rate fluctuation, risk-free rate, risk

premium and discount. The fair value of exchangeable bonds would increase if the net asset value

of each share increases, and the fair value would decrease if the interest rate, risk-free rate, risk

premium or discount decreases.

c. Categories of financial instruments

December 31

2015 2014

Financial assets

Fair value through profit or loss (FVTPL)

Held for trading $ 987,404 $ 893,297

Derivative instruments in designated hedge accounting

relationships 23,189 -

Loans and receivables (1) 18,378,245 18,176,817

Available-for-sale financial assets (2) 15,717,315 18,999,440

Financial liabilities

Fair value through profit or loss (FVTPL)

Held for trading 2,435 7,153

Derivative instruments in designated hedge accounting

relationships - 153

Amortized cost (3) 61,272,066 56,338,048

1) The balances included loans and receivables measured at amortized cost, which comprise cash and

cash equivalents, debt investments with no active market, notes receivable, accounts receivable and

accounts receivable from related parties.

2) The balances included the carrying amount of available-for-sale financial assets measured at cost.

3) The balances included financial liabilities measured at amortized cost, which comprise short-term

borrowings, short-term bills payable, notes payable, accounts payable, accounts payable to related

parties, other payables, current portion of long-term borrowings, bonds payable and long-term

borrowings.

d. Financial risk management objectives and policies

The Group’s main target of financial risk management was to manage the market risk related to

operating activity (including foreign currency risk, interest rate risk and other price risk), credit risk and

liquidity risk. To reduce the potential and detrimental influence of the fluctuations in market on the

Group’s financial performance, the Group was devoted to identify, estimate and hedge the uncertainties

of the market.

The Group sought to minimize the effects of these risks by using both derivative and nonderivative

financial instruments to avoid risk exposures. The use of financial instruments was governed by the

Group’s policies approved by the board of directors, which provided written principles on foreign

exchange risk, interest rate risk, credit risk, the use of financial derivatives and nonderivative financial

instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was

reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade

financial instruments, derivative financial instruments, for speculative purposes.

- 66 -

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency

exchange rates, interest rates and equity prices.

a) Foreign currency risk

The Group and most subsidiaries had foreign currency assets and liabilities, which exposed it

primarily to the financial risks of changes in foreign currency exchange rates. The Group used

foreign exchange forward contracts to eliminate currency exposure. These foreign exchange

forward contracts could reduce the influence of the exchange rate fluctuations on the Group’s

income.

Sensitivity analysis

For the position of financial assets and liabilities that had significant influence on the Group, the

risk was measured by considering the net position of foreign currency forward contract that is

undue.

The Group was mainly exposed to the USD and RMB.

The following table details the Group’s sensitivity to a 5% increase and decrease in the

functional currency against the relevant foreign currencies. 5% represents management’s

assessment of the reasonably possible change in foreign exchange rate. The sensitivity

analysis included only outstanding foreign currency denominated monetary items and adjusts

their translation at the end of the reporting period for a 5% change in foreign currency rates. A

positive number below indicates an increase in pre-tax profit associated with New Taiwan

dollars strengthen 5% against the relevant currency. For a 5% weakening of New Taiwan

dollars against the relevant currency, there would be an equal and opposite impact on pre-tax

profit and the balances below would be negative.


2015 2014

Influence to profit or loss at 5% variance

USD $ 254,261 $ 835,592

RMB $ 120,350 $ (113,314)

b) Interest rate risk

The Group was exposed to interest rate risk arising from borrowing at both fixed and floating

interest rates.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to

interest rates at the end of the reporting period were as follows:

December 31

2015 2014

Fair value interest rate risk

Financial assets $ 2,056,848 $ 2,948,990

Financial liabilities 11,279,300 7,720,533

Cash flow interest rate risk

Financial assets 1,730,707 1,475,692

Financial liabilities 38,853,514 40,038,122

- 67 -


The sensitivity analysis below were determined based on the Group’s floating interest rate

financial assets and liabilities at the end of the reporting period. Management adjusted the

sensitivity rate of 0.25% for assessing interest rate risk after considering the impact of the

volatile financial market conditions. The future cash flows of the Group’s floating interest rate

financial assets and financial liabilities will change by the variance of market interest.

For the Group’s portion of floating interest rate financial assets, if interest rates had been 0.25%

higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years

ended December 31, 2015 and 2014 would increase/decrease by $4,327 thousand and $3,689

thousand, respectively.

For the Group’s portion of floating interest rate financial liabilities, if interest rates had been

0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the

years ended December 31, 2015 and 2014 would decrease/increase by $97,134 thousand and

$100,095 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities

and mutual funds.


The sensitivity analyses below were determined based on the exposure to equity price risks at

the end of the reporting period.

If equity prices had been 5% higher/lower, the changes in fair value of held-for-trading

investments and available-for-sale investments for the years ended December 31, 2015 and

2014 would increase/decrease by $733,772 thousand and $898,282 thousand, respectively.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in

financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure

to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation

by the counterparties is arising from the carrying amount of the respective recognized financial

assets which comprise receivables from operating activities and financial assets from investing

activities as stated in the consolidated balance sheets.

The Group did transactions with a large number of unrelated customers and various industries.

The Group continuously evaluated the financial conditions of those customers.

To maintain the quality of the accounts receivable, the Group has built a credit risk management

procedure to reduce the credit risk from specific customer. The credit evaluation of individual

customer includes considering factors that will affect its payment ability such as financial condition,

past transaction records and current economic conditions. Credit risk of bank deposits,

fixed-income investments and other financial instruments with banks is evaluated and monitored by

the Group’s financial department. Since the counterparties are creditworthy banks and financial

institutions with good credit rating, thus, there’s no significant credit risk.

- 68 -

3) Liquidity risk

The objective of liquidity risk management is to maintain adequate cash and cash equivalents with

high liquidity and sufficient bank facilities that business operation requires and to ensure the Group

has sufficient financial flexibility.

As of December 31, 2015 and 2014, the amount of unused financing facilities were $31,771,649

thousand and $34,962,960 thousand.

The following table details the Group’s remaining contractual maturity for its non-derivative

financial liabilities with agreed repayment periods by financial institutions. The tables had been

drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on

which the Group can be required to pay. The tables included both interest and principal cash

flows. Specifically, loans with a repayment on demand clause were included in the earliest time

band regardless of the probability of the financial institutes choosing to exercise their rights.

To the extent that interest flows are floating rate, the undiscounted amount was derived from the

interest rate curve at the end of the reporting period.

December 31, 2015

Less than

1 Year 1-5 Years 5+ Years

Non-derivative financial liabilities

Variable interest rate liabilities $ 10,885,523 $ 29,209,925 $ -

Fixed interest rate liabilities 11,289,000 - -

$ 22,174,523 $ 29,209,925 $ -

December 31, 2014

Less than

1 Year 1-5 Years 5+ Years

Non-derivative financial liabilities

Variable interest rate liabilities $ 13,081,304 $ 28,456,272 $ -

Fixed interest rate liabilities 7,734,582 - -

$ 20,815,886 $ 28,456,272 $ -

29. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the

Company, have been eliminated on consolidation and are not disclosed in this note. Details of

transactions between the Group and other related parties are disclosed below.

a. Sales of goods


Related Parties Types 2015 2014

Associates and others $ 178,626 $ 396,568

- 69 -

For sales of goods to related parties, the prices and terms of receivables were made by the agreements

between parties.

b. Purchases of goods




For purchases of goods related parties, the prices and terms of payables were made by the agreements

between parties.

c. Receivables from related parties

December 31



The outstanding accounts receivable from related parties are unsecured. No expense was recognized

for the years ended December 31, 2015 and 2014 for allowance for impaired accounts receivable with

respect to the amounts owed by related parties.

d. Payables to related parties

December 31



The outstanding accounts payable to related parties are unsecured.

e. Others

Rental Income (Accounted as

Other Income)



Associates and others $ 353 $ 375

Rental Expenses (Accounted as

Operating Expenses)




Depending on the agreements, rental income and expenses were received or paid by per month or per

half-year.

In August 2014, YFY BioTechnology (Kunshan) Co., Ltd. disposed 100% shares of Qimin Restaurant

(Shanghai) Co., Ltd. to other related parties. Proceeds from the disposal was $0 and gain on the

proposal was $57,552 thousand (accounted as gain on disposal of investments).

- 70 -

In November 2015, the Company bought third subordinated bank debentures issued in 2015 by Bank

SinoPac, which amounted to $400,000 thousand (accounted for as debt investment with no active

market) and had an interest rate of 3.9%. As of December 31, 2015, the interest receivable (accounted

for under other current assets) was $1,300 thousand.

f. Compensation of key management personnel


2015 2014

Salaries and benefits $ 46,798 $ 48,896

Bonus - 285

Executive fees 1,943 2,287

$ 48,741 $ 51,468

The remuneration of directors and key executives was determined by the remuneration committee

having regard to the performance of individuals and market trends.

30. ASSETS PLEDGED OR MORTGAGED

The following assets had been pledged or mortgaged as collaterals for the portion of bank loans, guarantees

provided on certain commitments and other credit accommodation:

December 31

2015 2014

Notes receivable $ 1,381,859 $ -

Property, plant and equipment and investment properties 731,422 744,128

Pledged time deposits (accounted as debt investments with no active

market and other current assets) 757,234 8,002

$ 2,870,515 $ 752,130

31. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

As of December 31, 2015 and 2014, unused letters of credit for purchases of raw materials and machinery

and equipment amounted to approximately $1,609,294 thousand and $504,098 thousand, respectively.

- 71 -

32. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN

FOREIGN CURRENCIES

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

December 31, 2015

Foreign

Currencies Exchange Rate

New Taiwan

Dollars

Financial assets

Monetary items

USD $ 52,163 32.825 (USD:NTD) $ 1,712,239

USD 29,994 6.49 (USD:RMB) 984,567

RMB 208,551 5.05 (RMB:NTD) 1,054,221

RMB 500,917 0.154 (RMB:USD) 2,532,126

Non-monetary items

USD 8,990 32.825 (USD:NTD) 295,084

Investments accounted for using equity

method

USD 20,235 32.825 (USD:NTD) 664,222


Monetary items

USD 21,931 32.825 (USD:NTD) 719,881

USD 215,348 6.49 (USD:RMB) 7,068,797

RMB 1,185,633 0.154 (RMB:USD) 5,993,346

December 31, 2014

Foreign

Currencies Exchange Rate

New Taiwan

Dollars

Financial assets

Monetary items

USD $ 60,056 31.65 (USD:NTD) $ 1,900,762

USD 42,837 6.12 (USD:RMB) 1,355,791

RMB 159,333 5.17 (RMB:NTD) 824,135

RMB 598,993 0.1634 (RMB:USD) 3,098,238

Non-monetary items

USD 8,935 31.65 (USD:NTD) 282,799

Investments accounted for using equity

method

USD 17,992 31.65 (USD:NTD) 569,449


Monetary items

USD 24,652 31.65 (USD:NTD) 780,248

USD 622,298 6.12 (USD:RMB) 19,695,718

RMB 320,178 0.1634 (RMB:USD) 1,656,092

- 72 -

For the years ended December 31, 2015 and 2014, realized and unrealized net foreign exchange were loss

$603,262 thousand and gain $145,734 thousand, respectively. It is impractical to disclose net foreign

exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency

transactions and functional currencies of the group entities.

33. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

1) Financing provided to others. (Table 2)

2) Endorsements/guarantees provided. (Table 3)

3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled

entities). (Table 4)

4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the

paid-in capital. (Table 5)

5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in

capital. (None)

6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital.

(None)

7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the

paid-in capital. (Table 6)

8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in

capital. (Table 7)

9) Information on investees. (Table 8)

10) Trading in derivative instruments. (Notes 7 and 9)

11) Intercompany relationships and significant intercompany transactions. (Table 10)

b. Information on investments in mainland China

1) Information on any investee company in mainland China, showing the name, principal business

activities, paid-in capital, method of investment, inward and outward remittance of funds,

ownership percentage, net income of investees, investment income or loss, carrying amount of the

investment at the end of the period, repatriations of investment income, and limit on the amount of

investment in the mainland China area. (Table 9)

2) Any of the following significant transactions with investee companies in mainland China, either

directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or

losses:

a) The amount and percentage of purchases and the balance and percentage of the related payables

at the end of the period. (None)

b) The amount and percentage of sales and the balance and percentage of the related receivables at

the end of the period. (Table 6)

- 73 -

c) The amount of property transactions and the amount of the resultant gains or losses. (None)

d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the

end of the period and the purposes. (Table 3)

e) The highest balance, the end of period balance, the interest rate range, and total current period

interest with respect to financing of funds. (Table 2)

f) Other transactions that have a material effect on the profit or loss for the period or on the

financial position, such as the rendering or receiving of services. (None)

34. SEGMENT INFORMATION

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

Business Unit

of Pulp and

Fine Paper

Business Unit

of Container -

Board and

Packaging

Business Unit

of Consumer

Products Other Segment

Adjustment

and

Elimination Total

Year ended December 31, 2015

Revenue from external

customers $ 24,919,229 $ 22,504,231 $ 10,833,023 $ 5,323,514 $ - $ 63,579,997 Revenue from other internal

operating segments $ 1,286,291 $ 1,986,619 $ 60,365 $ 1,097,699 $ (4,430,974 ) $ -

Segment profit or loss $ 1,653,958 $ (855,521 ) $ (171,649 ) $ 533,302 $ 22,104 $ 1,182,194

Year ended December 31, 2014

Revenue from external

customers $ 24,830,069 $ 21,974,751 $ 9,357,443 $ 4,734,134 $ - $ 60,896,397

Revenue from other internal operating segments $ 1,250,378 $ 2,125,699 $ 8,097 $ 1,230,225 $ (4,614,399 ) $ -

Segment profit or loss $ 437,321 $ (38,498 ) $ 25,977 $ 736,423 $ (297,166 ) $ 864,057

The Group classifies its products into three segments in accordance with their characteristics, as follows:

a. Pulp and fine paper segment

Manufacture and sale of cardboard, paper and pulp.

b. Containerboard and packaging segment

Manufacture and sale of paper for cardboard cases, colored cases and food containers.

c. Consumer product segment

Manufacture and sale of tissue paper, napkins, detersives and cosmetics.

The accounting policies of each segment are the same as those accounting policies stated in Note 4. The

performance of segments is measured at income after tax. Revenue and profit between segments have

been adjusted; these adjustments include the elimination of intra-segment transactions to reconcile the

segment information with that reported for the Group as a whole.

- 74 -

December 31

2015 2014

Segment assets

Business unit of pulp and fine paper $ 38,532,280 $ 37,396,075

Business unit of containerboard and packaging 42,719,599 40,313,601

Business unit of consumer products 9,446,676 8,603,738

Other segments 69,878,258 72,265,557

Adjustment and elimination (47,185,913) (46,285,162)

Consolidated total assets $ 113,390,900 $ 112,293,809

Geographical Information

The Group operates in three principal geographical areas - Taiwan, Mainland China and Japan.

The Group’s revenue from continuing operations from external customers by location of operations and

information about its non-current assets by location of assets are detailed below.

Revenue from

External Customers

For the Year Ended Non-current Assets

December 31 December 31

2015 2014 2015 2014

Taiwan $ 36,159,240 $ 36,210,531 $ 24,290,900 $ 25,732,670

Mainland China 23,452,612 21,589,416 29,355,701 26,209,503

Japan 338,910 287,133 43,036 1,810

Others 3,629,235 2,809,317 776,983 609,908

$ 63,579,997 $ 60,896,397 $ 54,466,620 $ 52,553,891

Information about Major Customers

No single customer contributed 10% or more to the Group’s revenue for both 2015 and 2014.

- 75 -

TABLE 1


DIAGRAM OF INVESTMENT STRUCTURE

FOR THE YEAR ENDED DECEMBER 31, 2015

YFY Inc.

San Ying Enterprise Co., Ltd.


Ltd.

Yuen Yan Paper Container Co.,

Ltd.

Shin Foong Chemical

Industry Co., Ltd.

Union Paper Co., Ltd.

YFY HOLDING MANAGEMENT

CO., LTD.

YFY Consumer Products Co., Ltd.

18.9% 50.9%

YFY Biotech Management

Company

YFY Jupiter (BVI) Inc.

YFY RFID Co., Ltd.

YFY RFID Technologies

Co., Ltd.

38.62% Yeon Technologies

Co., Ltd.

Arizon RFID Technology


YFY Jupiter Ltd.

Jupiter Prestige Group Holdings

Limited

Mobius105 (HK) Ltd.

Mobius105 Ltd.

57%

YFY Jupiter (Shenzhen)

Ltd.

YFY Jupiter Supply Chain Management

Services (Shenzhen)

Limited

YFY Biopulp Technology

Ltd.

Yuen Foong Yu Blue Economy

Natural Resource (Yangzhou) Co.,

Ltd.

YFY Paper Mfg.

(Jiangyin) Co., Ltd.

Yuen Foong Yu Comsumer Products

Investment Limited

94% 60%

YFY Mauritius

Corp.

YFY Packaging (BVI) Corp.

Pek Crown Paper Co.,

Ltd.

Hwa Fong Paper (H.K.)

Ltd.

Shenzhen Systax Paper

Co., Ltd.

YFY Investment

Co., Ltd.

YFY Family Paper (Beijing) Co., Ltd.

Yuen Foong Yu Comsumer

Product (Yangzhou) Co.,

Ltd.

Systax Communicati

on (H.K.) Ltd.

YFY Cayman Co., Ltd.

YFY International Labuan Co.,

Ltd.

YFY Packaging

Inc.

66.8%

0.03%

60.0%

40.0%


(Fuzhou) Co., Ltd.

YFY Paper Enterprise (Kunshan) Co., Ltd.


(Suzhou) Co., Ltd.


(Tianjin) Co., Ltd.


(Dongguan) Co., Ltd.

YFY Paper Enterprise (Shanghai) Co., Ltd.


(Qingdao) Co., Ltd.

YFY Paper Enterprise (Nanjing) Co., Ltd.




(Xiamen) Co., Ltd.


(Zhongshan) Co., Ltd.


(Jiaxing) Co., Ltd.

YFY Paper Mfg.


90% 93.8%

Kunshan YFY Advertising and Printing Co., Ltd.

50% 50%Shanghai YFY Advertising and Printing Co., Ltd.

51%

YFY International

BVI Corp.

Note：100% of Ownership, Unless Otherwise Stated.

50%Yuen Foong

Shop

YFY Paradigm Investment Co.,

Ltd.

Effion Enertech Co.,

Ltd.

49%

YFY Capital Co., Ltd.

56.9%

Hwa Fong Investment

Co., Ltd.

CHP International

(BVI) Corporation

Chung Hwa Pulp

Corporation

Guangdong Ding Feng Pulp &

Paper Co., Ltd.

Zhaoqing Ding Feng

Forestry Ltd.

60%

66.3%

40% 13.5%

Chung Hwa Pulp

Corporation

0.7%

Rimagine Limited

Rimagine Group

Limited

Rimagine Design

(Shanghai) Co., Ltd.

YFY Venture Capital


75%Livebricks

Inc.


Ltd.


Investment Co., Ltd

85.5%

14.5%

20.2%

YFY Capital Holdings

Corp.

YFY (Shanghai) Financial

Services Co., Ltd.

Jupiter Prestige Group North America Inc.

Opal BPM Limited

Jupiter Prestige Group Europe

Ltd.

Jupiter Prestige

Group Asia Ltd.

82.5%

YFY Jupiter US, Inc.

Ever Growing Agriculture

Biotech Co., Ltd.85.04%

Yuen Foong Fusi Pai Packaging


70%

YFY Packaging

Capital Corp.

51%

China Color Printing Co.,

Ltd.

49.7%

38.62%

0.01% 0.07%

4.0%


Packaging Ltd.

Yeon Technologies (Yang Zhou)

Co.,Ltd

Innovativ Packaging

Worldwide, LLC

49% 0.64%

Kuang Hwa Fertilizer Limited

Company

0.01%

Cupid InfoTech Co.,

Ltd.

YFY Global Investment BVI Corp.

Eihoyo Shoji Co., Ltd.

0.1%

56.7%

50%

Shanghai YFY International

Trade Co., Ltd.

1%

1%

Kunshan Actview Carbon

Technology Co., Ltd.

66.4%

Jupiter Prestige Group Australia

PTY Ltd.

Opal BPMIndia

PrivateLimited

- 76 -

TABLE 2


FINANCING PROVIDED TO OTHERS



No. Lender Borrower Financial

Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)

Collateral Financing Limit

for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits

(Notes 1 and 3)

Note Item Value

1 YFY International BVI Corp.


Ltd.

Long-term receivables from

related parties

Yes $ 5,074,745 (US$ 154,600

thousand)

$ 5,074,745 (US$ 154,600

thousand)

$ 5,074,745 (US$ 154,600

thousand)

2-2.37 Short-term financing

$ - Financing for working capital

requirements

$ - - $ - $ 46,725,337 (US$ 1,423,468

thousand)

$ 46,725,337 (US$ 1,423,468

thousand)

Note 2


Ltd.


related parties

Yes 656,500 (US$ 20,000

thousand)

656,500 (US$ 20,000

thousand)

656,500 (US$ 20,000

thousand)

2 Short-term financing

- Financing for working capital

requirements

- - - 46,725,337 (US$ 1,423,468

thousand)

46,725,337 (US$ 1,423,468

thousand)

Note 2


Other receivables from related

parties

Yes 98,475 (US$ 3,000

thousand)

- - - Short-term financing


requirements

- - - 46,725,337 (US$ 1,423,468

thousand)

46,725,337 (US$ 1,423,468

thousand)

Note 2

Systax Communication

(H.K.) Ltd.


parties

Yes 77,861 (US$ 2,372

thousand)

77,861 (US$ 2,372

thousand)

71,296 (US$ 2,172

thousand)



requirements

- - - 46,725,337 (US$ 1,423,468

thousand)

46,725,337 (US$ 1,423,468

thousand)

Note 2


(Nanjing) Co.,

Ltd.


parties

Yes 459,550 (US$ 14,000

thousand)

391,602 (US$ 11,930

thousand)

391,602 (US$ 11,930

thousand)



requirements

- - - 9,345,081 (US$ 284,694

thousand)

18,690,128 (US$ 569,387

thousand)

Note 2

YFY Paper Mfg.

(Jiangyin) Co.,

Ltd.

Other receivables

from related

parties

Yes 229,775

(US$ 7,000

thousand)

229,775

(US$ 7,000

thousand)

229,775

(US$ 7,000

thousand)

2 Short-term

financing

- Financing for

working capital

requirements

- - - 9,345,081

(US$ 284,694

thousand)

18,690,128

(US$ 569,387

thousand)

Note 2

YFY BioTechnology

(Kunshan) Co.,

Ltd.

Other receivables No 131,300

(US$ 4,000

thousand)

131,300

(US$ 4,000

thousand)

131,300

(US$ 4,000

thousand)

2 Short-term

financing

- Financing for

working capital

requirements

- - - 9,345,081

(US$ 284,694

thousand)

18,690,128

(US$ 569,387

thousand)

-

YFY BioTechnology

(Kunshan) Co., Ltd.


(RMB 48,000 thousand)

242,639


242,639


2 Short-term

financing

- Financing for

working capital requirements

- - - 9,345,081

(US$ 284,694 thousand)

18,690,128

(US$ 569,387 thousand )

-

YFY Paper

Enterprise (Tianjin) Co., Ltd.

Other receivables

from related parties

Yes 32,825


32,825


32,825


2 Short-term

financing

- Financing for


- - - 46,725,337

(US$ 1,423,468 thousand)

46,725,337


Note 2

YFY Paper

Enterprise (Qingdao) Co.,

Ltd.

Other receivables


Yes 142,789


142,789


77,139


2 Short-term

financing

- Financing for


- - - 46,725,337


46,725,337


Note 2


(Kunshan) Co.,

Ltd.


related parties

Yes 1,086,820 (RMB 215,000

thousand)

1,086,820 (RMB 215,000

thousand)

793,631 (RMB 157,000

thousand)



requirements

- - - 46,725,337 (US$ 1,423,468

thousand)

46,725,337 (US$ 1,423,468

thousand)

Note 2

YFY Packaging

(Yangzhou)


Other receivables

from related

parties

Yes 558,025

(US$ 17,000

thousand)

492,375

(US$ 15,000

thousand)

492,375

(US$ 15,000

thousand)

2.37 Short-term

financing

- Financing for

working capital

requirements

- - - 46,725,337

(US$ 1,423,468

thousand)

46,725,337

(US$ 1,423,468

thousand)

Note 2

2 YFY Global

Investment BVI Corp.

YFY Paper Mfg.


Other receivables


Yes 328,250


328,250


328,250


2 Short-term

financing

- Financing for


- - - 9,281,039


9,281,039


Note 2

YFY Paper Mfg.


Other receivables


Yes 259,318


259,318


259,318


2 Short-term

financing

- Financing for


- - - 1,856,221


3,712,409


Note 2

Chinese Cubes Co.,

Ltd.



- - - Short-term

financing

- Financing for


- - - 1,856,221


3,712,409


-



parties

Yes 361,075 (US$ 11,000

thousand)

361,075 (US$ 11,000

thousand)

361,075 (US$ 11,000

thousand)



requirements

- - - 9,281,039 (US$ 282,743

thousand)

9,281,039 (US$ 282,743

thousand)

Note 2

(Continued)

- 77 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits

(Notes 1 and 3) Note

Item Value

3 YFY Paper Mfg.


YFY Paper Mfg.


Other receivables


Yes $ 497,844


$ 450,105


$ 421,489


2.25 Short-term

financing

$ - Financing for


$ - - $ - $ 450,105


$ 3,600,827


Note 2

Shenzhen Systax

Paper Co., Ltd.

Other receivables


Yes 9,956,859

(RMB 1,969,714 thousand)

9,002,075


- - Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2

Yuen Foong Yu

Blue Economy Natural Resource

(Yangzhou) Co.,

Ltd.

Other receivables


Yes 9,956,859


9,002,075


10

(RMB 2 thousand)

2.25 Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2

Kunshan YFY

Advertising and

Printing Co., Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

425,351

(RMB 84,145

thousand)

2.25 Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

YFY Family Care

(Kunshan) Co.,

Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

YFY Paper

Enterprise

(Suzhou) Co., Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

67,459

(RMB 13,345

thousand)

2.25 Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

YFY Paper

Enterprise (Fuzhou) Co.,

Ltd.

Other receivables


Yes 9,956,859


9,002,075


489,054


2.25 Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2


(Shanghai) Co.,

Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

204,054 (RMB 40,367

thousand)

2.25 Short-term financing


requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

YFY BioTechnology

(Kunshan) Co.,

Ltd.


(RMB 98,486

thousand)

101,100

(RMB 20,000

thousand)

47,092

(RMB 9,316

thousand)

2.25 Short-term

financing

- Financing for

working capital

requirements

- - - 450,105

(RMB 89,042

thousand)

3,600,827

(RMB 712,333

thousand)

-

Sinopac

International

Leasing (Tianjin) Corp.


(RMB 20,000

thousand)

- - - Short-term

financing

- Financing for

working capital

requirements

- - - 1,800,416

(RMB 356,167

thousand)

3,600,827

(RMB 712,333

thousand)

-

YFY Paper

Enterprise (Nanjing) Co.,

Ltd.

Other receivables


Yes 497,844


450,105


85,399


2.25 Short-term

financing

- Financing for


- - - 450,105


3,600,827


Note 2


(Dongguan) Co.,

Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-

- Short-term financing


requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

YFY Paper

Enterprise (Jiaxing) Co., Ltd.

Other receivables


Yes 9,956,859


9,002,075


159,919


2.25 Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2

Rimagine Design


Other receivables


Yes 9,956,859


9,002,075


1,269

(RMB 251 thousand)

2.25 Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2

YFY Paper

Enterprise (Guangzhou) Co.,

Ltd.

Other receivables


Yes 497,844


450,105


-

- Short-term

financing

- Financing for


- - - 450,105


3,600,827


Note 2


Paper Co., Ltd.


parties

Yes 497,844 (RMB 98,486

thousand)

450,105 (RMB 89,042

thousand)

-



requirements

- - - 450,105 (RMB 89,042

thousand)

3,600,827 (RMB 712,333

thousand)

Note 2



parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

135,999 (RMB 26,904

thousand)



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2


(Zhongshan) Co.,

Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

(Continued)

- 78 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value

YFY Paper

Enterprise (Xiamen) Co.,

Ltd.

Other receivables


Yes $ 9,956,859


$ 9,002,075


$ 16,545


2.25 Short-term

financing

$ - Financing for


$ - - $ - $ 9,002,075


$ 9,002,075


Note 2


(Kunshan) Co.,

Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

YFY Paper

Enterprise

(Tianjin) Co., Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

-

- Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

YFY Paper

Enterprise

(Qingdao) Co., Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

-

- Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

Arizon RFID

Technology (Yangzhou) Co.,

Ltd.

Other receivables


Yes 9,956,859


9,002,075


-

- Short-term

financing

- Financing for


- - - 9,002,075


9,002,075


Note 2

YFY Jupiter (Shenzhen) Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2


Packaging Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2


Investment Co.,

Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

- - Short-term financing


requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

Yuen Foong Yu

Comsumer

Product (Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 9,956,859

(RMB 1,969,714

thousand)

9,002,075

(RMB 1,780,834

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 9,002,075

(RMB 1,780,834

thousand)

9,002,075

(RMB 1,780,834

thousand)

Note 2

YFY Investment Co., Ltd.


parties

Yes 9,956,859 (RMB 1,969,714

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2


Investment Co.,

Ltd.


parties

Yes 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

-



requirements

- - - 9,002,075 (RMB 1,780,834

thousand)

9,002,075 (RMB 1,780,834

thousand)

Note 2

4 YFY Paper Enterprise

(Kunshan) Co., Ltd.

YFY Paper Mfg.


Other receivables


Yes 1,027,161


600,354


582,480


2.1 Short-term

financing

- Financing for


- - - 1,004,753


1,004,753


Note 2

YFY Packaging

(Yangzhou) Investment Co.,

Ltd.

Other receivables


Yes 1,004,753


600,354


12,966

(RMB 2,565 thousand )

2.1 Short-term

financing

- Financing for


- - - 1,004,753


1,004,753


Note 2


Co., Ltd.


parties

Yes 404,398 (RMB 80,000

thousand)

404,398 (RMB 80,000

thousand)

389,233 (RMB 77,000

thousand)



requirements

- - - 1,004,753 (RMB 198,765

thousand)

1,004,753 (RMB 198,765

thousand)

Note 2


(Qingdao) Co., Ltd.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 1,235,740

(RMB 244,460

thousand)

1,235,740

(RMB 244,460

thousand)

658,547

(RMB 130,277

thousand)

2.1 Short-term

financing

- Financing for

working capital

requirements

- - - 1,539,038

(RMB 304,460

thousand)

1,539,038

(RMB 304,460

thousand)

Note 2

YFY (Shanghai)

Financial Services

Co., Ltd.

Other receivables

from related

parties

Yes 303,299

(RMB 60,000

thousand)

303,299

(RMB 60,000

thousand)

60,660

(RMB 12,000

thousand)

2.85 Short-term

financing

- Financing for

working capital

requirements

- - - 1,539,038

(RMB 304,460

thousand)

1,539,038

(RMB 304,460

thousand)

Note 2


(Guangzhou) Co.,

Ltd.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 56,232

(RMB 11,124

thousand)

43,796

(RMB 8,664

thousand)

33,363

(RMB 6,600

thousand)

2.1 Short-term

financing

- Financing for

working capital

requirements

- - - 43,796

(RMB 8,664

thousand)

350,355

(RMB 69,309

thousand)

Note 2

YFY Paper Mfg.

(Jiangyin) Co.,

Ltd.

Other receivables

from related

parties

Yes 151,649

(RMB 30,000

thousand)

151,649

(RMB 30,000

thousand)

151,649

(RMB 30,000

thousand)

2.25 Short-term

financing

- Financing for

working capital

requirements

- - - 175,175

(RMB 34,654

thousand)

350,355

(RMB 69,309

thousand)

Note 2

(Continued)

- 79 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value



YFY Paper Mfg.


Other receivables


Yes $ 1,433,960


$ 1,433,960


$ 462,955


2.1 Short-term

financing

$ - Financing for


$ - - $ - $ 1,433,960


$ 1,433,960


Note 2


(Xiamen) Co., Ltd.

YFY Paper Mfg.


Other receivables


Yes 183,081


-

-

- Short-term

financing

- Financing for


- - - -

-

Note 2

9 YFY Paper Enterprise (Dongguan) Co.,

Ltd.


Ltd.


parties

Yes 704,118 (RMB 139,292

thousand)

704,118 (RMB 139,292

thousand)

250,600 (RMB 49,575

thousand)



requirements

- - - 704,118 (RMB 139,292

thousand)

704,118 (RMB 139,292

thousand)

Note 2

10 YFY Paper Enterprise (Tianjin) Co., Ltd.


Ltd.


parties

Yes 908,152 (RMB 179,655

thousand)

908,152 (RMB 179,655

thousand)

430,563 (RMB 85,176

thousand)



requirements

- - - 1,211,451 (RMB 239,655

thousand)

1,211,451 (RMB 239,655

thousand)

Note 2


Co., Ltd.


parties

Yes 303,299 (RMB 60,000

thousand)

303,299 (RMB 60,000

thousand)

106,155 (RMB 21,000

thousand)



requirements

- - - 1,211,451 (RMB 239,655

thousand)

1,211,451 (RMB 239,655

thousand)

Note 2

11 YFY Cayman Co., Ltd. YFY Paper

Enterprise

(Jiaxing) Co., Ltd.

Other receivables

from related

parties

Yes 196,950

(US$ 6,000

thousand)

131,300

(US$ 4,000

thousand)

131,300

(US$ 4,000

thousand)

2 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise


Other receivables

from related

parties

Yes 86,986

(US$ 2,650

thousand)

86,986

(US$ 2,650

thousand)

86,986

(US$ 2,650

thousand)

2.37 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise

(Suzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 246,188

(US$ 7,500

thousand)

246,188

(US$ 7,500

thousand)

246,188

(US$ 7,500

thousand)

2-2.37 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand )

Note 2


(Qingdao) Co.,

Ltd.


parties

Yes 215,004 (US$ 6,550

thousand)

215,004 (US$ 6,550

thousand)

215,004 (US$ 6,550

thousand)

2-2.37 Short-term financing


requirements

- - - 32,972,187 (US$ 1,004,484

thousand)

32,972,187 (US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise

(Tianjin) Co., Ltd.

Other receivables

from related

parties

Yes 262,600

(US$ 8,000

thousand)

262,600

(US$ 8,000

thousand)

262,600

(US$ 8,000

thousand)

2 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise


Other receivables

from related

parties

Yes 105,040

(US$ 3,200

thousand)

105,040

(US$ 3,200

thousand)

105,040

(US$ 3,200

thousand)

2.37 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise (Guangzhou) Co.,

Ltd.

Other receivables


Yes 180,538


180,538


180,538


2.37 Short-term

financing

- Financing for


- - - 6,594,444


13,188,855


Note 2


(Fuzhou) Co., Ltd.


parties

Yes 49,238 (US$ 1,500

thousand)

49,238 (US$ 1,500

thousand)

49,238 (US$ 1,500

thousand)



requirements

- - - 32,972,187 (US$ 1,004,484

thousand)

32,972,187 (US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise (Kunshan) Co.,

Ltd.

Other receivables


Yes 229,775


229,775


229,775


2 Short-term

financing

- Financing for


- - - 32,972,187


32,972,187


Note 2


(Xiamen) Co.,

Ltd.


parties

Yes 98,475 (US$ 3,000

thousand)



requirements

- - - 32,972,187 (US$ 1,004,484

thousand)

32,972,187 (US$ 1,004,484

thousand)

Note 2

YFY Paper

Enterprise


Other receivables

from related

parties

Yes 328,250

(US$ 10,000

thousand)

328,250

(US$ 10,000

thousand)

262,600

(US$ 8,000

thousand)

2-2.37 Short-term

financing

- Financing for

working capital

requirements

- - - 32,972,187

(US$ 1,004,484

thousand)

32,972,187

(US$ 1,004,484

thousand)

Note 2

YFY Paper Mfg.


Long-term

receivables from related parties

Yes 3,188,949


3,188,949


3,188,949


2-2.37 Short-term

financing

- Financing for


- - - 32,972,187


32,972,187


Note 2

(Continued)

- 80 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value

YFY Paper Mfg.


Long-term


Yes $ 1,516,493


$ 1,516,493


$ 1,516,493


2 Short-term

financing

$ -

Financing for


$ - - $ - $ 32,972,187


$ 32,972,187


Note 2

YFY Packaging


Ltd.

Long-term


Yes 328,250


328,250


328,250


2.37 Short-term

financing

-

Financing for


- - - 32,972,187


32,972,187


Note 2


Investment Co.,

Ltd.


parties

Yes 164,125 (US$ 5,000

thousand)

164,125 (US$ 5,000

thousand)

164,125 (US$ 5,000

thousand)



requirements

- - - 32,972,187 (US$ 1,004,484

thousand)

32,972,187 (US$ 1,004,484

thousand)

Note 2

12 YFY Jupiter Ltd. YFY Jupiter (BVI)

Inc.

Other receivables

from related

parties

Yes 18,054

(US$ 550

thousand)

18,054

(US$ 550

thousand)

18,054

(US$ 550

thousand)

0.1 Short-term

financing

- Financing for

working capital

requirements

- - - 142,099

(US$ 4,329

thousand)

284,166

(US$ 8,657

thousand)

Note 2


(Nanjing) Co., Ltd.

YFY Paper Mfg.


Other receivables


Yes 29,890


29,511


-

- Short-term

financing

- Financing for


- - - 29,511


236,088


Note 2

YFY Packaging


Ltd.

Other receivables


Yes 29,511


29,511


470

(RMB 93 thousand)

2.1 Short-term

financing

-

Financing for


- - - 29,511


236,088


Note 2

14 Arizon RFID

Technology


YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 2,763,975

(RMB 546,783

thousand)

2,763,975

(RMB 546,783

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 2,763,975

(RMB 546,783

thousand)

2,763,975

(RMB 546,783

thousand)

Note 2

15 YFY Jupiter

(Shenzhen) Ltd.

YFY Paper Mfg.


Other receivables


Yes 229,092


229,092


5,045

(RMB 998 thousand)

2.1 Short-term

financing

- Financing for


- - - 229,092


229,092


Note 2

16 Guangdong Ding Feng Pulp & Paper Co.,

Ltd.


Ltd.


parties

Yes 531,976 (RMB 105,238

thousand)

526,617 (RMB 104,178

thousand)

188,738 (RMB 37,337

thousand)



requirements

- - - 526,617 (RMB 104,178

thousand)

4,212,944 (RMB 833,425

thousand)

Note 2

17 YFY Family Paper (Beijing) Co., Ltd.


Ltd.


parties

Yes 1,104,770 (RMB 218,551

thousand)

1,079,642 (RMB 213,580

thousand)



requirements

- - - 1,079,642 (RMB 213,580

thousand)

1,079,642 (RMB 213,580

thousand)

Note 2

18 YFY Investment Co.,

Ltd.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 3,385,712

(RMB 669,778

thousand)

3,385,712

(RMB 669,778

thousand)

216,606

(RMB 42,850

thousand)

2.1 Short-term

financing

- Financing for

working capital

requirements

- - - 3,385,712

(RMB 669,778

thousand)

3,385,712

(RMB 669,778

thousand)

Note 2

19 Shenzhen Systax Paper

Co., Ltd.

YFY Paper Mfg.


Other receivables


Yes 131,556


131,556


27,090


2.1 Short-term

financing

- Financing for


- - - 131,556


131,556


Note 2

20 Effion Enertech Co.,

Ltd.

Lotus Ecoscings &

Engineering Co., Ltd.

Other receivables


Yes 100,000 100,000 100,000 1.35 Short-term

financing

- Financing for


- - - 298,672 597,344 Note 2

YFY Venture

Capital Investment Co.,

Ltd.

Other receivables


Yes 198,000 198,000 198,000 1.35 Short-term

financing

- Financing for


- - - 298,672 597,344 Note 2

21 YFY Family Care

(Kunshan) Co., Ltd.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 1,072,095

(RMB 212,087

thousand)

953,389

(RMB 188,604

thousand)

21,650

(RMB 4,283

thousand)

2.1 Short-term

financing

- Financing for

working capital

requirements

- - - 953,389

(RMB 188,604

thousand)

953,389

(RMB 188,604

thousand)

Note 2

(Continued)

- 81 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value

22 CHP International

(BVI) Corporation

YFY International

BVI Corp.

Other receivables


Yes $ 991,315


$ 590,850


$ 447,733


1.5 Short-term

financing

$ - Financing for


$ - - $ - $ 2,321,745


$ 4,643,490


Note 2

Guangdong Ding

Feng Pulp & Paper Co., Ltd.

Other receivables


Yes 1,083,225


1,083,225


984,750


1.77 Short-term

financing

- Financing for


- - - 2,321,745


4,643,490


Note 2

Zhaoqing Ding Feng

Forestry Ltd.

Other receivables


Yes 492,375


393,900


327,758


1.77 Short-term

financing

- Financing for


- - - 2,321,745


4,643,490


Note 2

23 Eihoyo Shoji Co., Ltd. YFY International

BVI Corp.

Other receivables


Yes 68,175

(JYP 250,000 thousand)

68,175


68,175


1.5 Short-term

financing

- Financing for


- - - 159,437


159,437


Note 2

24 YFY Packaging (Yangzhou)



Ltd.


parties

Yes 1,435,563 (RMB 283,990

thousand)

1,287,058 (RMB 254,612

thousand)

8,144 (RMB 1,611

thousand)



requirements

- - - 1,287,058 (RMB 254,612

thousand)

1,287,058 (RMB 254,612

thousand)

Note 2


Ltd.


parties

Yes 1,287,058 (RMB 254,612

thousand)

1,287,058 (RMB 254,612

thousand)

43,296 (RMB 8,565

thousand)


-

Financing for working capital

requirements

- - - 1,287,058 (RMB 254,612

thousand)

1,287,058 (RMB 254,612

thousand)

Note 2


(Shanghai) Co.,

Ltd


parties

Yes 1,287,058 (RMB 254,612

thousand)

1,287,058 (RMB 254,612

thousand)

35,451 (RMB 7,013

thousand)



requirements

- - - 1,287,058 (RMB 254,612

thousand)

1,287,058 (RMB 254,612

thousand)

Note 2

YFY Paper

Enterprise

(Jiaxing) Co., Ltd.

Other receivables

from related

parties

Yes 1,287,058

(RMB 254,612

thousand)

1,287,058

(RMB 254,612

thousand)

26,523

(RMB 5,247

thousand)

2.25 Short-term

financing

- Financing for

working capital

requirements

- - - 1,287,058

(RMB 254,612

thousand)

1,287,058

(RMB 254,612

thousand)

Note 2

YFY Paper

Enterprise

(Kunshan) Co., Ltd.

Other receivables

from related

parties

Yes 1,287,058

(RMB 254,612

thousand)

1,287,058

(RMB 254,612

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 1,287,058

(RMB 254,612

thousand)

1,287,058

(RMB 254,612

thousand)

Note 2

YFY Paper

Enterprise (Suzhou) Co.,

Ltd.

Other receivables


Yes 1,287,058


1,287,058


17,162


2.25 Short-term

financing

- Financing for


- - - 1,287,058


1,287,058


Note 2


(Nanjing) Ltd.


parties

Yes 64,355 (RMB 12,731

thousand)

64,355 (RMB 12,731

thousand)



requirements

- - - 64,355 (RMB 12,731

thousand)

514,824 (RMB 101,845

thousand)

Note 2


(Suzhou) Co., Ltd.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 569,120

(RMB 112,586

thousand)

461,337

(RMB 91,264

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 461,337

(RMB 91,264

thousand)

461,337

(RMB 91,264

thousand)

Note 2

YFY Packaging

(Yangzhou)

Investment Co.,

Ltd.

Other receivables

from related

parties

Yes 461,337

(RMB 91,264

thousand)

461,337

(RMB 91,264

thousand)

- - Short-term

financing

-

Financing for

working capital

requirements

- - - 461,337

(RMB 91,264

thousand)

461,337

(RMB 91,264

thousand)

Note 2

26 YFY Consumer Products Co., Ltd.


Ltd.


parties

Yes 1,010,995 (RMB 200,000

thousand)

1,010,995 (RMB 200,000

thousand)

1,010,995 (RMB 200,000

thousand)



requirements

- - - 1,069,419

2,138,837

Note 2

27 YFY Paper Enterprise (Fuzhou) Co., Ltd.


Ltd.


parties

Yes 58,380 (RMB 11,549

thousand)



requirements

- - - - - Note 2



YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 341,605

(RMB 67,578

thousand)

314,131

(RMB 62,143

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 314,131

(RMB 62,143

thousand)

314,131

(RMB 62,143

thousand)

Note 2

YFY Packaging

(Yangzhou)


Other receivables

from related

parties

Yes 314,131

(RMB 62,143

thousand)

314,131

(RMB 62,143

thousand)

- - Short-term

financing

-

Financing for

working capital

requirements

- - - 314,131

(RMB 62,143

thousand)

314,131

(RMB 62,143

thousand)

Note 2

(Continued)

- 82 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value


(Jiaxing) Co., Ltd.

YFY Paper Mfg.


Other receivables


Yes $ 375,898


$ 318,357


$ - - Short-term

financing

$ - Financing for


$ - - $ - $ 318,357


$ 318,357


Note 2

YFY Packaging


Ltd.

Other receivables


Yes 318,357


318,357


- - Short-term

financing

-

Financing for


- - - 318,357


318,357


Note 2

30 YFY Paradigm Investment Co., Ltd.

Livebricks Inc. Other receivables from related

parties

Yes 75,000 75,000 75,000 2.5 Short-term financing


requirements

- - - 674,190 1,348,380 Note 2

Cupid InfoTech Co., Ltd.


parties

Yes 50,000 50,000 50,000 1.5 Short-term financing


requirements

- - - 674,190 1,348,380 Note 2

31 YFY Packaging BVI

Corp.

YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 1,477,125

(US$ 45,000

thousand)

- - - Short-term

financing

- Financing for

working capital

requirements

- - - 10,383,664

(US$ 316,334

thousand)

10,383,664

(US$ 316,334

thousand)

Note 2

YFY International

BVI Corp.

Other receivables

from related

parties

Yes 656,500

(US$ 20,000

thousand)

656,500

(US$ 20,000

thousand)

656,500

(US$ 20,000

thousand)

1 Short-term

financing

-

Financing for

working capital

requirements

- - - 10,383,664

(US$ 316,334

thousand)

10,383,664

(US$ 316,334

thousand)

Note 2

YFY Cayman Co.,

Ltd.

Other receivables

from related

parties

Yes 833,755

(US$ 25,400

thousand)

833,755

(US$ 25,400

thousand)

833,755

(US$ 25,400

thousand)

1 Short-term

financing

-

Financing for

working capital

requirements

- - - 10,383,664

(US$ 316,334

thousand)

10,383,664

(US$ 316,334

thousand)

Note 2

32 YFY Consumer

Products Investment Limited

YFY Investment

Co., Ltd.

Other receivables


Yes 984,750


984,750


984,750


2 Short-term

financing

- Financing for


- - - 3,608,616


3,608,616


Note 2

Yuen Foong Yu

Consumer Product

(Yangzhou) Co.,

Ltd.

Other receivables


Yes 656,500


656,500


656,500


2 Short-term

financing

- Financing for


- - - 3,608,616


3,608,616


Note 2

33 YFY RFID

Technologies Co.,

Ltd.

YFY Cayman Co.,

Ltd.

Other receivables

from related

parties

Yes 7,222

(US$ 220

thousand)

7,222

(US$ 220

thousand)

7,222

(US$ (220

thousand)

1 Short-term

financing

- Financing for

working capital

requirements

- - - 16,938

(US$ 516

thousand)

16,938

(US$ 516

thousand)

Note 2

34 YFY International

Labuan Co, Ltd.

YFY Cayman Co.,

Ltd.

Other receivables


Yes 105,040


105,040


105,040


1 Short-term

financing

- Financing for


- - - 16,024,509


16,024,509


Note 2

35 YFY Packaging Capital

Corp.

YFY International

BVI Corp.

Other receivables


Yes 471,154


471,154


471,154


2 Short-term

financing

- Financing for


- - - 12,881,942


12,881,942


Note 2

YFY International BVI Corp.


related parties

Yes 719,293 (RMB 142,294

thousand)

719,293 (RMB 142,294

thousand)

719,293 (RMB 142,294

thousand)



requirements

- - - 12,881,942 (RMB 2,548,368

thousand)

12,881,942 (RMB 2,548,368

thousand)

Note 2


Ltd.


related parties

Yes 470,492 (RMB 93,075

thousand)

470,492 (RMB 93,075

thousand)

454,948 (RMB 90,000

thousand)



requirements

- - - 12,881,942 (RMB 2,548,368

thousand)

12,881,942 (RMB 2,548,368

thousand)

Note 2



related parties

Yes 4,780,037 (RMB 945,610

thousand)

4,780,037 (RMB 945,610

thousand)

4,780,037 (RMB 945,610

thousand)



requirements

- - - 12,881,942 (RMB 2,548,368

thousand)

12,881,942 (RMB 2,548,368

thousand)

Note 2


Investment Co.,

Ltd.


parties

Yes 631,872 (RMB 125,000

thousand)



requirements

- - - 12,881,942 (RMB 2,548,368

thousand)

12,881,942 (RMB 2,548,368

thousand)

Note 2

36 Rimagine Design


YFY Paper Mfg.

(Yangzhou) Co.,

Ltd.

Other receivables

from related

parties

Yes 3,149

(RMB 623

thousand)

3,149

(RMB 623

thousand)

- - Short-term

financing

- Financing for

working capital

requirements

- - - 3,149

(RMB 623

thousand)

3,149

(RMB 623

thousand)

Note 2

37 Kunshan YFY Jupiter

Green Packaging Ltd.

YFY Paper Mfg.


Other receivables


Yes 45,414


45,414


7,603


2.1 Short-term

financing

- Financing for


- - - 45,414


45,414


Note 2

(Continued)

- 83 -


Statement Account

Related

Party

Highest Balance

for the Period

(Note 3)

Ending Balance

(Note 3)

Actual Borrowing

Amount

(Note 3)

Interest

Rate

(%)

Nature of

Financing

Business

Transaction

Amounts

(Note 3)

Reasons for

Short-term

Financing

Allowance for

Impairment Loss

(Note 3)


for Each

Borrower

(Notes 1 and 3)

Aggregate

Financing Limits


Item Value

38 Yuen Foong Yu

Consumer Product (Yangzhou) Co.,

Ltd.

YFY Paper Mfg.


Other receivables


Yes $ 2,041,326


$ 2,041,326


$ 75,112


2.1 Short-term

financing

$ - Financing for


$ - - $ - $ 2,041,326


$ 2,041,326


Note 2

39 Zhaoqing Ding Feng Forestry Ltd.


Paper Co., Ltd.


parties

Yes 202,199 (RMB 40,000

thousand)

202,199 (RMB 40,000

thousand)

202,199 (RMB 40,000

thousand)



requirements

- - - 1,302,688 (RMB (257,704

thousand)

2,605,381 (RMB 515,409

thousand)

Note 2

Note 1: a. In the provision of business dealing, total loans should not exceed 40% of the lender’s net equity of the prior year. Individual loans should not exceed total purchases and sales between the lender and the borrower of the prior year. In the provision of short-term financing, individual and total loans should not exceed 40%

of the lender’s net equity of the prior year. To sum up, in the provision of business dealing and short-term financing, both aggregate loans and individual loans should not exceed 80% of the lender’s net equity of the prior year.

b. For YFY Inc.’s wholly owned foreign subsidiaries are not subject to the foregoing 40% and 80% limits when they provide financing to each other. For those subsidiaries of YFY Inc., if the lending is for the borrower’s business purposes or short-term financing, the amount of financing should not exceed twice of the

lender’s net equity as of the end of the prior year.

c. For YFY Inc.’s other foreign subsidiaries that are not wholly owned and are based in China, their individual contributions to a cash pool to be used for lending purposes should not exceed 10% of their respective net equities as of the end of the prior year.

d. For Guangdong Ding Feng Pulp & Paper Co., Ltd. and Chp International (BVI) Corporation, individual loans and total loans should not exceed 40% and 80% of the lender’s net equity, respectively.

Note 2: In preparing the consolidated financial statements, the transaction has been eliminated.

Note 3: The exchange rates are US$1=NT$32.825, RMB1=NT$5.054977 and JPY1=NT$0.2727 as of December 31, 2015.

(Concluded)

- 84 -

TABLE 3


ENDORSEMENTS/GUARANTEES PROVIDED



No. Endorser/Guarantor

Endorsee/Guarantee Limits on

Endorsement/

Guarantee Given

on Behalf of

Each Party

(Notes 1 and 4)

Maximum

Amount

Endorsed/

Guaranteed

During the

Period (Note 4)

Outstanding

Endorsement/

Guarantee at the

End of the Period

(Note 4)

Actual

Borrowing

Amount (Note 4)

Amount

Endorsed/

Guaranteed by

Collaterals

Ratio of

Accumulated

Endorsement/

Guarantee to Net

Equity In Latest

Financial

Statements (%)

Aggregate

Endorsement/

Guarantee Limit

(Notes 2 and 4)

Endorsement/

Guarantee Given

by Parent on

Behalf of

Subsidiaries

Endorsement/

Guarantee Given

by Subsidiaries

on Behalf of

Parent

Endorsement/

Guarantee Given

on Behalf of

Companies in

Mainland China

Name Relationship

Endorsement

1 YFY Consumer Products Co., Ltd. YFY Family Paper (Beijing) Co., Ltd. Note 3 a. $ 4,010,320 $ 65,650

(US$ 2,000

thousand)

$ - $ - $ - - $ 5,347,094 Yes No Yes

2 Chung Hwa Pulp Co., Ltd. Guangdong Ding Feng Pulp & Paper

Co., Ltd.

Note 3 a. 26,020,922 196,950

(US$ 6,000

thousand)

- - - - 34,694,562 Yes No Yes

Credit lines

1 YFY Inc. YFY Capital Co., Ltd. Note 3 a. 59,634,858 3,500,000 3,200,000 2,030,000 - 9.00 79,513,144 Yes No No

YFY Venture Capital Investment Co.,

Ltd.

Note 3 a. 59,634,858 2,150,000 2,150,000 880,000 - 6.05 79,513,144 Yes No No

San Ying Enterprise Co., Ltd. Note 3 a. 59,634,858 330,000 200,000 6,000 - 0.56 79,513,144 Yes No No

YFY Paradigm Investment Co., Ltd. Note 3 a. 59,634,858 1,700,000 1,700,000 1,063,000 - 4.78 79,513,144 Yes No No


Ltd.

Note 3 a. 59,634,858 230,000 230,000 101,000 - 0.65 79,513,144 Yes No No

Yeon Technologies Co., Ltd. Note 3 a. 59,634,858 100,000 60,000 15,000 - 0.17 79,513,144 Yes No No



Note 3 a. 59,634,858 90,000 - - - - 79,513,144 Yes No No

YFY International BVI Corp. Note 3 a. 59,634,858 588,000 588,000 262,600

(US$ 8,000

thousand)

- 11.30 79,513,144 Yes No No

4,086,713

(US$ 124,500

thousand)

3,430,213

(US$ 104,500

thousand)

390,486

(US$ 11,896

thousand)

-

YFY Global Investment BVI Corp. Note 3 a. 59,634,858

330,000 160,000 - - 1.84 79,513,144 Yes No No

984,750

(US$ 30,000

thousand)

492,375

(US$ 15,000

thousand)

98,475

(US$ 3,000

thousand)

-

YFY Jupiter Ltd. Note 3 a. 59,634,858 140,000 140,000 131,300

(US$ 4,000

thousand)

- 0.76 79,513,144 Yes No No

131,300

(US$ 4,000

thousand)

131,300

(US$ 4,000

thousand)

- -

Arizon RFID Technology (Yangzhou)

Co., Ltd.

Note 3 a. 59,634,858 143,520

(EUR 4,000

thousand)

82,063

(US$ 2,500

thousand)

71,760

(EUR 2,000

thousand)

- 0.23 79,513,144 Yes No Yes

Eihoyo Shoji Co., Ltd. Note 3 a. 59,634,858 84,000 84,000 - - 0.24 79,513,144 Yes No No

(Continued)

- 85 -

No. Endorser/Guarantor

Endorsee/Guarantee Limits on

Endorsement/

Guarantee Given

on Behalf of

Each Party

(Notes 1 and 4)

Maximum

Amount

Endorsed/

Guaranteed

During the

Period (Note 4)

Outstanding

Endorsement/

Guarantee at the

End of the Period

(Note 4)

Actual

Borrowing

Amount (Note 4)

Amount

Endorsed/

Guaranteed by

Collaterals

Ratio of

Accumulated

Endorsement/

Guarantee to Net

Equity In Latest

Financial

Statements (%)

Aggregate

Endorsement/

Guarantee Limit

(Notes 2 and 4)

Endorsement/

Guarantee Given

by Parent on

Behalf of

Subsidiaries

Endorsement/

Guarantee Given

by Subsidiaries

on Behalf of

Parent

Endorsement/

Guarantee Given

on Behalf of

Companies in

Mainland China

Name Relationship

2 YFY Packaging Inc. YFY Cayman Co., Ltd. Note 3 b. 11,080,617 $ 9,322,300

(US$ 284,000

thousand)

$ 8,911,988

(US$ 271,500

thousand)

$ 4,728,080

(US$ 144,039

thousand)

$ - 128.57 $ 14,774,156 No Yes No

YFY Paper Enterprise (Jiaxing) Co.,

Ltd.

Note 3 b. 11,080,617 98,475

(US$ 3,000

thousand)

98,475

(US$ 3,000

thousand)

98,475

(US$ 3,000

thousand)

- 1.42 14,774,156 No No Yes

YFY Paper Enterprise (Suzhou) Co.,

Ltd.

Note 3 b. 11,080,617 196,950

(US$ 6,000

thousand)

196,950

(US$ 6,000

thousand)

98,475

(US$ 3,000

thousand)

- 2.84 14,774,156 No No Yes

YFY Paper Enterprise (Kunshan) Co.,

Ltd.

Note 3 b. 11,080,617 131,300

(US$ 4,000

thousand)

- - - - 14,774,156 No No Yes

YFY Paper Enterprise (Dongguan)

Co., Ltd.

Note 3 b. 11,080,617 98,475

(US$ 3,000

thousand)

98,475

(US$ 3,000

thousand)

98,475

(US$ 3,000

thousand)

- 1.42 14,774,156 No No Yes

YFY Paper Enterprise (Guangzhou)

Co., Ltd.

Note 3 b. 11,080,617 212,050

(US$ 6,460

thousand)

212,050

(US$ 6,460

thousand)

212,050

(US$ 6,460

thousand)

- 3.06 14,774,156 No No Yes


Ltd.

Note 3 b. 11,080,617 328,250

(US$ 10,000

thousand)

328,250

(US$ 10,000

thousand)

252,753

(US$ 7,700

thousand)

- 4.74 14,774,156 No No Yes

3 YFY Consumer Products Co., Ltd.

Yuen Foong Yu Consumer Products


Note 3 a. 4,010,320 771,388

(US$ 23,500

thousand)

771,388

(US$ 23,500

thousand)

492,375

(US$ 15,000

thousand)

- 31.31 5,347,094 Yes No Yes

YFY Investment Co., Ltd. Note 3 a. 4,010,320 656,500

(US$ 20,000

thousand)

656,500

(US$ 20,000

thousand)

- - 26.65 5,347,094 Yes No Yes


Ltd.

Note 3 a. 4,010,320 1,313,000

(US$ 40,000

thousand)

820,625

(US$ 25,000

thousand)

164,125

(US$ 5,000

thousand)

- 33.31 5,347,094 Yes No Yes

4 Chung Hwa Pulp Co., Ltd. CHP International (BVI) Corp. Note 3 a. 26,020,922 164,400

(US$ 5,008

thousand)

164,400

(US$ 5,008

thousand)

-

- 1.00 34,694,562 Yes No No

Note 3 a. 26,020,922 147,398

(US$ 4,490

thousand)

147,398

(US$ 4,490

thousand)

-

- 0.89 34,694,562 Yes No No

Note 1: Represents 150% of the prior year’s net equity of YFY Inc., Chung Hwa Pulp Co., Ltd., YFY Packaging Inc., and YFY Consumer Products Co., Ltd.

Note 2: Represents 200% of the prior year’s net equity of YFY Inc., Chung Hwa Pulp Co., Ltd., YFY Packaging Inc. and YFY Consumer Products Co., Ltd.

Note 3: The relationships between endorsee and guarantee are as follow:

a. Subsidiary.

b. Same parent company.

Note 4: The exchange rates are US$1=NT$32.825 and EUR1=NT$35.88 as of December 31, 2015.

(Concluded)

- 86 -

TABLE 4


MARKETABLE SECURITIES HELD

DECEMBER 31, 2015


Holding Company Name Type and Name of Marketable Securities

Relationship

with the Holding

Company

Financial Statement Account

December 31, 2015

Note Shares

Carrying

Amount

Percentage of

Ownership Fair Value

YFY Inc. Common stock

SinoPac Holdings Co., Ltd. Note 1 Available-for-sale financial assets - non-current 422,635,536 $ 3,960,095 4.2 $ 3,960,095

Boardtek Electronics Corporation - Available-for-sale financial assets - non-current 37,323,087 1,248,457 16.7 1,248,457

TaiGen Biopharmaceuticals Holdings Ltd. Note 1 Available-for-sale financial assets - non-current 84,509,502 2,864,872 12.1 2,864,872

Canada Investment and Development Co.,

Ltd.

Note 1 Financial assets carried at cost - non-current 20,826,000 133,500 12.9 -

Synmax Biochemical Co., Ltd. Note 1 Financial assets carried at cost - non-current 5,999,371 61,611 13.9 -

Universal Investment Co., Ltd. Note 1 Financial assets carried at cost - non-current 5,562,000 50,000 2.9 -

Fu Hwa Development Enterprise Co., Ltd. Note 1 Financial assets carried at cost - non-current 4,200,000 42,000 14.0 -

Taiwan Cultural-Creative Development

Co., Ltd.


Shin Taiwan Agricultural Machinery Co.,

Ltd.

Note 1 Financial assets carried at cost - non-current 5,612 5,612 5.5 -

Lang Kuan Co., Ltd. - Financial assets carried at cost - non-current 665,000 4,251 9.5 -

China Trade and Development Corp. - Financial assets carried at cost - non-current 377,634 3,776 0.6 -

Taiwan Stock Exchange Corporation Note 1 Financial assets carried at cost - non-current 19,813,944 3,458 3.0 -

Sino Cell Technologies Ltd. - Financial assets carried at cost - non-current 995,313 9,962 10.0 -

Yuen Foong Paper Co., Ltd. - Financial assets carried at cost - non-current 544,067 810 0.7 -

KHL IB Venture Capital Co., Ltd. - Financial assets carried at cost - non-current 25,000,000 250,000 14.9 -

YFY Biotech Co., Ltd. Note 1 Financial assets carried at cost - non-current 3,980,000 36,184 19.9 -

Subordinated bank debentures

Bank SinoPac Third Subordinated bank

debentures issued in 2015

Note 2 Debt investment with no active market -

non-current

- 160,000 - -

YFY Paper Enterprise (Xiamen) Co., Stock certificate

Ltd. Xiamen Taiwanese Investment Association

Management Company

- Financial assets carried at cost - non-current - RMB 70

thousand

- -

YFY Global Investment BVI Corp. Exchangeable bonds

Giant Crystal Universal Development Inc. - Financial assets at fair value through profit or loss

- non-current

- US$ 8,990

thousand

- US$ 8,990

thousand

Common stock

SinoPac Holdings Co., Ltd. - Available-for-sale financial assets - current 100,602,937 US$ 28,717

thousand

1.0 US$ 28,717

thousand

Integral Investment-I Co., Ltd. - Financial assets carried at cost - non-current 337,949 US$ 338

thousand

13.8 -

(Continued)

- 87 -


Relationship

with the Holding

Company


December 31, 2015

Note Shares

Carrying

Amount

Percentage of


Preferred stock

Neutron Innovation (BVI) Ltd. - Financial assets carried at cost - non-current 1,692,250 US$ 1,354

thousand

6.5 $ -

Micareo Inc. - Financial assets carried at cost - non-current 4,999,999 US$ 2,000

thousand

15.7 -

Loyalty Alliance Enterprise Co., Ltd. - Financial assets carried at cost - non-current 3,034,073 US$ 2,440

thousand

2.6 -

Omni-ID Corporation Inc. - Financial assets carried at cost - non-current 2,953,630 US$ 3,000

thousand

3.7 -

Beneficiary certificates

Doughty Hanson & Co III - Financial assets carried at cost - non-current - US$ 960

thousand

0.2 -

WI Harper INC Fund VII LP - Financial assets carried at cost - non-current - US$ 235

thousand

0.3 -

Shin Foong Chemical Industry Co., Beneficiary certificates

Ltd. SinoPac TWD Money Market - Financial assets at fair value through profit or loss

- current

21,138,623 290,817 - 290,817

Common stock

SinoPac Holdings Co., Ltd. - Available-for-sale financial assets - non-current 19,748,706 185,045 0.2 185,045

Foongtone Technology Co., Ltd. - Financial assets carried at cost - non-current 2,383,815 11,784 11.8 -

Huashan Cultural-Creative Co., Ltd. - Financial assets carried at cost - non-current 3,200,000 32,000 6.2 -

China Color Printing Co., Ltd. Beneficiary certificates

Jih Sun Money Market - Financial assets at fair value through profit or loss

- current

2,872,617 42,002 - 42,002

Common stock

China Development Financial Holding

Corporation

- Available-for-sale financial assets - current 9,959,081 81,963 0.1 81,963

China Parcel Co., Ltd. - Financial assets carried at cost - non-current 463,917 5,804 10.8 -

YFY Capital Co., Ltd. Common stock

SinoPac Holdings Co., Ltd. - Available-for-sale financial assets - current 26,208,125 245,570 0.3 245,570

Yuanta Financial Holdings Co., Ltd. - Available-for-sale financial assets - current 8,946,324 108,698 0.1 108,698

Mega Financial Holding Company Ltd. - Available-for-sale financial assets - current 11,244,315 238,942 0.1 238,942

Taiwan Cooperative Financial Holding Co.,

Ltd.

- Available-for-sale financial assets - current 6,125,996 84,232 0.1 84,232

Taishin Holdings Co., Ltd. - Available-for-sale financial assets - current 25,448,493 290,113 0.3 290,113

Chinatrust Financial Holding Co., Ltd. - Available-for-sale financial assets - current 32,852 555 - 555

E.Sun Financial Holding Company Ltd. - Available-for-sale financial assets - current 1,291,696 24,736 - 24,736

Fubon Financial Holding Co., Ltd. - Available-for-sale financial assets - current 10,000 450 - 450

Cathay Financial Holding Co., Ltd. - Available-for-sale financial assets - current 21,000 972 - 972

China Life Insurance Company Ltd. - Available-for-sale financial assets - current 28,600 722 - 722

Advance Materials Corporation Co., Ltd. - Financial assets carried at cost - non-current 2,349,620 13,205 1.7 -

Leadwell Machines Mfg. Corp. - Financial assets carried at cost - non-current 2,090,000 23,957 3.4 -

(Continued)

- 88 -


Relationship

with the Holding

Company


December 31, 2015

Note Shares

Carrying

Amount

Percentage of


YFY Binotech Mangement Company Common stock

iStat Biomedical Co., Ltd. - Financial assets carried at cost - non-current 100,000 $ 1,000 0.6 $ -

YFY Venture Capital Investment Common stock

Co., Ltd. SinoPac Holdings Co., Ltd. - Financial assets at fair value through profit or loss

- current

9,946,173 93,196 0.1 93,196


Taigen Pharmaceuticals Holdings Limited Note 1 Available-for-sale financial assets - non-current 1,265,000 42,884 0.2 42,884

Quan Yuan Investment Co., Ltd. Note 1 Financial assets carried at cost - non-current 7,000,000 70,000 5.5 -

Taiwan Global BioFund Co., Ltd. Note 1 Financial assets carried at cost - non-current 5,600,000 69,384 4.7 -

Vision Venture Capital Corp. - Financial assets carried at cost - non-current 195,392 1,954 4.2 -

Ever Terminal Co., Ltd. - Financial assets carried at cost - non-current 3,002,401 33,567 2.5 -

Echem Solutions Corp. - Financial assets carried at cost - non-current 1,419,369 20,625 2.9 -

Overseas Investment & Development Co.,

Ltd.

- Financial assets carried at cost - non-current 1,000,000 9,960 1.1 -

Advance Materials Corporation Co., Ltd. - Financial assets carried at cost - non-current 1,113 11 - -

Medeon Biodesign, Inc. - Financial assets carried at cost - non-current 205,000 28,700 0.5 -

Hanmore Investment Corp. - Financial assets carried at cost - non-current 1,635,245 - 8.3 -

YFY Paradigm Investment Co., Ltd. Common stock


Darfon Electronics Corp. - Available-for-sale financial assets - current 801,076 15,421 0.3 15,421

Well Shin Technology Co., Ltd. - Available-for-sale financial assets - current 233,954 12,587 0.2 12,587

Shen’s Art Printing Co., Ltd. Note 1 Available-for-sale financial assets - current 43,109 648 0.1 648

Taigen Pharmaceuticals Holdings Limited - Available-for-sale financial assets - non-current 28,211,405 956,367 4.1 956,367

Canada Investment and Development Co.,

Ltd.


Locus Publishing Company Note 1 Financial assets carried at cost - non-current 1,402,386 16,442 12.8 -

Huashan Cultural-Creative Co., Ltd. Note 1 Financial assets carried at cost - non-current 6,893,333 68,933 13.3 -

Sino Cell Technologies Ltd. Note 1 Financial assets carried at cost - non-current 994,687 9,971 9.9 -

Foongtone Technology Co., Ltd. - Financial assets carried at cost - non-current 728,252 500 3.6 -

Taiwan Stock Exchange Corp. - Financial assets carried at cost - non-current 1,371 50 - -

Medeon Biodesign, Inc. - Financial assets carried at cost - non-current 259,000 36,260 0.6 -

YFY Packaging Inc. Beneficiary certificates

SinoPac TWD Money Market - Financial assets at fair value through profit or loss

- current

3,816,107 52,500 - 52,500

Yuanta Wan Tai Money Market Fund Financial assets at fair value through profit or loss

- current

133,634 2,000 - 2,000

Cupid InfoTech Co., Ltd. Common stock

SinoPac Holdings Co., Ltd. Available-for-sale financial assets - current 6,725,792 63,021 0.1 63,021

Lotus Ecoscings & Engineering Co., Common stock

Ltd. SinoPac Holdings Co., Ltd. - Available-for-sale financial assets - current 27,262,508 255,450 0.3 255,450

Boardtek Electronics Cor. Note 1 Available-for-sale financial assets - current 2,335,530 78,123 1.0 78,123

Fu Hwa Development Enterprise Co., Ltd. - Financial assets carried at cost - non-current 1,050,000 26,750 3.5 -

Foongtone Technology Co., Ltd. Note 1 Financial assets carried at cost - non-current 404,584 2,000 2.0 -

(Continued)

- 89 -


Relationship

with the Holding

Company


December 31, 2015

Note Shares

Carrying

Amount

Percentage of


Chung Hwa Pulp Co., Ltd. Common stock

SinoPac Holdings Co., Ltd. - Available-for-sale financial assets - current 68,365,018 $ 640,580 0.7 $ 640,580

Taigen Pharmaceuticals Holdings Limited - Available-for-sale financial assets - non-current 13,315,248 451,387 1.9 451,387

ID Softcapital Inc. Note 1 Financial assets carried at cost - non-current 5,000 50 5.0 -

NTU Innovation & Incubation Co., Ltd. Note 1 Financial assets carried at cost - non-current 800,000 8,000 6.3 -

Groundhog Technologies Inc. - Financial assets carried at cost - non-current 275,000 3,902 2.8 -

KHL IB Venture Capital Co., Ltd. - Financial assets carried at cost - non-current 25,000,000 250,000 14.9 -




- Debt investment with no active market -

non-current

- 170,000 - -

YFY Operating Management Beneficiary certificates

Consulting Co., Ltd. SinoPac TWD Money Market - Financial assets at fair value through profit or loss

- current

11,678,263 160,665 - 160,665

Ever Growing Agriculture Biotech Beneficiary certificates

Co., Ltd. SinoPac TWD Money Market - Financial assets at fair value through profit or loss

- current

574,741 7,907 - 7,907

Yeon Technologies Co., Ltd. Beneficiary certificates

SinoPac TWD Money Market - Financial assets at fair value through profit or loss

- current

109,076 1,501 - 1,501

Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or loss

- current

56,800 850 - 850

Union Paper Co., Ltd. Beneficiary certificates

SinoPac TWD Money Market Financial assets at fair value through profit or loss

- current

2,933,157 40,353 - 40,353





non-current

- 20,000 - -

Eihoyo Shoji Co., Ltd. Common stock

Beautone Japan Co., Ltd. - Financial assets carried at cost - non-current 440 JPY 37,400

thousand

36.7 -

Effion Enertech Co., Ltd. Subordinated bank debentures




non-current

- 50,000 - -

Note 1: The investor is the member of the Board of Directors or supervisors.

Note 2: The investor is the member of parent company of the board of directors.

(Concluded)

- 90 -

TABLE 5


MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL



Company Name Type and Name of Marketable

Security

Financial

Statement

Account

Counterparty Relationship

Beginning Balance Acquisition Disposal Other

Adjustments

(Note 3)

Ending Balance

Note Shares Amount Shares Amount Shares Amount

Carrying

Amount

Gain (Loss) on

Disposal Shares Amount

YFY Inc. Beneficial certificate

SinoPac TWD Money Market Note 1 - - - $ - 92,603,558 $ 1,272,500 92,603,558 $ 1,272,656 $ 1,272,500 $ 156 $ - - $ - -

Common stock

YFY International BVI Corp. Note 2 - - 534,598,758 22,525,090 15,500,000 493,613 - - - - (992,378 ) 550,098,758 22,026,325 Note 6

YFY Packaging Inc. Beneficiary certificate

SinoPac TWD Money Market Note 1 - - 2,264,873 31,000 292,218,153 4,009,900 290,666,919 3,988,847 3,988,399 448 (1 ) 3,816,107 52,500 - Yuanta Wan Tai Money Market Note 1 - - - - 136,775,606 2,042,200 136,641,972 2,040,455 2,040,200 255 - 133,634 2,000 -

YFY Consumer Products Co., Common stock Ltd. Yuen Foong Yu Consumer

Products Co., Ltd.

Note 2 - - 100,013,000 1,739,718 50,000,000 1,274,643 - - - - (2,130 ) 150,013,000 3,012,231 Notes 5 and 6

Chung Hwa Pulp Co., Ltd. Beneficiary certificate

SinoPac TWD Money Market Note 1 - - - - 407,473,376 5,591,800 407,473,376 5,592,294 5,591,800 494 - - - -

Mega Diamond Money Market Note 1 - - - - 124,796,712 1,538,000 124,796,712 1,538,182 1,538,000 182 - - - -

YFY Cayman Co., Ltd. Common stock

YFY Packaging Capital Corp. Note 2 - - - - 200,000,000 6,565,000 (Note 4)

- - - - (93,835 ) (Note 4)

200,000,000 6,471,165 Note 6

YFY Operation Management Beneficiary certificate Consulting Co., Ltd. SinoPac TWD Money Market Note 1 - - 12,005,659 164,325 39,344,211 540,000 39,671,607 544,200 543,713 487 53 11,678,263 160,665 -

Shin Foong Chemicla Beneficiary certificate Industry Co., Ltd. SinoPac TWD Money Market Note 1 - - - - 60,304,960 828,000 39,166,337 538,008 537,347 661 164 21,138,623 290,817 -

YFY Capital Co., Ltd. Beneficiary certificate SinoPac TWD Money Market Note 1 - - - - 50,473,991 693,000 50,473,991 693,075 693,000 75 - - - -

Union Paper Co., Ltd. Beneficiary certificate

SinoPac TWD Money Market Note 1 - - 3,517,548 48,146 33,165,578 455,000 33,749,969 463,000 462,786 214 (7 ) 2,933,157 40,353 -

Note 1: Accounted as financial assets at fair value through profit or loss - current.

Note 2: Accounted as investments accounted for using equity method.

Note 3: Include the exchange differences on translating foreign operations, share of other comprehensive income of associates and unrealized gains and losses on available-for-sale financial assets.

Note 4: The exchange rates are US$1=NT$32.825 as of December 31, 2015.

Note 5: Formerly Trifaith Ltd.


- 91 -

TABLE 6


TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL



Buyer Related Party Relationship Transaction Details Abnormal Transaction

Notes/Accounts

Receivable (Payable) Unrealized

Gain (Loss) Note

Purchase/Sale Amount % to Total Payment Terms Unit Price Payment Terms Ending Balance % to Total



Union Paper Co., Ltd. Note 1 b. Sales $ 339,007 52 1 month after transaction month $ - - $ - - $ - Note 2



YFY Paper Mfg. (Yangzhou)

Co., Ltd.

Note 1 b. Sales 3,507,203 59 In agreed terms - - 657,549 28 - Note 2



Note 1 b. Sales 305,045 5 In agreed terms - - 81,230 3 - Note 2


(Xiamen) Co., Ltd.






(Fuzhou) Co., Ltd.



(Qingdao) Co., Ltd.



(Tianjin) Co., Ltd.






(Nanjing) Co., Ltd.



(Suzhou) Co., Ltd.






(Jiaxing) Co., Ltd.


Shin Foong Chemical

Industry Co., Ltd.

Chung Hwa Pulp Co., Ltd. Note 1 b. Sales 412,895 12 4 months after transaction month - - 180,807 49 - Note 2

YFY Packaging Inc. Pek Crown Paper Co., Ltd. Note 1 a. Sales 636,244 7 3 months after transaction month - - 110,705 6 (605) Note 2

Chung Hwa Pulp Co., Ltd. Note 1 b. Sales 1,428,117 15 2 months after transaction month - - 259,309 15 - Note 2

YFY Consumer Products Co.,

Ltd.

Note 1 b. Sales 121,954 1 1 month after transaction month - - 13,582 1 - Note 2

(Continued)

- 92 -


Notes/Accounts


Gain (Loss) Note


Chung Hwa Pulp Co., Ltd. YFY Capital Co., Ltd. Note 1 b. Sales $ 985,626 5 2 months after transaction month $ - - 55,893 2 $ - Note 2


Ltd.

Note 1 b. Sales 580,716 3 2 months after transaction month - - 274,989 11 - Note 2

Jing Lun Paper (Shenzhen)

Co., Ltd.

Note 1 b. Sales 728,308 4 2 months after transaction month - - 407,183 17 - Note 2

Union Paper Co., Ltd. Note 1 b. Sales 629,153 3 1 month after transaction month - - 76,160 3 - Note 2

YFY Packaging Inc. Note 1 b. Sales 315,310 2 2 months after transaction month - 88,443 4 Note 2

China Color Printing Co., Ltd. Note 1 b. Sales 196,010 1 2 months after transaction month - - 33,815 1 - Note 2

YFY Investment Co., Ltd. YFY Family Care (Kunshan)

Co., Ltd.

Note 1 a. Sales 476,966 6 In agreed terms - - 89,338 6 - Note 2

YFY Consumer Products


Note 1 a. Sales 1,855,932 24 In agreed terms - - 216,108 14 - Note 2

YFY Family Care (Kunshan)

Co., Ltd.

YFY Investment Co., Ltd. Note 1 b. Sales 2,208,054 95 In agreed terms - - 918,713 97 - Note 2

YFY Family Paper (Beijing)

Co., Ltd.

YFY Investment Co., Ltd. Note 1 b. Sales 825,782 89 In agreed terms - - 85,282 93 - Note 2


(Suzhou) Co., Ltd.


(Kunshan) Co., Ltd.


Union Paper Co., Ltd. Chung Hwa Pulp Co., Ltd. Note 1 b. Sales 168,626 8 2 months after transaction month - - 13,552 6 - Note 2

YFY Consumer Products YFY Investment Co., Ltd. Note 1 b. Sales 1,548,211 60 In agreed terms - - 96,135 21 - Note 2

(Yangzhou) Co., Ltd. YFY Family Care (Kunshan)

Co., Ltd.


YFY Family Care (Beijing)

Co., Ltd.



Ltd.

Yuen Foong Shop Company

Limited

Note 1 a. Sales 570,615 16 In agreed terms - - 119,711 6 - Note 2

YFY Paper Mfg. (Yangzhou)

Co., Ltd.


(Jiaxing) Co., Ltd.

Note 1 b. Sales 211,630 3 In agreed terms - - 21,018 - 2,573 Note 2



Note 1 b. Sales 302,548 4 In agreed terms - - 77,697 2 4,164 Note 2


(Suzhou) Co., Ltd.



(Nanjing) Co., Ltd.




Note 1 b. Sales 125,346 2 In agreed terms - - 12,594 - 1,604 Note 2

YFY Consumer Product


Note 1 b. Sales 103,233 1 In agreed terms - - 20,025 - - Note 2

(Continued)

- 93 -


Notes/Accounts


Gain (Loss) Note


Eihoyo Shoji Co., Ltd. Chung Hwa Pulp Co., Ltd. Note 1 b. Sales $ 290,847 45 In agreed terms $ - - $ - - $ - Note 2

Ever Growing Agriculture

Biotech Co., Ltd.


Ltd.

Note 1 b. Sales 232,311 100 1 month after transaction month - - 89,015 100 - Note 2

Guangdong Ding Feng Pulp YFY Investment Co., Ltd. Note 1 b. Sales 191,867 8 2 month after transaction month - - 74,515 6 - Note 2

& Paper Co., Ltd. YFY Family Paper (Beijing)

Co., Ltd.

Note 1 b. Sales 123,394 5 In agreed terms - - 40,961 3 -

Zhaoqing Ding Feng Forestry

Ltd.


Paper Co., Ltd.

Note 1 b. Sales 436,317 100 Advance payment or 30 days

monthly statement

- - - - - Note 2

San Ying Enterprise Co., Ltd. Union Paper Co., Ltd. Note 1 b. Sales 100,370 66 1 month after transaction month - - 9,054 28 - Note 2

Note 1: The relationships are as follow:

a. Subsidiary.

b. Parent company or the same ultimate parent company.


(Concluded)

- 94 -

TABLE 7


RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2015


Company Name Related Party Relationship Ending Balance

(Note) Turnover Rate

Overdue Amounts Received

in Subsequent

Period

Allowance for

Impairment Loss Amount Actions Taken

YFY Cayman Co., Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd. Same ultimate parent company $ 236,805 - $ - - $ 29,329 $ -

YFY Family Care (Kunshan) Co., Ltd. YFY Investment Co., Ltd. Parent company 918,713 1.88 - - 557,244 -

YFY Packaging Inc. Chung Hwa Pulp Co., Ltd. Same ultimate parent company 259,309 5.49 - - 246,541 -

Pek Crown Paper Co., Ltd. Subsidiary 110,705 5.58 - - 109,028 -

YFY Investment Co., Ltd. Yuen Foong Yu Consumer Products


Subsidiary 216,108 6.70 - - 216,108 -

Shin Foong Chemical Industry Co., Ltd. Chung Hwa Pulp Co., Ltd. Same parent company 180,807 2.00 - - 78,901 -

YFY (Shanghai) Financial Services Co.,

Ltd.

YFY Firstpak Packaging (YangZhou)

Co., Ltd.

Same ultimate parent company 111,930 - - - 111,930 -

YFY Packaging (Yangzhou) Investment

Co., Ltd.

Same ultimate parent company 100,373 - - - 81,577 -

Chung Hwa Pulp Co., Ltd. Jing Lun Paper (Shenzhen) Co., Ltd. Same ultimate parent company 407,183 1.86 - - 63,424 -

YFY Consumer Products Co., Ltd. Same parent company 274,989 2.35 - - 90,354 -



YFY Family Paper (Beijing) Co., Ltd. Same parent company 174,333 2.04 - - 30,508 -

YFY Packaging (Yangzhou) Investment

Co., Ltd.

YFY Paper Mfg. (Yangzhou) Co., Ltd. Same parent company 657,549 4.20 - - - -

YFY International BVI Corp. YFY Investment Co., Ltd. Same ultimate parent company 336,910 - - - - -

YFY Consumer Products Co., Ltd. Yuen Foong Shop Company Limited Subsidiary 119,711 6.03 - - 99,728 -

Note: In preparing the consolidated financial statements, the transaction has been eliminated.

- 95 -

TABLE 8


INFORMATION ON INVESTEES



Investor Company Investee Company Location Main Businesses and Products Investment Amount As of December 31, 2015 Net Income (Loss)

of the Investee

Share of

Profits (Loss) Note

December 31, 2015 December 31, 2014 Shares % Carrying Amount

YFY Inc. Chung Hwa Pulp Co., Ltd. Hualien, Taiwan Manufacture and sale of pulp $ 5,715,988 $ 6,398,878 627,827,088 56.90 $ 9,452,577 $ 779,717 $ 443,780 Notes 1 and 6

E Ink Holdings Inc. Hsinchu, Taiwan To research, develop, produce and sale Thin-film

transistor liquid crystal

1,361,555 1,361,555 133,472,904 11.70 3,129,684 539,330 57,555 -

YFY International BVI Corp. British Virgin Islands. Investment and holding 17,218,994 16,725,381 550,098,758 100.00 22,026,325 (664,849 ) (664,374 ) Notes 1 and 6

YFY Global Investment BVI Corp. British Virgin Islands. Investment and holding 2,153,335 2,153,335 79,000,000 100.00 4,550,685 299,190 298,959 Notes 1 and 6

YFY Consumer Products Co., Ltd. Taipei, Taiwan Sale and produce of paper, household cleansers, and related paper merchandise

1,600,000 1,600,000 214,562,200 100.00 2,463,415 (159,006 ) (159,006 ) Notes 1 and 6

Shin Foong Chemical Industry Co., Ltd. Kaohsiung, Taiwan Sale and production of SBR Latex 75,203 75,203 53,451,248 56.70 1,221,683 767,162 434,477 Notes 1 and 6

Taiwan Global BioFund Co., Ltd. Taipei, Taiwan Biotechnology and biopharmaceutical business investment

516,875 516,875 51,687,500 23.00 1,129,728 (80,883 ) (18,582 ) -

China Color Printing Co., Ltd. Taipei, Taiwan To print magazines, posters and books 190,068 190,068 32,896,330 49.70 450,997 44,869 22,280 Notes 1 and 6

YFY Venture Capital Investment Co., Ltd. Taipei, Taiwan Investment and holding 200,000 200,000 44,993,600 100.00 701,794 42,068 42,068 Notes 1 and 6 Effion Enertech Co., Ltd. Taipei, Taiwan To operate cogeneration and provide power

technology

343,000 343,000 34,300,000 49.00 346,475 29,555 16,494 Notes 1 and 6

YFY Capital Co., Ltd. Taipei, Taiwan Paper and paper products, such as the trading business

189,759 189,759 26,840,000 100.00 319,617 52,540 52,540 Notes 1 and 6

YFY Operation Management Consulting Co., Ltd. Taipei, Taiwan Consulting management 250,000 250,000 25,000,000 100.00 241,073 20,716 20,716 Notes 1 and 6

Union Paper Co., Ltd. Yunlin, Taiwan Sale and manufacture of Kraft paper 200,700 200,700 19,584,000 18.90 225,081 21,121 3,995 Notes 1 and 6 YFY Paradigm Investment Co., Ltd. Taipei, Taiwan Investment and holding 231,357 231,357 54,870,000 100.00 1,378,687 62,297 62,297 Notes 1 and 6

San Ying Enterprise Co., Ltd. Taipei, Taiwan Design and construct water processing

construction and environmental facilities.

100,003 100,003 12,600,000 100.00 137,066 962 962 Notes 1 and 6

Lotus Ecoscings & Engineering Co., Ltd. Taipei, Taiwan Construction of sewage treatment plants and

incinerators

152,944 152,944 21,939,000 100.00 240,395 19,660 19,660 Notes 1 and 6

Eihoyo Shoji Co., Ltd. Japan Trade of paper, chemical material and machinery 2,099 2,099 200 100.00 81,646 1,857 1,857 Notes 1 and 6 Yuen Yan Paper Container Co., Ltd. Miaoli, Taiwan Sale of corrugated paper and manufacture of

material

62,462 69,327 6,178,500 50.90 70,424 6,769 3,448 Notes 1 and 6

Quan Hwa Venture Capital Co., Ltd.

Taipei, Taiwan Venture capital 27,331 27,331 2,733,167 19.50 9,704 - - -

Cupid InfoTech Co., Ltd.

Taipei, Taiwan 1. To provide service in information software

and information processing. 2. Wholesale of information software and

electric appliance.

10,000 10,000 1,000,000 100.00 23,364 9,402 9,402 Notes 1 and 6

Han Tang Management Services Co., Ltd.

Taipei, Taiwan To provide consulting service in business and information management

- 178 - - - (5 ) (2 ) -

Taiwan Genome Sciences Co., Ltd.

Taipei, Taiwan 1. Develop skills in genome medicine

2. Manufacture, wholesale of chemical material 3. Medicine test

12,260 12,260 1,225,956 19.40 3,384 430 83 -

YFY International BVI Corp. YFY Cayman Co., Ltd. Cayman Islands Investment and holding US$ 361,850 thousand

US$ 361,850 thousand

309,918,142 100.00 US$ 444,019 thousand

US$ (27,314 ) thousand


Notes 1 and 6

Hwa Fong Paper (H.K.) Ltd. Hong Kong, China Sale and print of paper merchandise US$ 13,520

thousand

US$ 13,520

thousand

116,000,000 100.00 US$ 2,370

thousand

US$ 241

thousand

US$ 241

thousand

Notes 1 and 6

Systax Communication (H.K.) Ltd. Hong Kong, China Sale and print of paper merchandise US$ 4,646

thousand

US$ 4,646

thousand

20,499,999 100.00 - US$ 89

thousand

US$ 89

thousand

Notes 1, 2 and 6

YFY Biopulp Technology Limited British Virgin Islands Investment and holding US$ 90 thousand

US$ 90 thousand

90,000 60.00 US$ 2 thousand

US$ (50 ) thousand

US$ (30 ) thousand

Notes 1 and 6

YFY Cayman Co., Ltd. YFY International Labuan Co., Ltd. Malaysia Investment and holding US$ 135,901 thousand


135,901,099 100.00 US$ 223,474 thousand



Notes 1 and 6

YFY Mauritius Corp. Mauritius Investment and holding US$ 157,502

thousand

US$ 157,502

thousand

157,501,731 60.0 US$ 130,647

thousand

US$ (41,688 )

thousand

US$ (25,013 )

thousand

Notes 1 and 6

Willpower Industries Ltd. British Virgin Islands Investment and holding US$ 10,898

thousand

US$ 10,898

thousand

6,950,000 44.80 US$ 18,837

thousand

US$ 6,478

thousand

US$ 2,904

thousand

-

YFY Packaging Capital Corp. British Virgin Islands Investment and holding US$ 200,000

thousand

-

200,000,000 100.00 US$ 197,141

thousand

US$ 959

thousand

US$ 959

thousand

Notes 1 and 6

(Continued)

- 96 -


of the Investee

Share of

Profits (Loss) Note


YFY International Labuan Co., Ltd. YFY Jupiter (BVI) Inc. British Virgin Islands. Investment and holding US$ 4,444

Thousand

US$ 4,444

Thousand

4,571,427 38.62 US$ 9,099

thousand

US$ 3,778

thousand

US$ 1,467

thousand

Notes 1 and 6

YFY Packaging Inc. Taipei, Taiwan Production and sale of Kraft paper and

corrugated paper

US$ 135,901

thousand

US$ 135,901

thousand

320,150,000 100.00 US$ 211,165

thousand

US$ (8,976 )

thousand

US$ (8,976 )

thousand

Notes 1 and 6

YFY Jupiter (BVI) Inc. Mobius 105 Ltd. Hong Kong, China Investment and holding HK$ 10

thousand

HK$ 10

thousand

10,000 100.00 US$ 5,608

thousand

US$ 2,050

thousand

US$ 2,050

thousand

Notes 1 and 6

YFY Jupiter Ltd. Hong Kong, China Design of packaging and sale of paper - - 3 100.00 US$ 6,001 thousand

US$ 2,622 thousand

US$ 2,622 thousand

Notes 1 and 6

Jupiter Prestige Group Holding Limited United Kingdom Investment and holding GBP 100

thousand

GBP 100

thousand

100,000 57.00 US$ 3,208

thousand

US$ (1,486 )

thousand

US$ (847 )

thousand

Notes 1 and 6

Mobius 105 (HK) Ltd. Hong Kong, China Design of packaging and sale of paper HK$ 10

thousand

HK$ 10

thousand

10,000 100.00 US$ 12

thousand

US$ (1 )

thousand

US$ (1 )

thousand

Notes 1 and 6

YFY Jupiter US Inc. USA Design of packaging and sale of paper US$ 1 thousand

US$ 1 thousand

100,000 100.00 - - - Notes 1, 2 and 6

YFY Jupiter US, Inc. Innovativ Packaging Worldwide, LLC USA Design of packaging and sale of paper - - 51,000 51.00 - US$ (647 ) thousand

US$ (330 ) thousand

Notes 1, 2 and 6

Mobius 105 Ltd. GST Packaging Ltd. Hong Kong, China Trading business HK$ 4 Thousand

HK$ 4 Thousand

3,500 35.00 US$ 240 thousand

US$ 218 thousand

US$ 76 thousand

-

YJY Packaging Ltd. Hong Kong, China Trading business HK$ 4 Thousand

HK$ 4 Thousand

3,500 35.00 US$ 177 thousand

US$ 203 thousand

US$ 71 thousand

-

JLD Logistics Ltd. Hong Kong, China Trading business HK$ 4

thousand

HK$ 4

thousand

3,500 35.00 US$ 84

thousand

US$ 113

thousand

US$ 40

thousand

-

Jupiter Prestige Group Holding Limited Rimagine Limited Hong Kong, China Investment and holding - - 100 100.00 - US$ (242 )

thousand

US$ (242 )

thousand

Notes 1, 2 and 6

Jupiter Prestige Group Europe Ltd. England Graphic design GBP 30

thousand

GBP 30

thousand

30,000 100.00 US$ 5,175

thousand

US$ (793 )

thousand

US$ (793 )

thousand

Notes 1 and 6

Jupiter Prestige Group North America Inc. USA Design of packaging and sale of paper US$ 1 thousand

US$ 1 thousand

100,000 100.00 US$ 1,158 thousand

US$ (307 ) thousand

US$ (307 ) thousand

Notes 1, 3 and 6

Jupiter Prestige Group Australia PTY Ltd. Australia Graphic design - - 100 100.00 - US$ (172 )

thousand

US$ (172 )

thousand

Notes 1, 2 and 6

Opal BPM Limited United Kingdom Design of process system and assistance of

graphic design

GBP 1

thousand

GBP 1

thousand

1,000 82.50 US$ 148

thousand

US$ 239

thousand

US$ 197

thousand

Notes 1 and 6

Foster and Balyis (Prestige) Ltd. United Kingdom Graphic design 300 33.30 US$ 84 thousand

US$ (73 ) thousand

US$ (24 ) thousand

Note 5

Rimagine Limited Rimagine Group Limited British Virgin Islands. Trading business - - 100 100.00 US$ 192 thousand

US$ 11 thousand

US$ 11 thousand

Notes 1 and 6

Jupiter Prestige Group Europe Ltd. Jupiter Prestige Group Asia Ltd. Hong Kong, China Graphic design - - 100 100.00 US$ 2,022 thousand

US$ 84 thousand

US$ 84 thousand

Notes 1 and 6

Opal BPM Limited Opal BPM India Private Limited India Workflow system coding GBP 1 thousand

- 1,000 100.00 US$ 1 thousand

- - Notes 1 and 6

YFY Packaging Inc. YFY Packaging (BVI) Corp. British Virgin Islands. Investment and holding 4,819,148 4,819,148 150,050,000 100.0 4,357,504 (510,914 ) (510,914 ) Notes 1 and 6 Pek Crown Paper Co., Ltd. Taichung, Taiwan Sale and manufacture of paper container 234,666 234,666 20,027,557 66.8 289,498 52,329 35,684 Notes 1 and 6

YFY Packaging (BVI) Corp. YFY Mauritius Corp. Mauritius Investment and holding US$ 105,000 thousand


105,000,000 40.00 US$ 87,097 thousand



Notes 1 and 6

YFY Global Investment BVI Corp. YFY RFID Co., Ltd. Hong Kong, China Investment and holding US$ 25,600 thousand

US$ 25,600 thousand

25,600,000 100.00 US$ 49,137 thousand

US$ 7,127 thousand

US$ 7,127 thousand

Notes 1 and 6

YFY Jupiter (BVI) Inc. British Virgin Islands. Investment and holding US$ 4,056

thousand

US$ 4,056

thousand

4,571,428 38.62 US$ 9,390

thousand

US$ 3,778

thousand

US$ 1,467

thousand

Notes 1 and 6

YFY RFID Technologies Co., Ltd. British Virgin Islands. Investment and holding US$ 5,330

thousand

US$ 5,330

thousand

5,330,000 100.00 US$ 116

thousand

US$ (146 )

thousand

US$ (146 )

thousand

Notes 1 and 6

YFY RFID Technologies Co., Ltd. Yeon Technologies Co., Ltd. Taipei, Taiwan Sale and design RFID products US$ 2,035

thousand

US$ 2,035

thousand

6,000,001 100.00 - US$ (146 )

thousand

US$ (146 )

thousand

Notes 1, 2 and 6

YFY Consumer Products Co., Ltd. Yuen Foong Yu Consumer Products Investment

Limited

Samoa Investment and holding 3,543,004 2,268,361 150,013,000 100.00 3,012,231 (277,410 ) (277,410 ) Notes 1, 4 and 6

Ever Growing Agriculture Biotech Co., Ltd. Taipei, Taiwan Agricultural services, wholesale and manufacturing of fertilizers and other cleaning

supplies wholesale.

107,595 32,595 6,716,034 85.00 169,628 24,492 15,785 Notes 1 and 6

Livebricks Inc. Taipei, Taiwan Information processing services. - - 750,000 75.00 - (18,612 ) (13,959 ) Notes 1, 2 and 6 Yuen Foong Shop Company Limited Taipei, Taiwan Sale of paper 25,000 25,000 2,500,000 50.00 3,291 (31,766 ) (15,673 ) Notes 1 and 6

(Continued)

- 97 -


of the Investee

Share of

Profits (Loss) Note


YFY Capital Co., Ltd. Chung Hwa Pulp Co., Ltd. Hualien, Taiwan Manufacture and sale of pulp $ 16,809 $ 18,099 1,181,137 0.1 $ 17,682 $ 779,717 $ 836 Note 6

E Ink Holdings Inc. Hsinchu, Taiwan Sale and manufacture of TFT-LCD 15,672 15,672 267,000 - 16,465 539,330 115 -

YFY Venture Capital Investment Co., Ltd. E Ink Holdings Inc. Hsinchu, Taiwan Sale and manufacture of TFT-LCD 412,244 412,244 23,059,296 2.0 585,099 539,330 9,943 -

Taiwan Global BioFund Co., Ltd. Taipei, Taiwan To provide service in consultation and business management

88,550 88,550 8,855,000 3.9 193,545 (80,883 ) (3,184 ) -

Effion Enertech Co., Ltd. Taipei, Taiwan To operate cogeneration and provide power

technology

7,000 7,000 700,000 1.0 7,478 29,555 296 Note 6

Taiwan Genome Sciences Co., Ltd. Taipei, Taiwan 1. Develop skills in genome medicine

2. Manufacture, wholesale of chemical material

3. Medicine test

1,660 1,660 165,972 2.6 458 430 11 -

Chung Hwa Pulp Co., Ltd. Hualien, Taiwan Manufacture and sale of pulp 68,976 - 7,014,504 0.64 105,000 779,717 - Note 6

YFY Paradigm Investment Co., Ltd. Union Paper Co., Ltd. Yunlin, Taiwan Investment and holding 44,476 44,476 4,112,892 4.0 47,271 21,121 839 Notes 1 and 6 YFY Biotech Management Company Taipei, Taiwan To provide service in consultation and business

management

10,000 10,000 1,400,000 100.0 43,064 24,071 24,071 Notes 1 and 6

E Ink Holdings Inc. Hsinchu, Taiwan Sale and manufacture of TFT-LCD 296,300 296,300 6,094,000 0.5 297,850 539,330 2,628 - Chung Hwa Pulp Co., Ltd. Hualien, Taiwan Manufacture and sale of pulp 77,666 85,971 7,635,485 0.7 114,311 779,717 5,412 Note 6

Yuen Foong Shop Company Limited Taipei, Taiwan Sale of paper 25,000 - 2,500,000 50.0 4,900 (31,766 ) (15,883 ) Notes 1 and 6

Lotus Ecoscings & Engineering Co., Ltd. Taiwan Genome Sciences Co., Ltd. Taipei, Taiwan 1. Develop skills in genome medicine

2. Manufacture, wholesale of chemical material 3. Medicine test

450 450 43,408 0.7 120 430 3 -

E Ink Holdings Inc. Hsinchu, Taiwan Sale and manufacture of TFT-LCD 73,961 73,961 1,778,000 0.2 76,607 539,330 767 -

Yuen Yan Paper Container Co., Ltd. Miaoli, Taiwan Sale of corrugated paper and manufacture of material

107 117 9,000 0.1 103 6,769 5 Note 6

Shin Foong Chemical Industry Co., Ltd. Kaohsiung, Taiwan Trade of paper, chemical material and machinery 183 183 11,000 - 252 767,162 90 Note 6

Pek Crown Paper Co., Ltd. Taichung, Taiwan Sale and manufacture of paper container 141 141 10,000 - 145 52,329 17 Note 6 Chung Hwa Pulp Co., Ltd. Hualien, Taiwan Manufacture and sale of pulp 1,226 1,354 117,247 - 1,750 779,717 83 Note 6

Chung Hwa Pulp Co., Ltd. Chp International (BVI) Corporation British Virgin Islands. Investment and holding 1,747,085 1,747,085 61,039,956 100.0 5,665,910 107,923 107,923 Notes 1 and 6 Effion Enertech Co., Ltd. Taipei, Taiwan To operate cogeneration and provide power

technology

343,000 343,000 34,300,000 49.0 366,429 29,555 14,482 Note 6

Taiwan Global BioFund Co., Ltd. Taipei, Taiwan To provide service in consultation and business management

100,000 100,000 10,000,000 4.4 228,017 (80,883 ) (3,638 ) -

Hwa Fong Investment Co., Ltd. Taipei, Taiwan Investment and holding 36,000 36,000 3,600,000 100.0 48,797 6,064 4,689 Notes 1 and 6

Quan Hwa Venture Capital Co., Ltd.

Taipei, Taiwan Biotechnology and biopharmaceutical business investment.

7,008 7,008 700,812 5.0 2,488 - - -

E Ink Holdings Inc. Hsinchu, Taiwan To research, develop, produce and sale thin-film

transistor liquid crystal display.

329,000 329,000 20,000,000 1.8 373,775 539,330 8,624 -

Hwa Fong Investment Co., Ltd. Effion Enertech Co., Ltd. Taipei, Taiwan To operate cogeneration and provide power

technology

7,000 7,000 700,000 1.0 7,478 29,555 295 Note 6

Kuang Hwa Fertilizer Limited Company Hualien, Taiwan To produce fertilizer 5,000 5,000 - 100.0 10,495 4,514 4,514 Notes 1 and 6

Effion Enertech Co., Ltd. YFY Capital Holdings Corp. British Virgin Islands Investment and holding 243,625 243,625 8,060 100.0 310,213 25,482 25,482 Notes 1 and 6

Note 1: Subsidiary.

Note 2: The amount was recognized as a subtraction from investment accounted for by the equity method and accounted as other non-current liabilities.

Note 3: Formerly YFY Jupiter Inc.

Note 4: Formerly Trifaith Ltd.

Note 5: In August 2015, the Group lost control over Foster and Balyis (Prestige) Ltd. due to the change of substantive influence.


(Concluded)

- 98 -

TABLE 9


INFORMATION ON INVESTMENTS IN MAINLAND CHINA



Investee Company Main Businesses and Products Paid-in Capital

(Notes 1 and 3)

Method of

Investment

(Note 4)

Accumulated

Outward

Remittance for

Investment from

Taiwan as of

January 1, 2015

(Notes 1 and 3)

Remittance of Funds Accumulated

Outward

Remittance for

Investment from

Taiwan as of

December 31,

2015

(Notes 1 and 3)

Net Income (Loss)

of the Investee

% Ownership of

Direct or Indirect

Investment

Investment

Gain (Loss)

(Note 1)

Carrying

Amount as of

December 31,

2015

(Note 1)

Accumulated

Repatriation of

Investment

Income as of

December 31,

2015

Outward Inward

YFY Paper Enterprise (Fuzhou) Co., Ltd. Manufacture, sale and print of

cardboard and cardboard cases

$ 164,125

(US$ 5,000

thousand)

a. (a) $ 49,238

(US$ 1,500

thousand)

$ - $ - $ 49,238

(US$ 1,500

thousand)

$ (72,855) 100.0 $ (72,855)

(Note 2)

$ - $ -

YFY Paper Enterprise (Kunshan) Co., Ltd. Manufacture, sale and print of


361,075

(US$ 11,000

thousand)

a. (a) 229,775

(US$ 7,000

thousand)

- - 229,775

(US$ 7,000

thousand)

(16,316) 100.0 (16,316)

(Note 2)

486,193 -

YFY Paper Enterprise (Suzhou) Co., Ltd. Manufacture, sale and print of


229,775

(US$ 7,000

thousand)

a. (a) 229,775

(US$ 7,000

thousand)

- - 229,775

(US$ 7,000

thousand)

(55,462) 100.0 (55,462)

(Note 2)

175,663 -

YFY Paper Enterprise (Tianjin) Co., Ltd. Manufacture, sale and print of


262,600

(US$ 8,000

thousand)

a. (a) 262,600

(US$ 8,000

thousand)

- - 262,600

(US$ 8,000

thousand)

33,140 100.0 33,140

(Note 2)

638,594 -

YFY Paper Enterprise (Dongguan) Co., Ltd. Manufacture, sale and print of


196,950

(US$ 6,000

thousand)

a. (a) 65,650

(US$ 2,000

thousand)

- - 65,650

(US$ 2,000

thousand)

(9,202) 100.0 (9,202)

(Note 2)

342,932 -

YFY Paper Enterprise (Shanghai) Co., Ltd. Manufacture, sale and print of


262,600

(US$ 8,000

thousand)

a. (a) 266,309

(US$ 8,113

thousand)

- - 266,309

(US$ 8,113

thousand)

(21,658) 100.0 (21,658)

(Note 2)

135,586 -

YFY Paper Enterprise (Qingdao) Co., Ltd. Manufacture, sale and print of


262,600

(US$ 8,000

thousand)

a. (a) 262,600

(US$ 8,000

thousand)

- - 262,600

(US$ 8,000

thousand)

23,900 100.0 23,900

(Note 2)

793,222 -

YFY Paper Enterprise (Nanjing) Co., Ltd. Manufacture, sale and print of


326,904

(US$ 9,959

thousand)

a. (a) 295,425

(US$ 9,000

thousand)

- - 295,425

(US$ 9,000

thousand)

(44,077) 90.0 (39,669)

(Note 2)

226,254 -

YFY Paper Enterprise (Guangzhou) Co., Ltd. Manufacture, sale and print of


311,838

(US$ 9,500

thousand)

a. (a) 246,188

(US$ 7,500

thousand)

- - 246,188

(US$ 7,500

thousand)

12,233 93.8 11,469

(Note 2)

421,945 -

YFY Paper Enterprise (Xiamen) Co., Ltd. Manufacture, sale and print of


213,363

(US$ 6,500

thousand)

a. (a) 213,363

(US$ 6,500

thousand)

- - 213,363

(US$ 6,500

thousand)

(26,480) 100.0 (26,480)

(Note 2)

- -

YFY Paper Enterprise (Zhongshan) Co., Ltd. Manufacture, sale and print of


196,950

(US$ 6,000

thousand)

a. (a) 157,560

(US$ 4,800

thousand)

- - 157,560

(US$ 4,800

thousand)

35,355 100.0 35,355

(Note 2)

752,046 -

(Continued)

- 99 -


(Notes 1 and 3)

Method of

Investment

(Note 4)

Accumulated

Outward

Remittance for

Investment from

Taiwan as of

January 1, 2015

(Notes 1 and 3)


Outward

Remittance for

Investment from

Taiwan as of

December 31,

2015

(Notes 1 and 3)

Net Income (Loss)

of the Investee

% Ownership of

Direct or Indirect

Investment

Investment

Gain (Loss)

(Note 1)

Carrying

Amount as of

December 31,

2015

(Note 1)

Accumulated

Repatriation of

Investment

Income as of

December 31,

2015

Outward Inward

YFY Paper Enterprise (Jiaxing) Co., Ltd. Manufacture, sale and print of


$ 164,125

(US$ 5,000

thousand)

a. (a) $ 164,125

(US$ 5,000

thousand)

$ - $ - $ 164,125

(US$ 5,000

thousand)

$ (33,150) 100.0 $ (33,150)

(Note 2)

$ 126,300 $ -

YFY Packaging (Yangzhou) Investment Co.,

Ltd.

Investment and holding and paper

trading

876,657

(US$ 26,707

thousand)

a. (a) 886,275

(US$ 27,000

thousand)

- - 886,275

(US$ 27,000

thousand)

(178,979) 100.0 (178,979)

(Note 2)

423,100 -

YFY Paper Mfg. (Yangzhou) Co., Ltd. Production and sale of paper and

cardboard

6,062,613

(US$ 184,695

thousand)

a. (b) 6,072,625

(US$ 185,000

thousand)

- - 6,072,625

(US$ 185,000

thousand)

(1,134,328) 100.0 (1,134,328)

(Note 2)

3,079,081 -

YFY BioTechnology (Kunshan) Co., Ltd. To promote agriculture skills and

operate in trade of agriculture

products

249,470

(US$ 7,600

thousand)

a. (c) 130,315

(US$ 3,970

thousand)

- - 130,315

(US$ 3,970

thousand)

(42,033) - (21,957)

(Note 7)

- -

YFY Paper Mfg. (Jiangyin) Co., Ltd. Manufacture, sale and print of


489,093

(US$ 14,900

thousand)

a. (c) 459,747

(US$ 14,006

thousand)

- - 459,747

(US$ 14,006

thousand)

(87,270) 94.0 (82,034)

(Note 2)

- -

Yuen Foong Yu Blue Economy Natural

Resource (Yangzhou) Co., Ltd.

Development the technology of

agricultural resource recycling

262,600

(US$ 8,000

thousand)

a. (c) 262,600

(US$ 8,000

thousand)

- - 262,600

(US$ 8,000

thousand)

(7,275) 100.0 (7,275)

(Note 2)

222,892 -

YFY Firstpak Packaging (YangZhou) Co.,

Ltd.

General trade 80,880

(RMB 16,000

thousand)

a. (d) - - - - (25,077) 70.0 (17,554)

(Note 2)

33,757 -

YFY Bio Technology (Yangzhou) Co., Ltd. Manufacture, sale and print of

cardboard

15,165

(RMB 3,000

thousand)

a. (d) - - - - (1,703) 49.5 (843)

(Note 2)

6,671 -

Shenzhen Systax Paper Co., Ltd. Sale of paper merchandise and

import/export business

16,176

(RMB 3,200

thousand)

a. (e) - - - - 7,755 100.0 7,755

(Note 2)

73,470 -

Kunshan YFY Advertising and Printing Co.,

Ltd.

To design, produce and act as agent

releasing various domestic

advertising and printing plate cum

98,475

(US$ 3,000

thousand)

a. (f) - - - - (13,096) 100.0 (13,096)

(Note 2)

- -

Shanghai YFY Advertising Printing Co., Ltd. Prepress publications, publications

printing, packaging printing, other

printing, business card printing,

and sale of paper and printing

equipment

10,110

(RMB 2,000

thousand)

a. (g) - - - - (4,780) 51.0 (2,438)

(Note 2)

1,478 -

Arizon RFID Technology (Yangzhou) Co.,

Ltd.

Sale and design RFID products 820,625

(US$ 25,000

thousand)

a. (h) 833,492

(US$ 25,392

thousand)

-

- 833,492

(US$ 25,392

thousand)

226,205 100.0 226,205

(Note 2)

1,606,335 -

Yeon Technologies (Yangzhou) Co., Ltd 40,440

(RMB 8,000

thousand)

a. (i) -

-

- -

2,173 100.0 710

(Note 2)

45,956 -

(Continued)

- 100 -


(Notes 1 and 3)

Method of

Investment

(Note 4)

Accumulated

Outward

Remittance for

Investment from

Taiwan as of

January 1, 2015

(Notes 1 and 3)


Outward

Remittance for

Investment from

Taiwan as of

December 31,

2015

(Notes 1 and 3)

Net Income (Loss)

of the Investee

% Ownership of

Direct or Indirect

Investment

Investment

Gain (Loss)

(Note 1)

Carrying

Amount as of

December 31,

2015

(Note 1)

Accumulated

Repatriation of

Investment

Income as of

December 31,

2015

Outward Inward

YFY Jupiter (Shenzhen) Ltd. Design and sale of paper $ 4,596

(US$ 140

thousand)

a. (j) $ - $ - $ - $ - $ 46,169 77.2 $ 35,659

(Note 2)

$ 127,058 $ -

Kunshan YFY Jupiter Green Packaging Ltd. Design of packaging and sale of

paper

10,110

(RMB 2,000

thousand)

a. (k) - - - - 16,516 77.2 12,756

(Note 2)

30,599 -

YFY Jupiter Supply Chain Management

Service (Shenzhen) Limited

Design of packaging and sale of

paper

- a. (k) - - - - 16,411 77.2 12,675

(Note 2)

13,136 -

Chengdu JieLianDa Warehousing Co., Ltd. Trading business 7,582

(RMB 1,500

thousand)

a. (k) - - - - (736) 27.0 (199)

(Note 6)

2,145 -

ChengDu JingShiTong Packing Co., Ltd. Trading business 10,110

(RMB 2,000

thousand)

a. (k) - - - - 2,104 27.0 569

(Note 6)

3,792 -

ChengDu YongJunYu Environmental

Protection packing Co., Ltd.

Trading business 10,110

(RMB 2,000

thousand)

a. (k) - - - - 43 27.0 12

(Note 6)

2,570 -

Rimagine Design (Shanghai) Co., Ltd. Photograh 11,482

(EUR 320

thousand)

a. (l) - - - - (12,276) 44.0 (5,404)

(Note 6)

- -

YFY Investment Co., Ltd. Investment and holding and sale of

paper

3,118,375

(US$ 95,000

thousand)

a. (m) 3,118,375

(US$ 95,000

thousand)

- - 3,118,375

(US$ 95,000

thousand)

(294,568) 100.0 (294,568)

(Note 2)

1,345,423 -

YFY Family Care (Kunshan) Co., Ltd. Manufacture and sale of tissue paper

and napkin

984,750

(US$ 30,000

thousand)

a. (n) 984,750

(US$ 30,000

thousand)

- - 984,750

(US$ 30,000

thousand)

8,893 100.0 8,893

(Note 2)

485,515 -

YFY Family Paper (Beijing) Co., Ltd. Manufacture and sale of tissue paper

and napkin

1,148,875

(US$ 35,000

thousand)

a. (n) 1,148,875

(US$ 35,000

thousand)

- - 1,148,875

(US$ 35,000

thousand)

(22,520) 100.0 (22,520)

(Note 2)

517,485 -



Manufacture and sale of tissue paper

and napkin

984,750

(US$ 30,000

thousand)

a. (n) 984,750

(US$ 30,000

thousand)

- - 984,750

(US$ 30,000

thousand)

42,055 100.0 42,055

(Note 2)

1,038,238 -

Shanghai YFY International Trade Co., Ltd. Trading business 5,055

(RMB 1,000

thousand)

b. (a) - 5,055

(RMB 1,000

thousand)

- 5,055

(RMB 1,000

thousand)

(4,661) 100.0 (4,661)

(Note 2)

432 -

Guangdong Ding Feng Pulp & Paper Co.,

Ltd.

Pulp and paper production, trading

and forestry business

2,810,805

(US$ 85,630

thousand)

a. (o) 722,150

(US$ 22,000

thousand)

- - 722,150

(US$ 22,000

thousand)

163,869 75.0

122,942

(Note 2)

4,038,881 -

(Continued)

- 101 -


(Notes 1 and 3)

Method of

Investment

(Note 4)

Accumulated

Outward

Remittance for

Investment from

Taiwan as of

January 1, 2015

(Notes 1 and 3)


Outward

Remittance for

Investment from

Taiwan as of

December 31,

2015

(Notes 1 and 3)

Net Income (Loss)

of the Investee

% Ownership of

Direct or Indirect

Investment

Investment

Gain (Loss)

(Note 1)

Carrying

Amount as of

December 31,

2015

(Note 1)

Accumulated

Repatriation of

Investment

Income as of

December 31,

2015

Outward Inward

Zhaoqing Ding Feng Forestry Ltd. Seedling cultivation and sales,

reforestation, sales-cum-forest

logging and other forestry,


$ 718,211

(US$ 21,880

thousand)

a. (p) $ 242,249

(US$ 7,380

thousand)

$ - $ - $ 242,249

(US$ 7,380

thousand)

$ 3,804 75.0 $ 2,854

(Note 2)

$ 2,446,178 $ -

YFY (Shanghai) Financial Services Co., Ltd.

Export factoring, domestic factoring,

business factoring and related

consulting services, develop credit

risk management platform

252,749

(RMB 50,000

thousand)

a. (a) 252,749

(RMB 50,000

thousand)

- - 252,749

(RMB 50,000

thousand)

25,481 79.2 20,177

(Note 2)

245,416 -

Kunshan Actview Carbon Technology Co.,

Ltd.

Research and development,

manufacture, and sale of activated

carbon and related products

41,360

(US$ 1,260

thousand)

b. (b) 27,442

(US$ 836

thousand)

- - 27,442

(US$ 836

thousand)

(7,480) 66.4 (4,963)

(Note 2)

30,711 -

Yangzhou Yuen Foong Yu Southern

Renewable Resources Co., Ltd.

Reclamation of waste paper 6,066

(RMB 1,200

thousand)

a. (r) - - - - (213) 49.0 (105)

(Note 2)

2,869 -

Accumulated Outward Remittance for Investment

in Mainland China as of December 31, 2015

Investment Amounts Authorized by

Investment Commission, MOEA

Upper Limit on the Amount of Investment

Stipulated by Investment Commission, MOEA

$16,538,973

(Notes 1 and 5)

$21,412,044

(Note 1) $37,407,150

Note 1: Except for investment gain or loss which use exchange rates of US$1＝NT$31.739 or RMB1＝NT$5.096819 or EUR1＝NT$35.244167, the exchange rates are US$1=NT$32.825 or RMB1＝NT$5.054977 or EUR1＝NT$35.88 as of December 31, 2015.

Note 2: Recognized from financial statements audited by the auditors for the same years.

Note 3: Difference between the amount of the paid-in capital multiplied by percentage of ownership and the cumulative amount of investment export from Taiwan in the end of year: Guangdong Ding Feng Pulp & Paper Co., Ltd. and YFY Paper Enterprise (Guangzhou) Co., Ltd. are capitalization

of retained earnings; YFY Paper Enterprise (Zhongshan) Co., Ltd., YFY Paper Enterprise (Kunshan) Co., Ltd., YFY Paper Enterprise (Dongguan) Co., Ltd. and YFY Paper Enterprise (Fuzhou) Co., Ltd. are subsidiaries reinvested earnings from China. YFY Jupiter (Shenzhen) Ltd. is

indirect acquired due to the acquirment of YFY Jupiter (BVI) Inc.

Note 4: Methods of investment and the related investors are as follow:

a. Investment in Mainland China through companies set up in another company. The related investees are as follow:

(a) YFY Mauritius Corp. (b) YFY Maruitius Corp. and YFY Packaging (Yangzhou) Investment Co., Ltd. (c) YFY International BVI Corp. (d) Yuen Foong Yu Blue Economy Natural Resourse (YangZhou) Co., Ltd. (e) Hwa Fong Paper (H.K.) Ltd. (f) YFY Paper Enterprise (Xiamen)

Co., Ltd. and YFY Paper Enterprise (Guangzhou) Co., Ltd. (g) Kunshan YFY Advertising and Printing Co., Ltd. (h) YFY RFID Co., Ltd. (i) Arizon RFID Technology (Yangzhou) Co., Ltd. (j) Mobius 105 Ltd. (k) YFY Jupiter (Shenzhen) Ltd. (l) Rimagine Limited (m) Yuen Foong Yu

Consumer Products Co., Ltd. (Formerly Trifaith Ltd.) (n) YFY investment Co., Ltd. (o) YFY International BVI Corp. and CHP International (BVI) Corporation (p) YFY International BVI Corp., CHP International (BVI) Corporation and Guangdong Ding Feng Pulp & Paper Co., Ltd. (q)

YFY Capital Holdings Corp. (r) YFY Paper Mfg. (Yangzhou) Co., Ltd.

b. Direct investment in Mainland China and the investor is San Ying Enterprise Co., Ltd.

(a) Yuen Foong Shop (b) San Ying Enterprise Co., Ltd.

Note 5: In calculating the accumulated outward remittance for investment, the reinvestment amount of $2,035,084 thousand made by investor of Mainland China has been deducted.

Note 6: Recognized from financial statements that have not been audited.

Note 7: The Group lost control due to reduced ownership interest and excluded the investee in August 2014. The share of profit or loss and other comprehensive income of the investee were recognized until August 2014.

(Concluded)

- 102 -

TABLE 10


INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS



No. Investee Company Counterparty Relationship

Transaction Details (Note)

Financial

Statement Account Amount Payment Terms

% to

Total Sales or

Assets

1 YFY Packaging Inc. Pek Crown Paper Co., Ltd. Subsidiary Sales $ 636,244 By market price 1.0

Accounts receivable 110,705 3 months after transaction month 0.1

Chung Hwa Pulp Co., Ltd. Same ultimate parent

company

Sales 1,428,117 By market price 2.2


YFY Consumer Products Co., Ltd. Same ultimate parent

company

Sales 121,954 By market price 0.2

2 Chung Hwa Pulp Co., Ltd. YFY Capital Co., Ltd. Same parent company Sales 985,626 By market price 1.6

Shenzhen Systax Paper Co., Ltd. Same ultimate parent

company



YFY Consumer Products Co., Ltd. Same parent company Sales 580,716 By market price 0.9

Accounts receivable 274,989 In agreed terms 0.2

YFY Packaging Inc. Same ultimate parent

company


Union Paper Co., Ltd. Same parent company Sales 629,153 By market price 1.0

China Color Printing Co., Ltd. Same parent company Sales 196,010 By market price 0.3

3 YFY Operation Management Consulting Co., Ltd. Union Paper Co., Ltd. Same parent company Sales 339,007 By market price 0.5

4 Shin Foong Chemical Industry Co., Ltd. Chung Hwa Pulp Co., Ltd. Same parent company Sales 412,895 By market price 0.6


5 YFY Family Care (Kunshan) Co., Ltd. YFY Investment Co., Ltd. Parent company Sales 2,208,054 By market price 3.5


6 YFY Investment Co., Ltd. Yuen Foong Yu Consumer Products Same parent company Sales 1,855,932 By market price 2.9


YFY Family Care (Kunshan) Co., Ltd. Same parent company Sales 476,966 By market price 0.8

7 Yuen Foong Yu Consumer Products (Yangzhou) YFY Investment Co., Ltd. Parent company Sales 1,548,211 By market price 2.4

Co., Ltd. YFY Family Care (Kunshan) Co., Ltd. Same parent company Sales 811,223 By market price 1.3

YFY Family Paper (Beijing) Co., Ltd. Same parent company Sales 204,503 By market price 0.3


8 YFY Family Paper (Beijing) Co., Ltd. YFY Investment Co., Ltd. Parent company Sales 825,782 By market price 1.3

(Continued)

- 103 -



Financial


% to

Total Sales or

Assets

9 YFY Cayman Co., Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd. Same ultimate parent

company

Accounts receivable $ 236,805 2 months after transaction month 0.2

10 YFY (Shanghai) Financial Services Co., Ltd. YFY Firstpak Packaging (Yangzhou) Investment Co., Ltd. Same ultimate parent

company


YFY Packaging (Yangzhou) Investment Co., Ltd. Same ultimate parent

company


11 YFY Paper Mfg. (Yangzhou) Co., Ltd. YFY Paper Enterprise (Jiaxing) Co., Ltd. Same parent company Sales 211,630 By market price 0.3

YFY Paper Enterprise (Shanghai) Co., Ltd. Same parent company Sales 302,548 By market price 0.5

YFY Paper Enterprise (Suzhou) Co., Ltd. Same parent company Sales 310,927 By market price 0.5

YFY Paper Enterprise (Nanjing) Co., Ltd. Same parent company Sales 311,701 By market price 0.5

YFY Paper Enterprise (Guangzhou) Co., Ltd. Same parent company Sales 125,346 By market price 0.2

YFY Foong Yu Consumer Product (Yangzhou) Co., Ltd. Same parent company Sales 103,233 By market price 0.2

12 YFY Packaging (Yangzhou) Investment Co., Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd. Same parent company Sales 3,507,203 By market price 5.5


YFY Paper Enterprise (Dongguan) Co., Ltd. Same parent company Sales 305,045 By market price 0.5

YFY Paper Enterprise (Xiamen) Co., Ltd. Same parent company Sales 334,091 By market price 0.5

YFY Paper Enterprise (Guangzhou) Co., Ltd. Same parent company Sales 404,400 By market price 0.6

YFY Paper Enterprise (Fuzhou) Co., Ltd. Same parent company Sales 168,569 By market price 0.3

YFY Paper Enterprise (Qingdao) Co., Ltd. Same parent company Sales 205,283 By market price 0.3

YFY Paper Enterprise (Tianjin) Co., Ltd. Same parent company Sales 242,758 By market price 0.4

YFY Paper Enterprise (Zhongshan) Co., Ltd. Same parent company Sales 263,802 By market price 0.4

YFY Paper Enterprise (Nanjing) Co., Ltd. Same parent company Sales 106,581 By market price 0.2

YFY Paper Enterprise (Suzhou) Co., Ltd. Same parent company Sales 140,149 By market price 0.2

YFY Paper Enterprise (Shanghai) Co., Ltd. Same parent company Sales 108,854 By market price 0.2

YFY Paper Enterprise (Jiaxing) Co., Ltd. Same parent company Sales 147,332 By market price 0.2

13 YFY Consumer Products Co., Ltd. Yuen Foong Shop Company Limited Subsidiary Sales 570,615 By market price 0.9


14 Eihoyo Shoji Co., Ltd. Chung Hwa Pulp Co., Ltd. Same parent company Sales 290,847 By market price 0.5

15 Ever Growing Agriculture Biotech Co., Ltd. YFY Consumer Products Co., Ltd. Parent company Sales 232,311 By market price 0.4

16 Guangdong Ding Feng Pulp & Paper Co., Ltd. YFY Investment Co., Ltd. Same ultimate parent

Company


YFY Family Paper (Beijing) Co., Ltd. Same ultimate parent

Company


17 Zhaoqing Ding Feng Forestry Ltd. Guangdong Ding Feng Pulp & Paper Co., Ltd. Parent company Sales 436,317 By market price 0.7

18 YFY Paper Enterprise (Suzhou) Co., Ltd. YFY Paper Enterprise (Kunshan) Co., Ltd. Same parent company Sales 220,598 By market price 0.3

(Continued)

- 104 -



Financial


% to

Total Sales or

Assets

19 Union Paper Co., Ltd. Chung Hwa Pulp Co., Ltd. Same ultimate parent

company

Sales $ 168,626 By market price 0.3

20 YFY International BVI Corp. YFY Investment Co., Ltd. Same ultimate parent

company


21 San Ying Enterprise Co., Ltd. Union Paper Co., Ltd. Same ultimate parent

company


Note: In preparing the consolidated financial statements, the transaction has been eliminated.

(Concluded)

yfy inc. (formerly yuen foong yu paper mfg. co., ltd.) and ... · yfy inc. (formerly yuen foong yu...

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