TRANSCEND INFORMATION, INC. AND
SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS ANDREPORT OF INDEPENDENT ACCOUNTANTSDECEMBER 31, 2014 AND 2013-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying
financial statements have been translated into English from the original Chinese version prepared and used in
the Republic of China. In the event of any discrepancy between the English version and the original
Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’
report and financial statements shall prevail.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR14001518
To the Board of Directors and Stockholders of Transcend Information, Inc.
We have audited the accompanying consolidated balance sheets of Transcend Information, Inc. and its
subsidiaries as of December 31, 2014 and 2013 and the related consolidated statements ofcomprehensive income, of changes in equity, and of 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.
As disclosed in Note 4(3)B, we did not audit the financial statements of certain subsidiaries for theyear ended December 31, 2013, which statements reflect total assets of NT$547,456 thousand,constituting 2 percent of the consolidated total assets, as of December 31, 2013, and total revenues of
NT$2,748,290 thousand, constituting 11 percent of the consolidated total operating revenue, for theyear then ended. Furthermore, we did not audit the financial statements of equity investments
accounted for under the equity method. The investment loss from these equity investments amounted
to NT$30,403 thousand for the year ended December 31, 2013. As of December 31, 2013, the equity
investment accounted for using the equity method was NT$221,255 thousand. The financial statementsof these subsidiaries and equity investments were audited by other independent accountants whose
reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit
reports of the other independent accountants.
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

~1~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)

Assets

December 31, 2014
AMOUNT%

Notes

December 31, 2013
AMOUNT%

Current assets
11,639,505

48

-

-

-

637,025

3

123,698

1

-

-

4,158

-

2,993,131

11

2,732,001

11

283,3161

254,5281

6,364,987

24

5,075,939

21

Other current assets

44,515-36,311-

Current Assets

21,941,863

83

19,866,14082

232,6391

264,4221

332,5931

221,2551

3,160,974

12

3,330,875

14Cash and cash equivalents

6(1)Current financial assets at fair value

6(2)

$

through profit or loss
Current bond investments without active

Notes receivable, net
6(4)Other receivables
Inventories, net

4453,545$6(3)marketAccounts receivable, net

11,565,3446(5)Non-current assets
Available-for-sale financial

6(6)assets-non-current
Investments accounted for using equity

6(7)methodProperty, plant and equipment

6(8), 7 and 8

Investment property, net

6(9)298,6141

303,232

1

Deferred tax assets

6(22)92,3191

78,915-

Other non-current assets

6(10) and 8

234,2381

183,6911

4,351,377

17

4,382,390

18

26,293,240

100

24,248,530

100

Non-current Assets
Total Assets$(Continued)~3~$

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity

December 31, 2014
AMOUNT%

Notes

December 31, 2013
AMOUNT%

Current liabilities
579,040

2

-

1,215

-

3,202,531

12

2,669,584

11

74,185-45,801-

475,0522

393,8102319,927

1

239,967

1

Other current liabilities

60,063-50,013-Current Liabilities

5,035,066

19

3,979,430

16

Short-term borrowings

6(11)

$

Notes payable
Accounts payable
Accounts payable to related parties

7

Other payables
Current tax liabilities

6(22)903,300

48$

Non-current liabilities
Deferred tax liabilities

6(22)485,3782395,542

2

Other non-current liabilities

6(12)54,191-

49,349-539,5692444,8912

5,574,635

21

4,424,321

18

4,307,617

16

4,307,617

18

4,799,075

18

4,799,075

20

Legal reserve

3,053,235

12

2,733,339

11

Unappropriated retained earnings

8,504,167

32

7,975,047

33

54,511

1

9,131

-

parent20,718,605

79

19,824,209

82

Total Equity

20,718,605

79

19,824,209

82

26,293,240

100

24,248,530

100

Non-current Liabilities
Total Liabilities
Share capital6(13)Common stock
Capital surplus

6(14)Capital surplus
Retained earnings

6(15)Other equity interest6(17)Other equity interest
Total equity attributable to owners ofCommitments and contingent liabilities

9

Significant subsequent event

11

Total Liabilities and Equity$$

The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 12, 2015.

~4~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except Earnings Per Share)

Items
Notes
Operating Revenue
6(18) and 7
Operating Costs
6(5) and 7
Gross Profit
Operating Expenses
6(21)Sales and marketing expenses
General and administrative expenses
Research and development expenses
Total operating expenses
Operating Profit
Non-operating Income and Expenses
Other income
6(19)Other gains and losses
6(20)Finance costs
Share of gain (loss) of associates and 6(7)joint ventures accounted for underequity method
Total non-operating income andexpensesProfit before Income Tax
Income tax expense
6(22)Profit for the Year
Other Comprehensive Income
Cumulative translation differences for 6(17)foreign operations
Unrealized (loss) gain on
6(6)available-for-sale financial assets
Actuarial (loss) gain on defined6(12)benefit plan
Income tax on other comprehensive 6(17)(22)
incomeOther Comprehensive Income for theYear
Total Comprehensive Income
Net Profit attributable to:
Owners of parent
Comprehensive Income attributableto:Owners of parent
Earnings Per Share
Basic earnings per share
Diluted earnings per share

$
(

(
(
(
(

Year ended December 31
2014
2013
AMOUNT%AMOUNT
27,219,495
100 $26,122,390
21,678,630) (80) (21,201,143) (5,540,865
20
4,921,247

%
100
81)
19

1,180,034) (439,532) (174,011) (1,793,577) (3,747,288

4) (
1) (
1) (
6) (
14

1,020,315) (392,338) (157,028) (1,569,681) (3,351,566

4)
1)
1)
6)
13

193,524460,0218,209)

11- (130,645
292,2365,900)

1
-

8,330

- (

30,403)-$

653,666
4,400,954
665,749) (3,735,205

2
16
2) (
14 $

386,578
3,738,144
539,187) (3,198,957

1
14
2)
12

$

92,968-148,5711(

31,783)

-

2,085

-

(

86)

-

5,387

-

(

15,805)- (25,258)

-

(

(

$

$
$

45,2943,780,499

14$$

130,785
3,329,742

1
13$

3,735,205

14$

3,198,957

12$

3,780,499

14$

3,329,742

13

8.67
8.66

$
$

6(23)
$
$

The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 12, 2015.
~5~

7.43
7.41

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan Dollars)

Capital Reserves

Equity attributable to owners of the parent
Retained Earnings

Common stock

Additional
paid-in capital

Capital surplus,
donated assets
received

Capital surplus,
net assets frommergerLegal reserve

Unappropriatedretained earnings$ 4,307,617$ 4,975,222$$

35,128$ 2,448,801$

Legal reserve

-

-

-

-

284,538(

284,538 )--Cash dividends

-

-

-

-

-

(

2,584,571 )

-

-

(

2,584,571 )

-

-

-

-

-

-

(

215,381 )Notes

Other equity interest
Cumulativetranslation
Unrealized gain or
differences ofloss onforeignavailable-for-sale
operations
financial assets

Total equity

For the year ended December 31, 2013
Balance at January 1, 2013
Appropriations of 2012 earnings

4,106

7,639,812($

95,549 ) ($20,718 )$ 19,294,419

6(15)
-

Change in capital reserve-

Cash distribution of capital reserve(

215,381 )

-

-

-

-

-

3,198,957--

3,198,957

-

-

-

-

-

5,387

123,313

2,085

130,785$ 4,307,617$ 4,759,841

$

4,106

$

35,128$ 2,733,339$

7,975,047$

27,764($

18,633 )$ 19,824,209$ 4,307,617$ 4,759,841

$

4,106

$

35,128$ 2,733,339$

7,975,047$

27,764($

18,633 )$ 19,824,209

Legal reserve

-

-

-

-

319,896(

319,896 )--Cash dividends

-

-

-

-

-

(

2,886,103 )

-

-

-

-

-

-

-

3,735,205

-

-

-

-

-

-

-

(

$ 4,307,617$ 4,759,841

35,128$ 3,053,235$

Net income for the year
Other comprehensive income for the year

6(17)Balance at December 31, 2013
For the year ended December 31, 2014
Balance at January 1, 2014
Appropriations of 2013 earnings

6(15)Net income for the year
Other comprehensive income (loss) for the year
Balance at December 31, 2014

6(17)

$

4,106

$

The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 12, 2015.

~6~

86 )
8,504,167$(

2,886,103 )
3,735,205

77,163(31,783 )45,294

104,927($

50,416 )$ 20,718,605

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan Dollars)
For the years ended December 31
2014
2013

Notes
CASH FLOWS FROM OPERATING ACTIVITIESConsolidated profit before tax for the year
Adjustments to reconcile profit before tax to net cash provided by operating
activities:
Income and expenses having no effect on cash flows
Net gains on financial assets at fair value through profit or loss
Gain on disposal of financial assets
Share of (gain) loss of associates and joint ventures accounted for using
equity method
Provision for bad debt expense
Loss (gain) on market price decline (recovery) of inventory
Depreciation
Interest income
Interest expense
Dividend income
Loss (gain) on disposal of property, plant and equipment
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Net gain on financial assets at fair value through profit or loss
Notes and accounts receivable
Other receivables
Inventories
Other current assets
Net changes in liabilities relating to operating activities
Notes and accounts payable
Other payables
Other current liabilities
Other non-current liabilities
Cash generated from operations
Cash dividends received
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of bond investments without active markets
Acquisition of bond investments without active markets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in investments accounted for using equity method
Increase in other non-current assets
Net cash (used in) provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Payment of cash dividends
Net cash used in financing activities
Effect of foreign exchange rate changes(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year$

6(2)(20)6(3)(20)
6(7)
6(4)
6(5)
6(21)
6(19)
6(20)
6(20)

29,979 )112,397 )(8,330 )
13,20050,009236,547
176,359 )8,209
13,781 )
1,800

(
(

30,403
14,9009,668 )
238,147
115,182 )15,074 )
1,916 )

270,451 ) (23,247 )1,339,057 )
8,204 )

29,979160,225 )
39,086
1,156,059
1,708

560,124
81,242
10,0504,756
3,460,894
13,781
170,818
8,209 )
525,162 )3,112,122

610,339 )
67,664 )10,436
5,131 )
4,131,287
15,074
99,8496,728 )
498,742 )3,740,740

(
(

(
(

(
(
(

(
(

364,425
862,978 )
23,399 ) (9,939
103,008 )
70,658 ) (685,679 )

(
(
(
(
(

(
(
(
$

343,560
2,886,103 ) (2,542,543 ) (41,93974,161 )
11,639,505
11,565,344$

The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 12, 2015.

~7~

3,738,144

53,545 ) (13,023 ) (

(
(

6(15)

$

(
(

(
(
(
(

6(8)
6(8)
6(7)

4,400,954

388,276
54,858 )
7,780
6,402 )
334,796447,3902,799,952 )
2,352,562 )
44,2881,767,262
9,872,243
11,639,505

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND 2013
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,EXCEPT AS OTHERWISE INDICATED)
1. HISTORY AND ORGANIZATION
Transcend Information, Inc. (the “Company”) was incorporated under the provisions of the Company
Law of the Republic of China (R.O.C.) in August 1989. The main activities of the Company and its
subsidiaries (collectively referred herein as the “Group”) are manufacturing, processing and the sale ofcomputer software and hardware, peripheral equipment and other computer components. The Securities
and Futures Commission of the Republic of China had approved the Company’s shares to be listed on
the Taiwan Stock Exchange and the shares started trading on May 3, 2001.
2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These consolidated financial statements were authorized for issuance by the Board of Directors on
March 12, 2015.
3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS(1) Effect of the adoption of new issuances of or amendments to International Financial ReportingStandards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
None.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by
the Group
According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014,
commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai
Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including
IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the
Preparation of Financial Reports by Securities Issuers " effective January 1, 2015 (collectively
referred herein as the “2013 version of IFRSs”) in preparing the consolidated financial statements.
The related new standards, interpretations and amendments are listed below:~8~New Standards, Interpretations and Amendments
Limited exemption from comparative IFRS 7
disclosures for first-time adopters (amendment to IFRS 1)
Severe hyperinflation and removal of fixed dates
for first-time adopters (amendment to IFRS 1)

Effective Date byInternational AccountingStandards Board
July 1, 2010
July 1, 2011
January 1, 2013

Government loans (amendment to IFRS 1)
Disclosures－Transfers of financial assets(amendment to IFRS 7)
Disclosures－Offsetting financial assets and financial
liabilities (amendment to IFRS 7)
IFRS 10, ‘Consolidated financial statements’

July 1, 2011
January 1, 2013
January 1, 2013
(Investment entities: January 1, 2014)

IFRS 11,‘Joint arrangements’

January 1, 2013

IFRS 12,‘Disclosure of interests in other entities’

January 1, 2013

IFRS 13, ‘Fair value measurement’

January 1, 2013

Presentation of items of other comprehensive income(amendment to IAS 1)
Deferred tax: recovery of underlying assets(amendment to IAS 12)

July 1, 2012
January 1, 2012

IAS 19 (revised), ‘Employee benefits’

January 1, 2013

IAS 27,‘Separate financial statements’(as amended in 2011)
IAS 28,‘Investments in associates and joint ventures’(as amended in 2011)
Offsetting financial assets and financial liabilities(amendment to IAS 32)
IFRIC 20, ‘Stripping costs in the production phaseof a surface mine’

January 1, 2013

Improvements to IFRSs 2010

January 1, 2011

Improvements to IFRSs 2009－2011

January 1, 2013

January 1, 2013
January 1, 2014
January 1, 2013

Based on the Group’s assessment, the adoption of the 2013 version of IFRS has no significant
impact on the consolidated financial statements of the Group, except for the following:
A. IAS 1, ‘Presentation of financial statements’
The amendment requires entities to separate items presented in OCI classified by nature into twogroups on the basis of whether they are potentially reclassifiable to profit or loss subsequently
when specific conditions are met. If the items are presented before tax then the tax related to~9~each of the two groups of OCI items (those that might be reclassified and those that will not bereclassified) must be shown separately. Based on the Group’s assessment, the adoption of thestandard has no significant impact on its consolidated financial statements, and the Group will
adjust its presentation of the statement of comprehensive income.
B.IFRS 12, ‘Disclosure of interests in other entities’
The standard integrates the disclosure requirements for subsidiaries, joint arrangements,
associates and unconsolidated structured entities. Based on the Group’s assessment, the adoptionof the standard has no significant impact on its consolidated financial statements, and the Groupwill disclose additional information about its interests in consolidated entities andunconsolidated entities accordingly.
Based on the Group's assessment, the significant effects of applying the 2013 version of IFRSs to its
consolidated financial statements are presentation and disclosure methods.
(3) IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet included in the 2013
version of IFRS as endorsed by the FSC:

New Standards, Interpretations and Amendments
IFRS 9, ‘Financial instruments'

Effective Date byInternational AccountingStandards Board
January 1, 2018

Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)
Investment entities: applying the consolidation exception(amendments to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations(amendments to IFRS 11)
IFRS 14, 'Regulatory deferral accounts'

January 1, 2016

IFRS 15, ‘Revenue from contracts with customers'

January 1, 2017

Disclosure initiative (amendments to IAS 1)

January 1, 2016

Clarification of acceptable methods of depreciation and amortisation(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)

January 1, 2016~10~

January 1, 2016
January 1, 2016
January 1, 2016

January 1, 2016

New Standards, Interpretations and Amendments

Defined benefit plans: employee contributions(amendments to IAS 19R)
Equity method in separate financial statements (amendments to IAS 27)
Recoverable amount disclosures for non-financial assets(amendments to IAS 36)
Novation of derivatives and continuation of hedge accounting(amendments to IAS 39)
IFRIC 21, ‘Levies’

Effective Date byInternational AccountingStandards Board

July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014

Improvements to IFRSs 2010-2012

July 1, 2014

Improvements to IFRSs 2011-2013

July 1, 2014

Improvements to IFRSs 2012-2014

January 1, 2016

The Group is assessing the potential impact of the new standards, interpretations and amendments
above and has not yet been able to reliably estimate their impact on the consolidated financial
statements.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies applied in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the periods presented, unlessotherwise stated.
(1) Compliance statement
The consolidated financial statements of the Group have been prepared in accordance with the“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and theInternational Financial Reporting Standards, International Accounting Standards, IFRICInterpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the“IFRSs”).
(2) Basis of preparation
A.Except for the following items, the consolidated financial statements have been prepared under
the historical cost convention:(a)Financial assets and financial liabilities (including derivative instruments) at fair value
through profit or loss.
(b)Available-for-sale financial assets measured at fair value.
(c)Liabilities on cash-settled share-based payment arrangements measured at fair value.
(d)Defined benefit liabilities recognized based on the net amount of pension fund assets lesspresent value of defined benefit obligations.
B.The preparation of financial statements in conformity with International Financial Reporting~11~

Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as
endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the processof applying the Group’s accounting policies. The areas involving a higher degree of judgment orcomplexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 5.
(3) Basis of consolidation
A.Basis for preparation of consolidated financial statements:(a)All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries
are all entities over which the Group has the power to govern the financial and operating
policies. In general, control is presumed to exist when the parent owns, directly or indirectly
through subsidiaries, more than half of the voting power of an entity. The existence andeffect of potential voting rights that are currently exercisable or convertible have been
considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
(b)Inter-company transactions, balances and unrealised gains or losses on transactions between
companies within the Group are eliminated. Accounting policies of subsidiaries have beenadjusted where necessary to ensure consistency with the policies adopted by the Group.
(c)Profit or loss and each component of other comprehensive income are attributed to the ownersof the parent and to the non-controlling interests. Total comprehensive income is attributed
to the owners of the parent and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
(d)Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing
control of the subsidiary (transactions with non-controlling interests) are accounted for as
equity transactions, i.e. transactions with owners in their capacity as owners. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value ofthe consideration paid or received is recognised directly in equity.
(e)When the Group loses control of a subsidiary, the Group remeasures any investment retainedin the former subsidiary at its fair value. Any difference between fair value and carrying
amount is recognised in profit or loss. All amounts previously recognised in othercomprehensive income in relation to the subsidiary are reclassified to profit or loss ortransferred directly to retained earnings as appropriate, on the same basis as would be
required if the related assets or liabilities were disposed of. That is, when the Group loses
control of a subsidiary, all gains or losses previously recognised in other comprehensive
income in relation to the subsidiary should be reclassified from equity to profit or loss, if
such gains or losses would be reclassified to profit or loss when the related assets or
liabilities are disposed of.
~12~

B.Subsidiaries included in the consolidated financial statements:
Name ofInvestor

Name of
Subsidiary

Main Business
Activities

Ownership (%)
December December
31, 2014

31, 2013

Saffire Investment Ltd.
(Saffire)

Investment holding company

100

100

Description-〞

Transcend Japan Inc.
(Transcend Japan)

Wholesaler of computer memory
modules and peripheral products

100

100

-

〞

Transcend Information
Inc. (Transcend USA)

Wholesaler of computer memory
modules and peripheral products

100

100

Note 1〞

Transcend Korea Inc.
(Transcend Korea)

Wholesaler of computer memory
modules and peripheral products

100

100

-

SaffireMemhiro Pte. Ltd.
Investment Ltd. (Memhiro)

Investment holding company

100

100

-

Memhiro Pte.
Ltd.

Transcend Information
Europe B.V. (Transcend
Europe)Transcend Information
Trading GmbH, Hamburg(Transcend Germany)

Wholesaler of computer memory
modules and peripheral products

100

100

-

Wholesaler of computer memory
modules and peripheral products

100

100

Note 1〞

Transcend Information(Shanghai), Ltd.
(Transcend Shanghai)

Manufacturing, processing andsale of computer software andhardware, peripheral equipment
and other computer components

100

100

-

〞

Transtech Trading(Shanghai) Co., Ltd.
(Transtech Shanghai)

Wholesaler of computer memory
modules, peripheral equipment
and other computer components

100

100

-

〞

Transcend Information(Hong Kong), Ltd.
(Transcend Hong Kong)

Wholesaler of computer memory
modules and peripheral products

100

100

-

Transcend
Taiwan〞Note 1:The financial statements of Transcend USA and Transcend Germany as of and for theyear ended December 31, 2013 were audited by other independent accountants.
C.Subsidiaries not included in the consolidated financial statements: None.
D.Adjustment for subsidiaries with different balance sheet dates: None.
E.Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company:
None.
(4) Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in New Taiwan dollars, which is theCompany’s functional and the Group’s presentation currency.
~13~

A.Foreign currency transactions and balances(a)Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions arerecognised in profit or loss in the period in which they arise.
(b)Monetary assets and liabilities denominated in foreign currencies at the period end are
re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences
arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c)Non-monetary assets and liabilities denominated in foreign currencies held at fair value
through profit or loss are re-translated at the exchange rates prevailing at the balance sheet
date; their translation differences are recognised in profit or loss as part of the fair value gainor loss. Non-monetary assets and liabilities denominated in foreign currencies held at fairvalue through other comprehensive income are re-translated at the exchange rates prevailingat the balance sheet date; their translation differences are recognised in other comprehensive
income. However, non-monetary assets and liabilities denominated in foreign currencies thatare not measured at fair value are translated using the historical exchange rates at the dates of
the initial transactions.
(d)All foreign exchange gains and losses are presented in the statement of comprehensive
income within ‘other gains and losses’.
B.Translation of foreign operations
The operating results and financial position of all the group entities that have a functional
currency different from the presentation currency are translated into the presentation currency as
follows:(a)Assets and liabilities for each balance sheet presented are translated at the closing exchange
rate at the date of that balance sheet;(b)Income and expenses for each statement of comprehensive income are translated at averageexchange rates of that period; and(c)All resulting exchange differences are recognised in other comprehensive income.
(5) Classification of current and non-current items
A.Assets that meet one of the following criteria are classified as current assets; otherwise they areclassified as non-current assets:(a)Assets arising from operating activities that are expected to be realised, or are intended to be
sold or consumed within the normal operating cycle;(b)Assets held mainly for trading purposes;(c)Assets that are expected to be realised within twelve months from the balance sheet date;(d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are
to be exchanged or used to pay off liabilities more than twelve months after the balance sheet
date.
~14~

B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise
they are classified as non-current liabilities:(a)Liabilities that are expected to be paid off within the normal operating cycle;(b)Liabilities arising mainly from trading activities;(c)Liabilities that are to be paid off within twelve months from the balance sheet date;(d)Liabilities for which the repayment date cannot be extended unconditionally to more thantwelve months after the balance sheet date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
(6) Cash equivalents
Cash equivalents refer to short-term highly liquid investments that are readily convertible to known
amount of cash and subject to an insignificant risk of changes in value. Time deposits that meet theabove criteria and are held for the purpose of meeting short-term cash commitment in operations areclassified as cash equivalents.
(7) Receivables
A.Accounts receivable
Accounts receivable are receivables originated by the entity. They are created by the entity by
selling goods or providing services to customers in the ordinary course of business. Accounts
receivable are initially recognised at fair value and subsequently measured at amortised costusing the effective interest method, less provision for impairment. However, for short-term
accounts receivable without bearing interest, as the effect of discount is insignificant, they aremeasured subsequently at original invoice amount.
B.Bond investments without active market(a)Bond investments without active market are loans and receivables not originated by the entity.
They are bond investments with fixed or determinable payments that are not quoted in an
active market, and also meet all of the following conditions:i. Not designated on initial recognition as at fair value through profit or loss;
ii. Not designated on initial recognition as available-for-sale;iii. Not for which the holder may not recover substantially all of its initial investment, otherthan because of credit deterioration.
(b)On a regular way purchase or sale basis, bond investments without active market arerecognised and derecognised using trade date accounting.
(c)Bond investments without active market are initially recognised at fair value on the trade dateplus transaction costs and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Amortisation of a premium or a discount onsuch assets is recognised in profit or loss.
(8) Financial assets at fair value through profit or loss
A.Derivatives are also categorized as financial assets held for trading unless they are designated ashedges.
~15~

B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss arerecognised and derecognised using settlement date accounting.
C.Financial assets at fair value through profit or loss are initially recognised at fair value. Relatedtransaction costs are expensed in profit or loss. These financial assets are subsequently
remeasured and stated at fair value, and any changes in the fair value of these financial assets arerecognised in profit or loss.
(9) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using theweighted-average method. The cost of finished goods and work in progress comprises raw materials,
direct labour, other direct costs and related production overheads (allocated based on normal
operating capacity). It excludes borrowing costs. The item by item approach is used in applying thelower of cost and net realisable value. Net realisable value is the estimated selling price in theordinary course of business, less the estimated cost of completion and applicable variable selling
expenses.
(10) Available-for-sale financial assets
A.Available-for-sale financial assets are non-derivatives that are either designated in this categoryor not classified in any of the other categories.
B.On a regular way purchase or sale basis, available-for-sale financial assets are recognised andderecognised using trade date accounting.
C.Available-for-sale financial assets are initially recognised at fair value plus transaction costs.
These financial assets are subsequently remeasured and stated at fair value, and any changes in
the fair value of these financial assets are recognised in other comprehensive income.
(11) Impairment of financial assets
A.The Group assesses at each balance sheet date whether there is objective evidence that afinancial asset or a group of financial assets is impaired as a result of one or more events that
occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
B.The criteria that the Group uses to determine whether there is objective evidence of an
impairment loss is as follows:(a)Significant financial difficulty of the issuer or debtor;(b)A breach of contract, such as a default or delinquency in interest or principal payments;(c)The Group, for economic or legal reasons relating to the borrower’s financial difficulty,
granted the borrower a concession that a lender would not otherwise consider;(d)It becomes probable that the borrower will enter bankruptcy or other financial
reorganisation;(e)The disappearance of an active market for that financial asset because of financial
difficulties;~16~

(f)Observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although
the decrease cannot yet be identified with the individual financial asset in the group,
including adverse changes in the payment status of borrowers in the group or national or
local economic conditions that correlate with defaults on the assets in the group;(g)Information about significant changes with an adverse effect that have taken place in thetechnology, market, economic or legal environment in which the issuer operates, andindicates that the cost of the investment in the equity instrument may not be recovered; or(h)A significant or prolonged decline in the fair value of an investment in an equity instrument
below its cost.
C.When the Group assesses that there has been objective evidence of impairment and an
impairment loss has occurred, accounting for impairment is made as follows according to thecategory of financial assets:(a) Bond investments without active market
The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at thefinancial asset’s original effective interest rate, and is recognised in profit or loss. If, in a
subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment loss was recognised, thepreviously recognised impairment loss is reversed through profit or loss to the extent thatthe carrying amount of the asset does not exceed its amortised cost that would have been at
the date of reversal had the impairment loss not been recognised previously. Impairment
loss is recognised and reversed by adjusting the carrying amount of the asset through theuse of an impairment allowance account.
(b)Available-for-sale financial assets
The amount of the impairment loss is measured as the difference between the asset’s
acquisition cost (less any principal repayment and amortisation) and current fair value, lessany impairment loss on that financial asset previously recognised in profit or loss, and isreclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period,
the fair value of an investment in a debt instrument increases, and the increase can be
related objectively to an event occurring after the impairment loss was recognised, thensuch impairment loss is reversed through profit or loss. Impairment loss of an investment in
an equity instrument recognised in profit or loss shall not be reversed through profit or loss.
Impairment loss is recognised and reversed by adjusting the carrying amount of the asset
through the use of an impairment allowance account.

~17~(12) Derecognition of financial assets
The Group derecognises a financial asset when one of the following conditions is met:
A.The contractual rights to receive cash flows from the financial asset expire.
B.The contractual rights to receive cash flows from the financial asset have been transferred andthe Group has transferred substantially all risks and rewards of ownership of the financial asset.
C.The contractual rights to receive cash flows from the financial asset have been transferred;however, the Group has not retained control of the financial asset.
(13) Investments accounted for using equity method / associates
A.Associates are all entities over which the Group has significant influence but not control. In
general, it is presumed that the investor has significant influence, if an investor holds, directly
or indirectly 20 percent or more of the voting power of the investee. Investments in associates
are accounted for under the equity method and are initially recognised at cost.
B.The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit orloss, and its share of post-acquisition movements in other comprehensive income is recognisedin other comprehensive income.When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, including any other unsecured receivables, the Group does
not recognise further losses, unless it has incurred legal or constructive obligations or madepayments on behalf of the associate.
C.When changes in an associate’s equity are not recognised in profit or loss or othercomprehensive income of the associate and such changes do not affect the Group’s ownership
percentage of the associate, the Group recognises change in ownership interests in the associatein ‘capital surplus’ in proportion to its ownership.
D.Unrealised gains on transactions between the Group and its associates are eliminated to theextent of the Group’s interest in the associates. Unrealised losses are also eliminated unless thetransaction provides evidence of an impairment of the asset transferred. Accounting policies ofassociates have been adjusted where necessary to ensure consistency with the policies adopted
by the Group.
E.When the Group disposes its investment in an associate, if it loses significant influence over thisassociate, the amounts previously recognised in other comprehensive income in relation to theassociate, are reclassified to profit or loss on the same basis as would be required if the relevant
assets or liabilities were disposed of. If it still retains significant influence over this associate,
then the amounts previously recognised in other comprehensive income in relation to theassociate are reclassified to profit or loss proportionately in accordance with theaforementioned approach.
F.In the case that an associate issues new shares and the Group does not subscribe or acquire newshares proportionately, which results in a change in the Group’s ownership percentage of theassociate but maintains significant influence on the associate, then ‘capital surplus’ and‘investments accounted for under the equity method’ shall be adjusted for the increase or~18~

decrease of its share of equity interest. If the above condition causes a decrease in the Group’s
ownership percentage of the associate, in addition to the above adjustment, the amounts
previously recognised in other comprehensive income in relation to the associate arereclassified to profit or loss proportionately on the same basis as would be required if therelevant assets or liabilities were disposed of.
(14) Property, plant and equipment
A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during theconstruction period are capitalised.
B.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. The carrying amountof the replaced part is derecognised. All other repairs and maintenance are charged to profit orloss during the financial period in which they are incurred.
C.Land is not depreciated. Other property, plant and equipment apply cost model and are
depreciated using the straight-line method to allocate their cost over their estimated useful lives.
If each component of property, plant and equipment is significant, it is depreciated separately.
D.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful
lives differ from previous estimates or the patterns of consumption of the assets’ future
economic benefits embodied in the assets have changed significantly, any change is accounted
for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting
Estimates and Errors’, from the date of the change.
The estimated useful lives of property, plant and equipment are as follows:
Buildings
2~55 years
Machinery and equipment
2~10 years
Transportation equipment
3~5 years
Office equipment and miscellaneous equipment
3~5 years(15) Investment property
An investment property is stated initially at its cost and measured subsequently using the costmodel. Except for land, investment property is depreciated on a straight-line basis over its
estimated useful life of 8 ~ 55 years.
(16) Operating lease
Payments made under an operating lease are recognised in profit or loss on a straight-line basis
over the lease term.
(17) Long-term prepaid rents
Long-term prepaid rents include premium paid for land use right of Transcend Shanghai and areamortized over the term of granted period of 50 years using the straight-line method.

~19~

(18) Impairment of non-financial assets
The Group assesses at each balance sheet date the recoverable amounts of those assets where there
is an indication that they are impaired. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higherof an asset’s fair value less costs to sell or value in use. When the circumstances or reasons forrecognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment
loss is reversed. The increased carrying amount due to reversal should not be more than what the
depreciated or amortised historical cost would have been if the impairment had not beenrecognised.
(19) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost; any difference between the proceeds net of transaction costs
and the redemption value is recognised in profit or loss over the period of the borrowings using theeffective interest method.
(20) Notes and accounts payable
Notes and accounts payable are obligations to pay for goods or services that have been acquired in
the ordinary course of business from suppliers. They are recognised initially at fair value andsubsequently measured at amortised cost using the effective interest method. However, short-term
accounts payable without bearing interest are subsequently measured at initial invoice amount as
effect of discounting is immaterial.
(21) Employee benefits
A.Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits
expected to be paid in respect of service rendered by employees in a period and should berecognised as expenses in that period when the employees render service.
B.Pensions(a)Defined contribution plans
For defined contribution plans, the contributions are recognised as pension expenses when
they are due on an accrual basis. Prepaid contributions are recognised as an asset to theextent of a cash refund or a reduction in the future payments.
(b)Defined benefit plansi. Net obligation under a defined benefit plan is defined as the present value of an amount ofpension benefits that employees will receive on retirement for their services with theGroup in current period or prior periods. The liability recognised in the balance sheet inrespect of defined benefit pension plans is the present value of the defined benefit
obligation at the balance sheet date less the fair value of plan assets, together withadjustments for unrecognised past service costs. The defined benefit net obligation is
calculated annually by independent actuaries using the projected unit credit method. The~20~

rate used to discount is determined by using interest rates of government bonds (at thebalance sheet date).
ii. Actuarial gains and losses arising on defined benefit plans are recognised in othercomprehensive income in the period in which they arise.
C.Employees’ bonus and directors’ and supervisors’ remuneration
Employees’ bonus and directors’ and supervisors’ remuneration are recognised as expenses andliabilities, provided that such recognition is required under legal or constructive obligation andthose amounts can be reliably estimated. However, if the accrued amounts for employees’
bonus and directors’ and supervisors’ remuneration are different from the actual distributed
amounts as resolved by the stockholders at their stockholders’ meeting subsequently, thedifferences should be recognised based on the accounting for changes in estimates. The
Group calculates the number of shares of employees’ stock bonus based on the fair value pershare at the previous day of the stockholders’ meeting held in the year following the financial
reporting year, and after taking into account the effects of ex-rights and ex-dividends.
(22) Employee share-based payment
For the equity-settled share-based payment arrangements, the employee services received aremeasured at the fair value of the equity instruments granted at the grant date, and are recognised ascompensation cost over the vesting period, with a corresponding adjustment to equity. The fairvalue of the equity instruments granted shall reflect the impact of market vesting conditions andnon-market vesting conditions. Compensation cost is subject to adjustment based on the service
conditions that are expected to be satisfied and the estimates of the number of equity instrumentsthat are expected to vest under the non-market vesting conditions at each balance sheet date. And
ultimately, the amount of compensation cost recognised is based on the number of equity
instruments that eventually vest.
(23) Income tax
A.The tax expense for the period comprises current and deferred tax. Tax is recognised in profit orloss, except to the extent that it relates to items recognised in other comprehensive income oritems recognised directly in equity, in which cases the tax is recognised in other comprehensive
income or equity.
B.The current income tax expense is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the countries where the Company and its
subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in accordance with applicable tax regulations. It
establishes provisions where appropriate based on the amounts expected to be paid to the tax
authorities. An additional 10% tax is levied on the unappropriated retained earnings and isrecorded as income tax expense in the year the stockholders resolve to retain the earnings.
C.Deferred income tax is recognised, using the balance sheet liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in~21~

the consolidated balance sheet. Deferred income tax is determined using tax rates (and laws)that have been enacted or substantially enacted by the balance sheet date and are expected toapply when the related deferred income tax asset is realised or the deferred income tax liability
is settled.
D.Deferred income tax assets are recognised only to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can be utilised. At eachbalance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E.A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting fromacquisitions of equipment or technology, research and development expenditures to the extent
that it is possible that future taxable profit will be available against which the unused tax
credits can be utilised.
(24) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of newshares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
(25) Dividends
Dividends are recorded in the Company’s financial statements in the period in which they areapproved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock
dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shareson the effective date of new shares issuance.
(26) Revenue recognition
The Group manufactures and sells computer software and hardware, peripheral equipment andother computer components. Revenue is measured at the fair value of the consideration received or
receivable taking into account of returns, rebates and discounts for the sale of goods to externalcustomers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods
should be recognised when the Group has delivered the goods to the customer, the amount of sales
revenue can be measured reliably and it is probable that the future economic benefits associatedwith the transaction will flow to the entity. The delivery of goods is completed when thesignificant risks and rewards of ownership have been transferred to the customer, the Groupretains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold, and the customer has accepted the goods based on thesales contract or there is objective evidence showing that all acceptance provisions have beensatisfied.
(27) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to thechief operating decision-maker. The chief operating decision-maker, who is responsible forallocating resources and assessing performance of the operating segments, has been identified as
the Chairman of the Board who makes strategic decisions.

~22~

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF
ASSUMPTION UNCERTAINTY
The preparation of these consolidated financial statements requires management to make criticaljudgements in applying the Group’s accounting policies and make critical assumptions and estimatesconcerning future events. Assumptions and estimates may differ from the actual results and arecontinually evaluated and adjusted based on historical experience and other factors. Such assumptions
and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year; and the related information is addressed below:(1) Critical judgements in applying the Group’s accounting policies
Investment property
The Group uses part of the property for its own use and part to earn rentals or for capital
appreciation. When the portions cannot be sold separately and cannot be leased separately underfinance lease, the property is classified as investment property only if the own-use portion accountsof the property is not material.
(2) Critical accounting estimates and assumptions
A.Impairment assessment of investments accounted for using equity method
The Group assesses the impairment of an investment accounted for using equity method as soon
as there is any indication that it might have been impaired and its carrying amount cannot berecoverable. The Group assesses the recoverable amounts of an investment accounted for using
equity method based on the present value of expected future cash flows from the investee, andanalyzes the reasonableness of related assumptions.
B.Realisability of deferred income tax assets
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profit will be available against which the deductible temporary differences can be utilised.
Assessment of the realisability of deferred income tax assets involves critical accounting
judgements and estimates of the management, including the assumptions of expected future sales
revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc.
Any variations in global economic environment, industrial environment, and laws andregulations might cause material adjustments to deferred income tax assets.
As of December 31, 2014, the Group recognised deferred income tax assets amounting to$92,319.
C.Evaluation of inventories
As inventories are stated at the lower of cost and net realisable value, the Group must determine
the net realisable value of inventories on balance sheet date using judgements and estimates.
Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory
comsumption, obsolete inventories or inventories without market selling value on balance sheet
date, and writes down the cost of inventories to the net realisable value. Such an evaluation of
inventories is principally based on the demand for the products within the specified period in the
future. Therefore, there might be material changes to the evaluation.
As of December 31, 2014, the carrying amount of inventories was $6,364,987.

~23~

6. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and cash equivalents

Cash on hand and petty cash
Checking accounts and demand deposits
Time deposits
Cash equivalents Bond with repurchase agreement
Total

December 31, 2014$
1,523
2,245,438
8,925,923

December 31, 2013$
736
5,608,593
5,985,468

392,460
11,565,344

44,708
11,639,505$$

A.The Group transacts with a variety of financial institutions all with high credit quality to disperse
credit risk, so it expects that the probability of counterparty default is remote. The Group’s
maximum exposure to credit risk at balance sheet date is the carrying amount of all cash andcash equivalents.
B.Cash and cash equivalents pledged as collateral had been reclassified as ‘other non-current assets’in the amount of $2,981 as of December 31, 2013. Please refer to Note 8 for details. As of
December 31, 2014, the Group had no cash and cash equivalents pledged to others.
C.As of December 31, 2014 and 2013, the bond with repurchase agreement recognized as cash
equivalents is 30-day highly-liquid investments with annual interest rate of 1.50%.
(2) Financial assets at fair value through profit or loss
Items
December 31, 2014
December 31, 2013

Current item :Financial assets held for trading
Non-hedging derivatives$

53,545$-

A.The Group recognized net gain of $104,559 and $29,979 on financial assets held for trading forthe years ended December 31, 2014 and 2013, respectively.
B.The non-hedging derivative instrument transactions and contract information are as follows:
December 31, 2014
Derivative Instruments
Current items:
Forward foreign exchange
contracts
〞
〞
〞
〞
〞

Contract Amount(Notional Principal)

EUR
〞
〞
〞
JPY
〞

Contract Period

16,000 November 6, 2014 to April 20, 2015
4,200 November 25, 2014 to April 23, 2015
5,200 November 25, 2014 to May 18, 2015
3,900 December 10, 2014 to June 8, 2015
1,910,000 November 10, 2014 to April 27, 2015
800,000 December 10, 2014 to June 8, 2015

~24~

The Group entered into forward foreign exchange contracts to buy USD (sell EUR and JPY) tohedge exchange rate risk of export proceeds. However, these forward foreign exchange contracts
are not accounted for under hedge accounting.
C.The Group has no financial assets at fair value through profit or loss pledged to others.
(3) Current bond investments without active markets
Items

December 31, 2014

Current items：
Funds-bonds
Bond with repurchase agreement$$

51,500585,525
637,025

December 31, 2013$$

49,18574,513
123,698

A.The counterparties of the Group’s fund investments, namely Industrial and Commercial Bank of
China, Bank of China, China Construction Bank, Shanghai Pudong Development Bank andFubon Bank (China) Co, Ltd., are well-known banks in the People’s Republic of China. The
bond with repurchase agreements is sold by Yuanta Asset Management Limited. The maximum
exposure to credit risk at balance sheet date is the carrying amount of bond investments without
active markets.
B.The Group recognised gain on disposal of financial assets of $13,023 and $15,719 in profit orloss for the years ended December 31, 2014 and 2013, respectively.
C.No bond investments without active market were pledged to others.
(4) Accounts receivable
December 31, 2014$

Accounts receivable
Less: Allowance for bad debts($

December 31, 2013

3,026,355 $
33,224) (2,993,131 $2,779,323
47,322)
2,732,001

A.The Group has insured credit insurance that covers accounts receivable of its major customers.
Should bad debt occur, the Group will receive 90% of the losses resulting from non-payment.
B.The ageing analysis of accounts receivable that were past due but not impaired is as follows：

December 31, 2014
Up to 30 days
31 to 90 days
91 to 180 days$$

620,543
19,446
1,037
641,026

December 31, 2013$$

656,958
20,3391,775
679,072

The above ageing analysis was based on past due date.
C.Movement analysis of financial assets that were impaired is as follows:(a)As of December 31, 2014 and 2013, the Group’s accounts receivable that were impaired
amounted to $33,224 and $47,322, respectively.

~25~

(b)Movements on the Group provision for impairment of accounts receivable are as follows:
2014
2013
Individual provision
Individual provision$
47,322 $57,267
13,20014,900(27,577) (24,845)279$
33,224 $47,322

At January 1
Provision for impairment
Write-offs during the year
Net exchange differences
At December 31

D.The credit quality of accounts receivable that were neither past due nor impaired was in thefollowing categories based on the Group’s Credit Quality Control Policy:

December 31, 2014$
905,678
1,446,427$
2,352,105

Group 1
Group 2

December 31, 2013$
682,540
1,370,389$
2,052,929

Group 1:Customers with credit line under $20,000, including a comprehensive consideration ofrevenues, capital, and operational performance.
Group 2:Customers with credit line over $20,000, including a comprehensive consideration ofrevenues, capital, and operational performance.
E.The Group’s maximum exposure to credit risk as of December 31, 2014 and 2013 was the
carrying amount of every class of receivables less 90% of insurance claims.
F.The Group does not hold any collateral as security.
(5) Inventories

Raw materials
Work in progress
Finished goods
Total

Raw materials
Work in progress
Finished goods
Total

$

$

$

$

Cost
3,864,256
856,658
1,771,056
6,491,970

December 31, 2014
Allowance forvaluation loss($
85,740) $(14,430)(26,813)($
126,983) $Book value
3,778,516
842,228
1,744,243
6,364,987

Cost
2,581,990
1,057,654
1,513,269
5,152,913

December 31, 2013
Allowance forvaluation loss($
24,610) $(7,210)(
45,154)($
76,974) $Book value
2,557,380
1,050,444
1,468,115
5,075,939~26~

A.The cost of inventories recognized as expense:

For the years ended December 31,
2014
2013
Cost of inventories sold
Loss on (gain on reversal of) inventory
write-down$

21,628,621$

21,210,811$

50,009 (21,678,630 $

9,668)
21,201,143

The reversal of inventory write-down for the year ended December 31, 2013 was caused by theprice recovery of certain finished goods affecting the allowance of valuation loss on certain raw
materials, work-in-process goods, and finished goods.
B.No inventories were pledged to others.
(6) Non-current available-for-sale financial assets
Items

December 31, 2014

Non-current items：
Listed stocks
OthersSubtotal
Valuation adjustments of available-for-salefinancial assets
Accumulated impairment
Total

December 31, 2013$

281,930
31,125313,055$

281,930
31,125313,055(($

50,416) (30,000) (232,639 $

18,633)30,000)264,422

A.The Group recognized ($31,783) and $2,085 in other comprehensive (loss) income for fair valuechange for the years ended December 31, 2014 and 2013, respectively.
B.Equity investment in Taiwan IC Packaging Corporation was initially recognized asavailable-for-sale financial assets. On June 17, 2013, as resolved by the Board of Directors andthe shareholders’ meeting, the Group and Group’s Chairman of the Board were elected as adirector and the Chairman of the Board of Taiwan IC Packaging Corporation, respectively.
Pursuant to the above, the Group gained significance influence on Taiwan IC Packaging
Corporation. The Group, in accordance with IFRS, reclassified the investment to investment
accounted for using equity method for the amount of $251,658. Please refer to Note 6(7) for
details.
C.No available-for-sale financial assets were pledged to others.

~27~

(7) Investments accounted for using equity method
A.Details are as follows:
December 31, 2014
Percentage ofInvestee Company
ownership
Taiwan IC Packaging Corp.
12.88

Book value$
332,593

December 31, 2013
Percentage ofownership
13.55

Book value$
221,255

Taiwan IC Packaging Corporation issued new shares in September 2014. The Group subscribedfor 10,843 thousands of new shares, increasing the book value of investments accounted forusing equity method by $103,008. The percentage of ownership decreased to 12.88% after thesubscription.
B.The financial information of the Company’s principal associates is summarized below:
Assets
December 31, 2014
Taiwan IC$ 4,042,285
Packaging Corp.
December 31, 2013
Taiwan IC$ 3,051,768
Packaging Corp.

Liabilities

Revenue

Profit (Loss) % interest held$

477,923$ 2,218,278$

56,28512.88%$

504,558$ 2,249,714 ($405,554)

13.55%

C.Share of gain (loss) of investments accounted for using the equity method are as follows:
For the years ended December 31,
2014
2013
Investee Company$
8,330 ($
30,403)
Taiwan IC Packaging Corp.
D.The Group’s investment in Taiwan IC Packaging Corporation has quoted market price. The fairvalue of Taiwan IC Packaging Corporation was $521,022 and $291,100 as of December 31,
2014 and 2013, respectively.
E.The investment loss for the year ended December 31, 2013 was recognized based on the financial
statements of the investee company which was audited by other independent accountants.
F.The investment in Taiwan IC Packaging Corporation was reclassified from the non-current
available-for-sale financial assets. Please refer to Note 6(6)B for details.

~28~

(8) Property, plant and equipment
Land

Buildings$

729,847 $- (729,847 $2,780,284 $
648,599) (2,131,685 $

863,765 $431,096) (432,669 $

12,411 $
9,238) (3,173 $

53,981 $39,088) (14,893 $71,969 $53,361) (18,608 $

4,512,257
1,181,382)
3,330,875

2014
Opening net book amount$
Additions(including transfer)
Disposals
Depreciation charge
Net exchange differences(
Closing net book amount$

729,847 $- (5,644)
724,203 $2,131,685 $
2,705
- (
117,237) (27,351
2,044,504 $

432,669 $
28,736
8,875) (100,845) (5,023
356,708 $3,173 $
1,624
190) (
1,435) (110 (3,282 $

14,893 $2,241908) (
4,131) (124)
11,971 $18,608 $
8,113
1,766) (5,061) (412
20,306 $3,330,875
43,41911,739)228,709)
27,1283,160,974

724,203 $- (724,203 $2,774,759 $
730,255) (2,044,504 $

824,587 $467,879) (356,708 $9,402 $
6,120) (3,282 $

48,271 $36,300) (11,971 $64,797 $44,491) (20,306 $4,446,019
1,285,045)
3,160,974

At January 1, 2014
Cost
Accumulated depreciation

At December 31, 2014
Cost
Accumulated depreciation$$$

Machinery~29~

VehiclesOfficeEquipment

OthersTotal

Buildings$

748,603 $- (748,603 $2,722,444 $
517,899) (2,204,545 $

814,401 $
330,516) (483,885 $

17,820 $12,575) (5,245 $

52,365 $35,873) (16,492 $66,298 $51,177) (15,121 $4,421,931
948,040)
3,473,891

2013
Opening net book amount$
Additions(including transfer)
Disposals
Depreciation charge
Net exchange differences(
Closing net book amount$

748,603 $- (18,756)
729,847 $2,204,545 $
4,189
- (
118,452) (41,403
2,131,685 $

483,885 $
39,381
4,644) (99,097) (13,144
432,669 $5,245 $
167) (
2,049) (144
3,173 $

16,492 $3,109237) (
4,716) (245
14,893 $15,121 $
9,735815) (
6,139) (706
18,608 $3,473,891
56,414
5,863)
230,453)
36,8863,330,875

729,847 $- (729,847 $2,780,284 $
648,599) (2,131,685 $

863,765 $431,096) (432,669 $

12,411 $
9,238) (3,173 $

53,981 $39,088) (14,893 $71,969 $53,361) (18,608 $

4,512,257
1,181,382)
3,330,875

At January 1, 2013
Cost
Accumulated depreciation

At December 31, 2013
Cost
Accumulated depreciation$$$

Machinery

VehiclesOfficeEquipment

Land

OthersInformation about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

~30~

Total

(9) Investment property
Land
At January 1, 2014
Cost
Accumulated depreciation and impairment

$
$

2014
Opening net book amount
Additions
Depreciation charge
Net exchange differences
Closing net book amount$$At December 31, 2014
Cost
Accumulated depreciation and impairment

$
$

$
$

2013
Opening net book amount
Depreciation charge
Net exchange differences
Closing net book amount$$At December 31, 2013
Cost
Accumulated depreciation and impairment

$
$

~31~

Total

137,037 $- (137,037 $

232,509 $66,314) (166,195 $369,546
66,314)
303,232

137,037 $- (137,037 $

166,195 $345
7,838) (2,875
161,577 $

303,232
345
7,838)
2,875
298,614137,037 $- (137,037 $236,633 $
75,056) (161,577 $

373,670
75,056)298,614Land
At January 1, 2013
Cost
Accumulated depreciation and impairment

Buildings

Buildings

Total

137,037 $- (137,037 $

226,931 $57,696) (169,235 $

363,968
57,696)306,272

137,037 $- (137,037 $

169,235 $7,694) (4,654
166,195 $306,272
7,694)
4,654
303,232

137,037 $- (137,037 $

232,509 $66,314) (166,195 $369,546
66,314)
303,232

A.Rental income from the investment property and direct operating expenses arising frominvestment property are shown below:
For the years ended December 31,
2014
2013
$
17,165 $15,463
Rental income from investment property
Direct operating expenses arising frominvestment property that generated rental$
6,940 $
6,849
income in the year
Direct operating expenses arising frominvestment property that did not generate
$
898 $
845
rental income in the year
B.The fair value of the investment property held by the Group was $1,829,038 and $1,027,201 as ofDecember 31, 2014 and 2013, respectively, which was based on the transaction prices of similar
properties in the same area.
C.No investment property was pledged to others.
(10) Other non-current assets
December 31, 2014$
117,884
67,592
48,762$
234,238

Long-term prepaid rents
Guarantee deposits paid
Others

December 31, 2013$
116,669
34,58132,441$
183,691

In May 2005, the Group signed a land-use right contract with the People's Republic of China for
the use of land with a term of 50 years. All rentals had been paid on the contract date. The Group
recognized rental expenses of $2,819 and $2,766 for the years ended December 31, 2014 and 2013,
respectively.
(11) Short-term borrowings
Type of borrowings
Bank borrowings:
SecuredDecember 31, 2014

Interest rate

Collateral$

396,900

0.63~0.64%
0.93~0.95%$

506,400
903,300

Transcend Japan’sLand and Buildings-

December 31, 2013

Interest rate

Collateral
Transcend Japan’sLand and Buildings-

UnsecuredType of borrowings
Bank borrowings:
Secured

$283,900

0.65%
2.46%

$

295,140
579,040

Unsecured~32~

(12) Pensions
A.(a)The Company has a defined benefit pension plan in accordance with the Labor Standards
Law, covering all regular employees’ service years prior to the enforcement of the Labor
Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue
to be subject to the pension mechanism under the Law. Under the defined benefit plan, twounits are accrued for each year of service for the first 15 years and one unit for each
additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on
the number of units accrued and the average monthly salaries and wages of the last 6 months
prior to retirement. The Company contributes monthly an amount equal to 2% of theemployees’ monthly salaries and wages to the retirement fund deposited with the Bank of
Taiwan, the trustee, under the name of the independent retirement fund committee.
(b)The amounts recognized in the balance sheet are determined as follows:

December 31, 2014
December 31, 2013$
50,576 $55,354(27,307) (31,206)$23,269 $24,148Present value of funded obligations
Fair value of plan assets
Net liability in the balance sheet(c)Changes in present value of funded obligations are as follows:

2014
Present value of funded obligations
At January 1
Current service cost
Interest cost
Actuarial loss (profit)
Benefits paid
Curtailment and settlement
At December 31$

2013
55,354 $
857
1,104
220 (
2,316) (4,643) (50,576 $(($72,6451,355
1,086
5,673)
3,256)
10,803)55,354(d)Changes in fair value of plan assets are as follows:

2014
Fair value of plan assets
At January 1
Expected return on plan assets
Actuarial profit (loss)
Contributions
Benefits paid
Settlement
At December 31

$

(
(
$

~33~

2013
31,206 $
641
134 (
2,693
2,316) (5,051) (27,307 $43,205
772
286)
2,808
3,256)
12,037)
31,206

(e)Amounts of expenses recognized in statements of comprehensive income are as follows:
2014
Current service cost
Interest cost
Expected return on plan assets
Curtailment or settlement loss
Current pension costs

$

2013
857 $
1,104
641) (
409
1,729 $

(
$

1,355
1,086
772)
1,235
2,904

Details of cost and expenses recognized in comprehensive income statements are as follows:
2014
Cost of sales
Selling expenses
General and administrative expenses
Research and development expenses

$

2013
998 $
463
112
156
1,729 $

$

1,394
803
299
408
2,904

(f)Amounts recognized under other comprehensive (loss) income are as follows:

2014
($
$

Recognition for current year
Accumulated amount

2013
86) $
24,618 $5,387
24,704(g)The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic
subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment
and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard andUtilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund
includes deposit in domestic or foreign financial institutions, investment in domestic or
foreign listed, over-the-counter, or private placement equity securities, investment indomestic or foreign real estate securitization products, etc.). With regard to the utilisation of
the Fund, its minimum earnings in the annual distributions on the final financial statements
shall be no less than the earnings attainable from the amounts accrued from two-year time
deposits with the interest rates offered by local banks. The constitution of fair value of plan
assets as of December 31, 2014 and 2013 is given in the Annual Labor Retirement Fund
Utilisation Report published by the government. Expected return on plan assets was a
projection of overall return for the obligations period, which was estimated based on
historical returns and by reference to the status of Labor Retirement Fund utilisation by the
Labor Pension Fund Supervisory Committee and taking into account the effect that theFund’s minimum earnings in the annual distributions on the final financial statements shallbe no less than the earnings attainable from the amounts accrued from two-year time
deposits with the interest rates offered by local banks.
The Company’s actual return of plan assets was $774 and $486 for the years ended
December 31, 2014 and 2013, respectively.

~34~

(h)The principal actuarial assumptions used were as follows:
2014
2.00%
2.00%
1.75%

Discount rate
Future salary increases
Expected return on plan assets

2013
2.00%
2.00%
1.75%

Assumptions regarding future mortality experience are set based on actuarial advice inaccordance with published statistics and experience in each territory.
(i)Historical information of experience adjustments was as follows:

2014
Present value defined
benefit obligations
Fair value of plan assets
Deficit in the plan
Experience adjustmentson plan liabilities
Experience adjustmentson plan assets

$

2013

2012

$

50,576 $27,307) (23,269 $55,354 $31,206) (24,148 $72,645
43,205)29,440$285$

1,070 ($

23,199)$134 ($

286) ($

534)((j)Expected contributions to the defined benefit pension plans of the Group within one year
from December 31, 2014 amounts to $1,097.
B.(a)Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined
contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),
covering all regular employees with R.O.C. nationality. Under the New Plan, the Company
and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’monthly salaries and wages to the employees’ individual pension accounts at the Bureau ofLabor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of
employment.
(b)The Group’s mainland subsidiaries have a defined contribution plan. Monthly contributions
to an independent fund administered by the government in accordance with the pension
regulations in the People’s Republic of China (PRC) are based on certain percentage of
employees' monthly salaries and wages, ranging from 12.5% to 22%. Other than the monthly
contributions, the Group has no further obligations.
(c)Transcend Japan, Transcend Korea, Transcend USA, Transcend Europe and Transcend
Germany have a defined contribution plan. Monthly contributions are based on a certain
percentage of employees’ monthly salaries and wages and are recognized as pension costs
accordingly. Other than the monthly contributions, the Group has no further obligations.
(d)The pension costs under defined contribution pension plans of the Group for the years ended
December 31, 2014 and 2013 were $45,243 and $41,561, respectively.

~35~

(13) Share capital
As of December 31, 2014, the Company’s authorized capital was $5,000,000, consisting of
500,000 thousand shares of ordinary stock (including 25 thousand shares reserved for employee
stock options). The paid-in capital was $4,307,617 with a par value of $10 (in dollars) per share,
and consisting of 430,762 thousand shares of ordinary stock outstanding. All proceeds from sharesissued have been collected.
(14) Capital surplus
Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of parvalue on issuance of common stocks and donations can be used to cover accumulated deficit or toissue new stocks or cash to shareholders in proportion to their share ownership, provided that theCompany has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requiresthat the amount of capital reserve to be capitalized mentioned above should not exceed 10% of thepaid-in capital each year. Capital reserve shall not be used to cover accumulated deficit unless thelegal reserve is insufficient.
(15) Retained earnings
A.In accordance with the Company’s Articles of Incorporation, the current year’s earnings, if any,
shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of theremaining amount shall be set aside as legal reserve. The Company shall also set aside special
reserve in accordance with the regulations. On the premise that there is no effect on the
Company’s normal operations and no violation of regulations, the Company shall reserve
certain amount for maintaining stability of dividends. The remainder, if any, is distributableearnings. When distributing earnings, the Company shall appropriate 0.2% of the total
distributable amount as the directors’ and supervisors’ remuneration. Bonus distributed to theemployees shall account for at least 1% of the total distributable earnings. The remainder to beappropriated shall be resolved by stockholders at the stockholders’ meeting, and cash dividends
shall account for at least 5% of the total dividends distributed.
B.The Company distributes dividends taking into consideration the Company's economic
environment and growth phases, future demands of funds, long-term financial planning, andthe cash flows that the stockholders desire. Cash dividends shall account for at least 5% of thetotal dividend distributed.
C.Except for covering accumulated deficit or issuing new stocks or cash to shareholders inproportion to their share ownership, the legal reserve shall not be used for any other purpose.
The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to theirshare ownership is permitted, provided that the distribution of the reserve is limited to the
portion in excess of 25% of the Company’s paid-in capital.
D.In accordance with the regulations, the Company shall set aside special reserve from the debit
balance on other equity items at the balance sheet date before distributing earnings. When debit
balance on other equity items is reversed subsequently, the reversed amount could be included~36~

in the distributable earnings.
E.For the years ended December 31, 2014 and 2013, employees’ bonus was accrued at $33,620
and $58,849, respectively, which was based on a certain percentage prescribed by theCompany's Articles of Incorporation of net profit after taking into account the legal reserve andother factors (under the Company’s Articles of Incorporation, bonus distributed to theemployees shall account for at least 1% of total distributable earnings for the years ended
December 31, 2014 and 2013, respectively.)
Information about the appropriation of employees’ bonus and directors’ and supervisors’
remuneration by the Company as proposed by the Board of Directors and resolved by thestockholders will be posted in the “Market Observation Post System” at the website of the
Taiwan Stock Exchange.
F.(a)The appropriation of earnings and distribution of capital reserve of years 2013 and 2012 hadbeen resolved at the stockholders’ meeting on June 12, 2014 and June 13, 2013, respectively.
Details are summarized below:
2013

Legal reserve
Cash dividends
Cash distribution from
capital reserve
Total

$

$

Amount319,896
2,886,103

2012
Dividends
per share(in dollars)
$

$

6.7

3,205,999$

Amount284,538
2,584,571$$$

215,3813,084,490

2013
Directors' and supervisors' remuneration
Employees' cash bonus

Dividends
per share(in dollars)
6.0
0.5

2012
5,192
25,962
31,154$$

5,166
85,361
90,527

The above appropriation of 2013 and 2012 earnings as resolved by the shareholders was inagreement with those amounts recognized in the 2013 and 2012 financial statements.

~37~

(b)The appropriation of earnings for the year of 2014 was proposed by the Board of Directors on
March 12, 2015. Details are summarized below:
2014
Dividends per share
Amount(in dollars)
Legal reserve$373,5213,359,941 $Cash dividends
7.8$
3,733,462
Total
Note:
2014
Directors’ and supervisors’ remuneration$
6,049
30,243
Employees’ cash bonus$
36,292
The above appropriation of earnings of 2014 and legal reserve has yet to be resolved by theshareholders as of March 12, 2015.
(16) Share-based payment-employee compensation plan
A.The Company’s share-based payment transactions were set forth below:

Type ofarrangement
Employee stock
options

Grant date2007.10.15

Expiry date2013.10.5

Quantity
granted(in thousands)
4,536

Contract
period6 years

Vesting
conditions
2 years’
service

B.The fair value of stock options granted on October 15, 2007 is measured using theBlack-Scholes option-pricing model. Relevant information is as follows:

Type ofarrangement
Employeestock options

Stock
Grant dateprice2007.10.15 $ 120

Exercise
price
$
120

~38~

Expected

Expected

Expected

Risk-free

pricevolatility
39.68%

vesting
period4.375
years

dividend
yield rate
0%interest
rate
2.61%

Fair value
per unit$ 43.32

C.Detail of the employee stock options are set forth below:
For the years ended December 31,
2014
2013
WeightedWeightedaverage
averageNo. of shares exercise price No. of shares exercise price(in thousands) (in dollars) (in thousands) (in dollars)
Options outstanding at
beginning of period
Options expired
Options outstanding at endof period
Options exercisable at endof period

$

-

$

- $
- (

1,192 $
1,192)

107.8
107.8

-

-

-

-

-

-

-

-

As of December 31, 2014 and 2013, the Company has no options outstanding.
D.The Company has no expense incurred on share-based payment transactions for the years ended
December 31, 2014 and 2013.
(17) Other equity items

At January 1, 2014
Change in unrealized gains orlosses for available-for-salefinancial assets
Cumulative translationdifferences for foreign
operations
Effect from income tax
At December 31, 2014

Unrealised gain
Cumulative
or loss ontranslation differences
available-for-salefor foreign
financial assets
operations($
18,633) $27,764 $(31,783)($- (50,416) $

~39~

Total
9,131

- (

31,783)92,96815,805) (104,927 $92,96815,805)54,511At January 1, 2013
Change in unrealized gains orlosses for available-for-salefinancial assets
Cumulative translationdifferences for foreign
operations
Effect from income tax
At December 31, 2013

Unrealised gain
Cumulative
or loss ontranslation differences
available-for-salefor foreign
financial assets
operations($
20,718) ($95,549) ($

($

Total
116,267)

2,085

-

2,085

- (
18,633) $148,571
25,258) (27,764 $148,571
25,258)9,131(18) Operating revenue

Sales revenue$

For the years ended December 31,
2014
2013
27,219,495 $
26,122,390(19) Other income

Interest income
Rental revenue
Total

$
$

For the years ended December 31,
2014
2013
176,359 $
115,182
17,165
15,463
193,524 $
130,645(20) Other gains and losses
For the years ended December 31,
2014
2013
Net gain on financial assets at fair value
through profit or loss
Gain on disposal of financial assets(Loss) gain on disposal of property, plantand equipment
Net currency exchange gain
Dividend income
Others
Total

$

(

$

~40~

104,559
13,023$29,979112,397

1,800)
304,389
13,781
26,069460,021 $

1,916
93,261
15,07439,609292,236

(21) Expenses by nature

Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses
Depreciation on property, plant andequipment (including investment property)

For the years ended December 31,
2014
2013
1,561,989 $
1,323,077
177,181
142,567
46,972
44,46562,362
69,216$

236,547

238,147(22) Income tax
A.Income tax expense(a)Components of income tax expense:
For the years ended December 31,
2014
2013
Current tax:
Current tax on profits for the year
Prior year income tax underestimatedTotal current tax
Deferred tax:
Origination and reversal of temporary
differences
Total deferred tax
Income tax expense$$

572,765
32,357605,122$

60,62760,627665,749$

476,410
13,505489,915

49,272
49,272539,187(b)The income tax relating to components of other comprehensive income is as follows:
For the years ended December 31,
2014
2013
Cumulative translation differences
for foreign operations$

15,805$25,258B.Reconciliation between income tax expense and accounting profit:

For the years ended December 31,
2014
2013
Tax calculated based on profit before tax
and statutory tax rate
Effects from items disallowed by tax
regulation
Effect from investment tax credit
Prior year income tax underestimatedEffect from Alternative Minimum Tax
Income tax expense

~41~

$

770,780 $690,396(

156,067) (- (32,357
18,679665,749 $

182,348)
17,270)13,50534,904539,187$

C.Amounts of deferred tax assets or liabilities as a result of temporary difference are as follows:
For the year ended December 31, 2014
Recognisedin other
Recognised in comprehensive
profit or loss
incomeAt December 31

At January 1
Deferred tax liabilities
Over provision ofallowance for doubtful
accounts
Amount of pension
recognized overamount contributed
Unused compensatedabsences
Unrealised sales
discounts andallowances
Unrealised gross margin
Unrealised loss onmarket price decline
and obsolete and slowmoving inventory
Others
Total
Deferred tax liabilities
Unrealised exchange
gain
Valuation gain on
financial assets
Unrealised gain on
disposal of financial
assetsCumulativetranslation differences
for foreign operations
differences
Net gain on investments
accounted for using
equity method
Others
Total

$

$

9,400

$

3,040

7,738 (

- $12,440

240)

-

7,498

4,082

2,613

-

6,695

13,54923,929 (4,095
6,071)-

17,644
17,85813,133
7,084
78,9158,504
1,463
13,404- $21,637
8,547
92,319

$

$

$

($

1,340) ($- (44,182) $- ($45,522)

4,153)- (4,153)- (16,435)(

16,435)-(41,064)- (15,805) (56,869)((($336,331) (372)
395,542) ($25,725)29
74,031) ($- (- (15,805) ($362,056)343)
485,378)~42~

For the year ended December 31, 2013
Recognisedin other
Recognised incomprehensive
profit or loss
incomeAt December 31

At January 1
Deferred tax assets
Over provision ofallowance for doubtful
accounts
Amount of pension
recognised overamount contributed
Unused compensatedabsences
Unrealised sales
discounts andallowances
Unrealised gross margin
Unrealised loss onmarket price decline
and obsolete and slowmoving inventory
Unrealised exchange
loss
Others
Total
Deferred tax liabilities
Unrealised exchange
gain
Unrealised gain on
disposal of financial
assetsCumulativetranslation differences
for foreign operations
differences
Net gain on investments
accounted for using
equity method
Others
Total

$

7,437

$

1,963

7,845 (

- $

9,400

107)

-

7,738

1,411

2,671

-

4,082

9,096
22,224

4,453
1,705

-

13,54923,92914,775 (1,642)-

13,133$8,569 (
12,957 (84,314 ($8,569)
5,873)
5,399) $

- $

7,084
78,915$- ($1,340) $- ($1,340)- (16,435)- (16,435)- (25,258) (41,064)25,726)372)
43,873) ($- (- (25,258) ($336,331)372)
395,542)(

15,806)(

310,605) (- (326,411) ($

($

~43~

$

D.The amounts of deductible temporary difference that are not recognized as deferred tax assets
are as follows:
December 31, 2014
December 31, 2013$
73,173 $73,173
Deductible temporary differences
E.The investment plan of the Company to increase capital to expand business of “manufacturingof computers, electronic products and optical products, printing and reproduction of recorded
media, and computer system designing services” qualified for “The Guidelines for the
Calculation of Exempt Income for the Five-year Profit-seeking Enterprise Income Tax
Exemption by Manufacturing Industries and their Related Technical Services Industries
Increasing New Investment from July 1, 2008 to December 31, 2009”, which indicates theCompany is entitled to operating income tax exemption for 5 consecutive years (ending
December 2016).
F.As of December 31, 2014, the Company’s income tax returns through 2012 have been assessed
and approved by the National Taxation Bureau of Taipei, Ministry of Finance.
G.Unappropriated retained earnings:

December 31, 2014$
121,097
8,383,070$
8,504,167

Earnings generated in and before 1997
Earnings generated in and after 1998

December 31, 2013$
121,097
7,853,950$
7,975,047

H.As of December 31, 2014 and 2013, the balance of the imputation tax credit account was$971,495 and $1,028,831, respectively. The creditable tax rate was 15.89% for 2013 and isestimated to be 14.82% for 2014.

~44~

(23) Earnings per share
For the year ended December 31, 2014
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)
Basic earnings per share
Profit attributable to owners of parent
Diluted earnings per share
Profit attributable to owners of parent
Dilutive potential ordinary shares :Employees’ bonus
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares

Basic earnings per share
Profit attributable to owners of parent
Diluted earnings per share
Profit attributable to owners of parent
Dilutive potential ordinary shares :Employees’ bonus
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares$

3,735,205

430,762$

3,735,205

430,762

-

445

$

8.67

3,735,205
431,207 $8.66
For the year ended December 31, 2013
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)$

3,198,957

430,762$

3,198,957

430,762-982

3,198,957

431,744

$

$

$

7.43

$

7.41

(24) Operating leases
A.The Group leases land and buildings to others under operating lease agreements. Rental revenueof $17,165 and $15,463 were recognized for these leases in profit or loss for the years ended
December 31, 2014 and 2013, respectively. The leases for buildings have terms expiring
between 2016 and 2017, and all these lease agreements are not renewable at the end of thelease period. The future aggregate minimum lease payments receivable under non-cancellable
operating leases are as follows:
Not later than one year
Later than one year but not later than
five years

December 31, 2014$
19,085

December 31, 2013$
10,05924,21843,303

17,64027,699$~45~$

B.On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won
Chin and Cheng Chuan, to build a new plant on the leased land. The lease has a term of 10
years from April 10, 2009 to April 9, 2019. The annual rental payment is $35,633 (exclusive oftax), which was determined based on the average rent of land near the leased land shown in theappraisal report issued by CCIS Real Estate Joint Appraisers Firm. Rent was paid on thecontract date and becomes payable on the same date each following year until the end of thelease. The future aggregate minimum lease payments payable under non-cancellable operatingleases are as follows:
Not later than one year
Later than one year but not later than
five years
Later than five years

December 31, 2014$
37,415

December 31, 2013$
37,415

124,716
162,131

149,659
12,472
199,546$$

7. RELATED PARTY TRANSACTIONS(1) Significant transactions and balances with related parties
A.Sales
For the years ended December 31,
2014
2013
Sales of goods－Entity controlled by theGroup's key management

$

-

$

240,688

The sales prices charged to related parties are almost equivalent to those charged to third parties.
The credit term to Transcend H.K. is 120 days. The credit term to third parties is 30 to 60 days
after monthly billings.
B.Purchases of goods
For the years ended December 31,
2014
Purchases of goods－Investments accounted
for using equity method$

2013
368,841$

164,227

The purchase prices charged by related parties are almost equivalent to those charged by third
parties. The credit term from Taiwan IC Packaging Corporation is 30 days after monthly billings.
The credit term from third parties is 30 to 45 days after monthly billings.
C.Accounts payable
December 31, 2014
Payables to related parties－Investments
accounted for using equity method$

74,185

December 31, 2013$

45,801The payables to related parties arise mainly from purchase transactions and are due 30 days after
the date of purchase. The payables bear no interest.
~46~

D.Property transactions
Disposal of property, plant and equipment:
For the year ended December 31, 2014, the Group sold property, plant and equipment to Taiwan
IC Packaging Corporation, the investment accounted for using equity method, at book value of$10,497. In addition to the above disposal transactions, the Group made purchases of property,
plant, and equipment on behalf of Taiwan IC Packaging Corporation in the amount of $3,874.
As of December 31, 2014, all receivables were collected.
The Group had no property transactions for the year ended December 31, 2013.
E.Lease contracts
On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won
Chin and Cheng Chuan, to build a new plant on the leased land. Please refer to Note 6(24) for
details.
(2) Compensation of key management

Salaries and other short-term employee benefits$

For the years ended December 31,
2014
2013
97,163 $92,151

8. PLEDGED ASSETSThe Group’s assets pledged as collateral are as follows:
Nature of assets
Property, plant and equipment

Book value
December 31, 2014 December 31, 2013$
957,822 $979,500

Other non-current assets
Time deposit$

957,822$

2,981
982,481

Pledge purpose
Long-term andshort-term loans
Patent deposit

9. COMMITMENTS AND CONTINGENT LIABILITIESAs of December 31, 2014, except for the provision of endorsements and guarantees mentioned in Note13(1)B and the lease contract described in Notes 6(24) and 7(1)E, there are no other commitments andcontingent liabilities.

~47~

10. SIGNIFICANT CATASTROPHE
None.
11. SIGNIFICANT SUBSEQUENT EVENT
Please refer to Note 6(15)F(b).
12. OTHERS(1) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue asa going concern in order to provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue newshares or sell assets to reduce debt. The Group’s own funds are currently sufficient, daily
operations can create stable cash inflows, and there are no significant capital expenditure plans inthe short term. Except for obtaining loans to reduce the exchange rate exposure, the Group has
sufficient funds to cover its own needs. Debt financing is not desirable and not necessary.
(2) Financial instruments
A.Fair value information of financial instruments
The carrying amount of financial instruments which are not measured at fair value (including
cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-termborrowings, notes payable, accounts payable, other payables, current bond investment without
active market and other financial assets (presented as “other non-current asset’’)) areapproximate to their fair values. The fair value information of financial instruments measured
at fair value is provided in Note 12(3).
B.Financial risk management policies(a) The Group’s risk management objective is to identify and analyze all the possible risks(including market risk, credit risk, liquidity risk and cash flow interest rate risk) by
examining the impact of the macroeconomic conditions, industrial developments, market
competition and the Group’s business development plans so as to maintain the best risk
position and adequate liquidity position and centralize the management of all market risks.
(b) For the purpose of managing assets, liabilities, revenue and expenditures effectively andcontrol foreign exchange risk, the Group uses forward foreign exchange contracts andoptions as their hedging strategy.

~48~

C.Significant financial risks and degrees of financial risks(a)Market risk
Foreign exchange risk
i. The Group operates internationally and is exposed to foreign exchange risk arising fromvarious currency exposures, primarily with respect to the USD. Foreign exchange risk arises
from future commercial transactions, recognised assets and liabilities and net investments inforeign operations.
ii. The Group’s businesses involve some non-functional currency operations (the Company’sfunctional currency: NTD; the subsidiaries’ functional currencies: JPY, KRW, USD, EUR,
GBP and RMB, etc.). The information on assets and liabilities denominated in foreign
currencies whose values would be materially affected by the exchange rate fluctuations is asfollows:

Financial assets

Financial liabilities

Financial assets

Financial liabilities

Foreign
Currency
USD:NTD
JPY:NTD
EUR:NTDRMB:NTDUSD:RMB
USD:NTD

December 31, 2014
Foreign Currency
AmountExchange Rate$
331,867
31.6500
1,090,586
0.2646
16,46838.4700
353,3965.092051,3296.2156138,173
31.6500
December 31, 2013

Foreign
Currency
USD:NTD
JPY:NTD
EUR:NTDRMB:NTDUSD:RMB
USD:NTDRMB:NTD

Foreign Currency
Amount$100,687
2,512,345
12,084459,499
43,645
119,640
60,000Exchange Rate
29.8050
0.283941.0900
4.91906.059229.8050
4.9190Book Value$
10,503,591
288,569
633,524
1,799,492
1,624,554
4,373,175

Book Value$
3,000,976
713,255
496,532
2,260,276
264,454
3,565,870
295,140

iii. Sensitivity analyses relating to foreign exchange rate risks are primarily for financial
reporting period-end date of foreign currency monetary item. If the New Taiwan dollar
exchange rate to the U.S. dollar increases or decreases by 1%, the Group’s net income will
increase or decrease by $77,550 and $7,359 for the years ended December 31, 2014 and 2013,
respectively.

~49~Price risk
i. The Group is exposed to equity securities price risk because of investments held by theGroup and classified on the consolidated balance sheet as available-for-sale. The Group is
not exposed to commodity price risk. To manage its price risk arising from investments inequity securities, the Group diversifies its portfolio.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks.
The prices of equity securities would change due to the change of the future value of investee
companies. If the prices of these equity securities had increased/decreased by 1% with allother variables held constant, other components of equity for the years ended December 31,
2014 and 2013 would have increased/decreased by $2,326 and $2,644, respectively, as aresult of gains/losses on equity securities classified as available-for-sale.
Interest rate risk
i. The Group’s principal interest-bearing assets are cash and cash equivalents, current bondinvestment without active market and short-term borrowings. Cash and cash equivalents are
due within twelve months. Current bond investment without active market and short-termborrowings are maintained at fixed rates. Therefore, it is assessed that there is no significant
cash flow interest rate risk.
ii. The Group has not used any financial instruments to hedge its interest rate risk.
(b)Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clientsor counterparties of financial instruments on the contract obligations. According to theGroup’s credit policy, each local entity in the Group is responsible for managing andanalysing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Internal risk control assesses the credit quality of thecustomers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits
set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit
risk arises from deposits with banks and financial institutions, as well as credit exposures tocustomers, including outstanding receivables.
ii. No credit limits were exceeded during the reporting periods, and management does notexpect any significant losses from non-performance by these counterparties for the years
ended December 31, 2014 and 2013.
(c)Liquidity riski. Cash flow forecasting is performed in the operating entities of the Group and aggregated byGroup treasury. Group treasury monitors rolling forecasts of the Group’s liquidity
requirements to ensure it has sufficient cash to meet operational needs.
ii. Surplus cash held by the operating entities over and above balance required for working~50~

capital management are transferred to the Group treasury. The Group treasury invests
surplus cash in interest bearing current accounts, time deposits, current bond investment
without active market, choosing instruments with appropriate maturities or sufficientliquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
As of December 31, 2014 and 2013, the Group held money market position of$12,202,369 and $11,763,203, respectively, that are expected to readily generate cash
inflows for managing liquidity risk.
iii.The Group’s non-derivative financial liabilities are analysed based on the remaining period
at the balance sheet date to the contractual maturity date, and all financial liabilities are due
within one year.
(3) Fair value estimation
A.The table below analyses financial instruments measured at fair value, by valuation method. The
different levels have been defined as follows:
Level 1:Quoted prices in active markets for identical assets or liabilities.
Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3:Inputs for the assets or liabilities that are not based on observable market data.
The following table presents the Group’s financial assets and liabilities that are measured at fairvalue at December 31, 2014 and 2013:
December 31, 2014
Financial assets:

Level 1

Level 2

Level 3

Total

Current financial assets at fairvalue through profit or loss

$

-

$

53,545$-$53,545

Non-current available-for-salefinancial assets$

231,514

$

-

$

1,125

$

232,639

December 31, 2013
Financial assets:
Non-current available-for-salefinancial assets

Level 1$

263,297

Level 2$

Level 3

-

$

1,125

Total

$

264,422

B.The fair value of financial instruments traded in active markets is based on quoted market prices
at the balance sheet date. A market is regarded as active if quoted prices are readily andregularly available from an exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and regularly occurring market transactions
on an arm‘s length basis. The quoted market price used for financial assets held by the Group is
the closing price. These instruments are included in level 1. Instruments included in level 1
comprise primarily equity instruments classified as available-for-sale financial assets.

~51~

C.The fair value of financial instruments not traded in an active market (such as the derivative
instruments which are traded in GTSM) is based on the cost of the investment.
D.If one or more of the significant inputs is not based on observable market data, the instrument isincluded in level 3.
E.Forward foreign exchange contracts’ resulting fair value estimates are included in level 2.
F.The financial instruments of Level 3 had no changes for the years ended December 31, 2014 and
2013.

~52~

13. SUPPLEMENTARY DISCLOSURES(1) Significant transactions information
A.Loans to others: None.
B.Provision of endorsements and guarantees to others:
Party being endorsed/guaranteed

Number(Note 1)0Endorser/guarantor

Company
nameLimit onendorsements/ Maximum outstanding
Outstanding
guarantees endorsement/guarantee endorsement/guarantee
Relationship with
provided for a amount as of December amount as of December
thesingle party
31, 2014 (Note 4)
31, 2014 (Note 4)endorser/guarantor(Note 3)(Note 2)

Transcend Transcend
TaiwanJapan Inc.

2

$ 4,143,721$

529,200$

Actual amountdrawn down
(Note 5)529,200 $396,900

Ceiling on
Provision of
Ratio of accumulated
Provision ofProvision ofAmount of
total amount endorsements/
endorsement/guarantee
endorsements/ endorsements/
endorsements/ofguarantees byamount to net asset
guarantees by guarantees toguarantees
endorsements/
parentFootnote
value of thesubsidiary to
the party insecured withguarantees
company toendorser/guarantor
parentMainlandcollateralprovidedsubsidiarycompany (%)
company
China(Note 6)(Note 7)-2

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:(a)The Company is ‘0’.
(b)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories:(a)Having business relationship.
(b)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(c)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.
(d)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.
(e)Mutual guarantee of the trade as required by the construction contract.
(f)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
Note 3: Not exceeding 20% of the Company’s net asset value. ($20,718,605*20%=$4,143,721)
Note 4: The maximum outstanding endorsement/guarantee amount during and as of December 31, 2014 is JPY$2,000,000 .
Note 5: The actual amount of endorsement drawn down is JPY$1,500,000.
Note 6: Not exceeding 40% of the Company’s net asset value. ($20,718,605*40%=$8,287,442)
Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

~53~$ 8,287,442

Y

-

-

-

C. Holding of marketable securities as of December 31, 2014 (not including subsidiaries, associates and joint ventures):
As of December 31, 2014

Securities held by
Transcend Taiwan

Marketable securities (Note 1)

Relationship with the securities issuer (Note 2)

General ledger
account

Number ofshares or units

Ownership(%)

Fair value

Footnote(Note 4)

180,7188$ 180,718-

Book value (Note 3)

Stocks
Alcor Micro Corp.

-

Non-current
available-for-salefinancial assets

6,220,933$

Hitron Tech. Inc.

-〞

3,060,017

50,796

1

50,796-

Skyviia Corp.

-〞

259,812

-

2

-

-

Dramexchange Tech Inc.

-〞

60,816

1,125

1

1,125

-

$

232,639

Bonds
Yuanta Asset Management Limited - bondwith repurchase agreement rated as
investment-grade bonds by S&P
Transcend Shanghai-

Current bondinvestment without
active market-$

585,525

-

-

-

-

Current bondinvestment without
active market-$

51,500---Finance productsYuedeying financial planning No.14100028,
Financial products of Fubon Bank （China）
Co., Ltd.

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IAS 39 ‘Financial instruments: recognition and measurement’.
Note 2: Leave the column blank if the issuer of marketable securities is non-related party.
Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated
impairment for the marketable securities not measured at fair value.
Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein havesuch conditions.
D.Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
E.Acquisition of real estate exceeding NT$300 million or 20% of paid-in capital or more: None.
F.Disposal of real estate exceeding NT$300 million or 20% of paid-in capital or more: None.

~54~

G.Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the Company’ paid-in capital or more:
TransactionSales(purchases)
Purchaser/seller

Relationship with the counterparty

Percentage of
total sales(purchases)

Differences in transaction terms
compared to third party transactions

Sales/purchasesamountTranscend
TaiwanTranscend Japan Inc.

The Company's subsidiarySales$ 2,708,036

10〞Transcend Information
Europe B.V.

Subsidiary of Memhiro〞

2,651,317

10

〞

〞

〞

Transcend Information, Inc.

The Company's subsidiary〞

833,335

3〞〞

Transcend Information
Trading GmbH, Hamburg

Subsidiary of Memhiro〞

1,071,561

4〞Transcend Korea Inc.

The Company's subsidiary〞754,321〞Transtech Shanghai

Subsidiary of Memhiro〞〞

Transcend Information (H.K.)
Ltd.

Subsidiary of Memhiro〞

Transcend Shanghai

Transcend
Information
Europe B.V.

Transcend Information
Trading GmbH, Hamburg

Transcend
ShanghaiTranstech Shanghai

Transcend
TaiwanTranscend Shanghai

Subsidiary of Memhiro(Purchases)

Taiwan IC Packaging Corp.

Associates accounted forusing the equity method〞〞

Counterparty

Notes/accounts receivable (payable)

Credit term

Unit price120 days afterNo significant
monthly billings
difference

Credit term
30 to 60 days aftermonthly billings to
third parties

Percentage of total
notes/accounts
receivable (payable) Footnote

Balance$239,7338-〞385,201

13

-

〞

〞

208,945

7

-

〞

〞

〞

100,3943-

3

60 days aftermonthly billings〞〞

44,382

2-

458,2882

120 days aftermonthly billings〞〞

103,9014-〞

567,378

2

〞

〞

〞

95,734

3-

Subsidiary of Memhiro〞

256,358

1

〞

〞

〞

-

-

-

Together with Transcend
Information
Europe B.V. are controlled byparent company
Together with Transcend Shanghai
are controlled by parent company〞

677,224

24

30 days after
receipt of goods〞

7 to 60 days after
receipt of goods tothird parties

41,33013-〞

257,198560 days aftermonthly billings〞

30 to 60 days aftermonthly billings to
third parties

55,537

5-(

808,631) (4)

60 days after
receipt of goods

Note 1

7 to 30 days after
receipt of goods tothird parties(

1,605,323) (

41)

-

(

368,841) (1)

30 days afterNo significant
monthly billings
difference

30 to 45 days after (monthly billings to
third parties

74,185) (2)-

Note 1:The purchase transactions between Transcend Taiwan and Transcend Shanghai were attributed to processing of supplied materials. No other similar transactions can be used for comparison.
Note 2:The Company’s sales to subsidiaries were equivalent to subsidiaries’s purchases from the Company; accordingly, the Company did not disclose the information on subsidiaries’ purchases from the Company.

~55~

H.Receivables from related parties exceeding NT$100 million or 20% of the Company’s paid-in capital or more:
Overdue receivables

Creditor

Counterparty

Transcend Taiwan

Transcend Information
Europe B.V.
Transcend Japan Inc.

〞〞〞
Transcend Shanghai

Transcend Information
Inc.
Transcend Information
Trading GmbH, Hamburg
Transcend Taiwan

Relationship with thecounterparty

Balance at December
31, 2014

Subsidiary of Memhiro$

Turnover rate

385,201 $7.36

Subsidiary of the Company

239,733

Subsidiary of the Company

AmountAction taken
-

-

6.04

-

208,945

3.97

Subsidiary of Memhiro

100,394

Parent company

1,605,323~56~$

Amount collected
subsequent to thebalance sheet date$

Allowance for
doubtful accounts

385,201 $--239,733---

181,586

-

13.31

-

-

100,394

-

5.11

-

-

557,237-

I. Derivative financial instruments undertaken during the year ended December 31, 2014: Please refer to Note 6(2).
J.Significant inter-company transactions during the year ended December 31, 2014:
Transaction
Number(Note 1)Company

0

Transcend Taiwan

nameCounterparty

Relationship(Note 2)

General ledger
account
Sales$

2,708,036

Percentage ofconsolidated total
operating revenues or
total assets (Note 3)〞〞

Transcend Information Europe B. V.

〞〞

2,651,317

〞

〞

〞

〞

1,071,561

〞

4%

〞

〞

Transcend Information Trading GmbH,
Hamburg
Transcend Information, Inc.

〞〞

833,335

〞

3%

〞

〞

Transcend Korea Inc.

〞〞

754,321

〞

3%

〞

〞

Transcend Information (H.K.) Ltd〞〞

567,378

〞

2%

〞

〞

Transtech Trading (Shanghai) Co., Ltd.

〞〞458,288

〞

2%

〞

〞

Transcend Information (Shanghai), Ltd.

〞

Purchases

808,631〞〞Transcend Information Europe B. V.

〞

Accounts Receivable〞〞

Transcend Information (Shanghai), Ltd.

〞

Accounts Payable

1,605,323

60 days after receipt of goods

6%

Transcend Information Trading GmbH,
Hamburg3

Sales

677,224

There is no significant difference in unit pricefrom those to third parties.

2%

Transcend Information
Europe B. V.

1Transaction terms

There is no significant difference in unit pricefrom those to third parties.
〞

1

Transcend Japan Inc.

AmountProcessing with supplied materials. No othersimilar transactions can be used for comparison.
385,201
120 days after monthly billings

10%
10%

4%
1%

Note 1: Transaction information between parent company and subsidiaries should be noted in the first column, the number is written as below:(a) Parent company: 0(b) Subsidiaries were numbered from 1.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories:(a) Parent company to subsidiary.
(b) Subsidiary to parent company.
(c) Subsidiary to subsidiaries.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts andbased on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

~57~

(2) Information on investees (not including investees in Mainland China)
Initial investment amount

Investor

Investee

LocationTranscend
TaiwanSaffire Investment Ltd.

B.V.I.

Investments holding
company

Transcend Japan Inc.

Japan

Wholesaler of computer
memory modules andperipheral products

United States of Wholesaler of computer
Americamemory modules andperipheral products

Transcend Information, Inc.

Main business activities

Balance at
December 31,
2014$

Balance at
December 31,
2013

Shares held at December 31, 2014
Investment income(loss)
recognised by theCompany for the year
ended December 31,
2014 (Note 1)

Footnote$

89,469Note 2

Net profit (loss) of theinvestee for the year
ended December 31,
2014

No. of Shares Ownership(in units)(%)

Book value

1,202,418

36,600,000100$ 3,423,984 $

96,48989,103

89,1036,400

100

183,679

35,35135,351

Note 2

38,592

38,592625,000

100

117,188

10,698

10,698Note 2

6,132

6,132

40,000100

30,533

7,477

7,477

Note 2

1,202,418$

Transcend Korea Inc.

Korea

Wholesaler of computer
memory modules andperipheral products

Taiwan IC Packaging Corp.

TaiwanPackaging of Semiconductors

354,666

251,658

51,842,975

12.88

332,593

56,2858,330

Note 5

SaffireInvestment Ltd.

Memhiro Pte Ltd.

Singapore

Investments holding
company

1,156,920

1,156,920

55,132,000100

3,488,704

96,51496,514Note 3

Memhiro Pte
Ltd.

Transcend Information Europe
B.V.

Netherlands

Wholesaler of computer
memory modules andperipheral products

1,693

1,693

100

100

182,807

15,812

15,815Note 4

Transcend Information Trading
GmbH, Hamburg

Germany

Wholesaler of computer
memory modules andperipheral products

2,288

2,288

-

100

59,543 (8,990) (8,990)

Note 4

Transcend Information (H.K.)
Ltd.

Hong Kong

Wholesaler of computer
memory modules andperipheral products

7,636

7,636

2,000,000

100

8,328 (

369) (

369)

Note 4.
Note 1：The Company does not directly recognize the investment income (loss) except for the subsidiaries directly held.
Note 2：Subsidiaries of the Company.
Note 3：Subsidiary of Saffire.
Note 4：Subsidiaries of Memhiro.

.

Note 5：Please refer to Note 6 (7).

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(3) Information on investments in Mainland China
A.Basic information：

Investee in
Mainland
China

Main business activities

Paid-in capital

Investment
method(Note 1)

Transcend
Information(Shanghai),
Ltd.

Manufacturer and seller ofcomputer memory modules,
storage products and disks$ 1,134,178(2)Transtech
Trading(Shanghai)Co., Ltd.

Manufacturer and seller ofcomputer memory modules,
storage products and disks.
Wholesaler and agent ofcomputer memory modules
and peripheral products.
Retailer of computercomponents.

16,310(2)$

1,134,178--

16,310--$Transtech Trading (Shanghai) Co., Ltd.
$$

1,134,178 $

16,31090,007

100

546

100

1,134,178
16,31016,3101,150,488$

Note 1：Investment methods are classified into the following three categories:(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company in the third area (Memhiro Pte Ltd.), which then invested in Mainland China.
(3) Others.
Note 2：The financial statements that are audited and attested by R.O.C. parent company’s CPA.
Note 3：The numbers in this table are expressed in New Taiwan Dollars.
B.Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas: None.

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Investment
incomerecognized by
the Company
for the year
ended
December 31,
2014（Note 2）

Ownership
held by theCompany(direct andindirect)

Investment amount approved by the Investment
Commission of the Ministry of Economic Affairs(MOEA)$
1,134,178

Accumulated amount of remittance from Taiwan to
Mainland China as of December 31, 2014

Company name
Transcend Information (Shanghai), Ltd.

Amount remitted from
Accumulated
Accumulated
Taiwan to Mainlandamount ofamount of
China/Amount remitted backremittance from to Taiwan for the year ended remittance from Net income
Taiwan to
Taiwan toof investee as
December 31, 2014
MainlandMainlandof December
China as ofChina as of31, 2014
Remitted toRemitted
January 1,
December 31,
Mainlandback to
2014
2014
China
Taiwan1,150,488$

AccumulatedBook value ofamount ofinvestments in investment
MainlandincomeFootnote
China as of remitted back
December 31, to Taiwan as
2014
of December
31, 2014

89,741 $3,199,913

-

-

546

14,827--

Ceiling on investments in Mainland China imposed by
the Investment Commission of MOEA$-$

12,431,163

14. SEGMENT INFORMATION(1) General information
The Group operates business only in a single industry, allocating resources and assessing
performance of the Group as a whole, and has identified that the Group has only one reportable
operating segment.
(2) Segment information
The segment information provided to the chief operating decision-maker for the reportablesegments is as follows:$$

Segment revenue
Segment income

For the years ended December 31,
2014
2013
27,219,495 $
26,122,390
3,735,205 $3,198,957(3) Reconciliation for segment income (loss)
None.
(4) Information on products and services
Not applicable as revenues from external customers are derived primarily from the sale ofproducts.
(5) Geographical information
Geographical information for the years ended December 31, 2014 and 2013 is as follows:
For the years ended and as of December 31,
2014
2013
Non-current
Non-current
Revenueassets
RevenueassetsTaiwan$4,751,076 $2,102,410 $
3,853,004 $2,093,746
Asia
10,143,998
1,496,542
9,145,221
1,627,345
America
2,545,259
61,8672,160,047
59,554
Europe8,520,270
33,0079,750,399
37,153
1,258,892
1,213,719
Others$27,219,495 $3,693,826 $
26,122,390 $3,817,798
Total(6) Major customers information
There is no sale to a single customer constituting more than 10% of the Group’s consolidated net
sales for the years ended December 31, 2014 and 2013.

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