C.C.P. Contact Probes Co., Ltd. 2013 Annual Report

C.C.P. Contact Probes Co., Ltd. 2013 Annual Report

Publish Date: May 10, 2014 C.C.P. annual report is available online at: TSE website: http://mops.twse.com.tw C.C.P. website: http://www.pccp.com.tw

Spokesman and Agent Spokesman 1. Spokesman: Lance Chen Position: Chief Finance Officer Telephone: (02) 2961-2525 E-mail: [email protected] 2. Agent Spokesman: Johnny Tsai Position: Vice General Manager Telephone: (02) 2961-2525 E-mail: [email protected] Main company & factory contact information Head office: A d d r e s s: 5F, No.8 Lane 24 Ho Ping Rd., Panchiao District New Taipei City 220,

Taiwan R.O.C. Telephone: (02) 2961-2525 F a x : (02) 2961-0355 Stock Transfer Agency Title: KGI Securities Co., Ltd Address: 4F, No. 35 Po-ai Road Chungcheng District Taipei City, Taiwan R.O.C. Telephone: (02)2361-0262 Ext. 879 Website: www.kgi.com.tw Most recent annual financial report auditors Title: PriceWaterHouseCoopers International Limited Auditors: Qing-Shan Hung and Zong-Xi Lai Address: 27F, No.333, Keelung Road, Taipei City, Taiwan R.O.C. Telephone: (02) 2729-6666 Website: www.pwc.tw

Non-domestic trading center and information database for the company’s internationally traded stocks: none C.C.P. company website: www.pccp.com.tw

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CONTENTS

I. Letter to Shareholders…………………………………………………………………....... 04 II. Company Introduction

A- Establishment Date…………………………………………………………………. 06 B- Company History….………………………………………………………………... 06

III. Corporate Governance A- Organization Structure…………………………………………………………….... 08 B- Board of Directors, Supervisors and Key Managers Background Information….…. 11 C- Corporate Governance………………………………………………………………. 19 D- Transfer of share ownership and shares pledged of top management with over ten

percent share ownership for the most recent year ending on the reporting date….... 22 E- Information on the relationship of the Top 10 Shareholders as stipulated in statement

of financial accounting standard No.6 or information on spouses or relatives within the second degree of kinship ………………………………………

23 IV. Capitals and Stocks

A- Capital and Share Ownership……………………………………………………...... 23 B- Corporate Bond Issuance……………………………...……………………………. 25 C- Issuance of Preferred Shares……………………………..…………………………. 28 D- Participation and Issuance of Global Depositary Receipt……………….………….. 28 E- Issuance of Employee Stock Options...………………………...…………………… 28

V. Operation Highlights A- Overview of Business…………………………………………………………..….... 31 B- Overview of Market and Sales Distribution……………….……………………....... 35 C- Employee Information for the Past Two Years……………………………………... 44

VI. Financial Position A- Financial Position Overview for the Recent Five Years………………………...…… 45 B- Financial Analysis for the Past Five Years………………………………………….. 51 C- Supervisor’s Report………...………………………………………………………... 57 D- Consolidated Financial Statements for the Most Recent Years….……………...…… 57 E- Impact on the Company’s financial status if company or its affiliates experience

financial difficulty……...………………………………………………………........

57 VII. Overview of Financial Position, Operating Results, and Risk Management

A- Financial Position………………………………………………………………..….. 58 B- Income Statement…………………………………………………………………… 59 C- Cash Flow Analysis……………………………………………………………….… 60 D- Effect of Major Capital Expenditure on Financial Position………………………… 61 E- The Explanation of Gain and Loss………………………………………………….. 62

VIII. Special Notes A- Company Affiliates………...…………………………………………………...…... 63

Attachment Audited Consolidated Financial Statements for the parent company and its subsidiaries.. 64

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I. Letter to Shareholders Dear Shareholders, In 2013, the global economy performed not so well and was in a low rate of growth. Economic recovery was not significant in developed countries. European sovereign debt crisis is not solved yet. All the major economic entities such as America, Europe and Japan adjusted their monetary policies or exchange rate. These factors all resulted in the uncertainty of job market and private consuming. Under the economic environment of severe adjustment and competition, CCP has achieved several important projects from new customers last year, has been continuing to improve the machines and equipment, to enhance the efficiency of inner processes, to prepare for the growth in the future by plenty of and powerful capabilities of production and technology. The net consolidate revenue of 2013 is 1,071,062 thousand, The consolidate operating profit is 436,376 thousand and consolidate net income before tax is 123,750 thousand. The net consolidate revenue of 2012 was 1,194,889 thousand, consolidate operating profit was 459,284 thousand and consolidate net income before tax was 78,830 thousand. 2013 compare 2012, decrease 10.36%, decrease 4.99% and increase 56.98%. The EPS of 2013 is NT2.01 is increase 48.89% than 2012. A. 2013 Business Report

1. 2013 Business Plans Implementation and Result Unit: thousand NTD

Account 2013 2012 Growth Rate

Operating Revenues 1,071,062 1,194,889 (10.36)

Cost of goods sold 634,686 735,605 (13.72)

Gross Profit 436,376 459,284 (4.99) Total Operating Expense

341,541 353,322 (3.33)

Operating Income 94,835 105,962 (10.50)

Income Before Tax 123,750 78,830 56.98

2. Financial and profitability Ratio

Year 2013 2012

Debt to asset ratio 46.07 52.77 Finance Structure (%) Long-term fund to Fixed Asset

Ratio 275.70 398.51

Current Ratio 172.49 187.56 Solvency (%)

Quick Ratio 146.79 154.02

Return on Assets Ratio (%) 6.79 5.08

Return on Equity Ratio (%) 12.22 9.32 Profitability (%)

Earnings Per Share (NT$) 2.01 1.35

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3. Research and Development

The main developments in 2013, high conductivity MEMS probes with enhanced electrical properties have been introduced. In addition, φ0.10mm semiconductor testing probes have been successfully developed, which not only provide a small-dimension solutions to our customers, but also raises technical level. For surface treatment & materials development, high hardness coating and treatment technology of alloy have been applied in mass production, further enhance product performance. Regarding production automation, we have designed and built equipments which increase production capacity, stability as well as controlling yield rate at the same time.

B. Plan for 2014

1. Operating Directions

i. Perspective: to establish long-term relationships with customers and suppliers. ii. Mission: to be the industry leader.

iii. Strategy: to develop products to fit diversified needs of customers.

2. Production and Marketing Policies i. Continuing developing niche products to increase profit, such as connectors for

wearable devices, EV solution and high-end testing probes for portable device test.

ii. Taking advantage of economy of scale of production automation to improve efficiency and to lower costs.

iii. Further promoting the C.C.P. brand name in Asia, and also expanding our international customer network to increase C.C.P.’s market share.

iv. Developing stronger quality control system; effectively improving product reliability and customer satisfaction.

v. Continuing widening product application in a variety of fields to reduce operation risk in market.

C. Future Company Development Strategy C.C.P. manufactures testing probes and probe-like connectors. We produce highly

efficient and customized, creative, and low-cost products. The growing strategy for the company’s future in regards to the development of productions will closely follow the needs in electronic products market to reach the targets: preciseness, variety and high quality. The firm’s product developing plan will stay in the track of electronic products market to satisfy consumers’ meticulous needs for variety and quality. Looking at the operating management, C.C.P. will keep up with its reputation in working on the market, while also seeking to simplify, lower costs, and to make our product excellent in order to be more competitive. In the near future, C.C.P. will consistently need to be disciplined, studious, creative, and efficient getting through all the difficulties. C.C.P.’s abundant experience and accumulated knowledge will allow the company to deliver outstanding products to its customers, and give the fruit back to all our respectable shareholders.

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D. External Environment, Legal Environment and the Overall Operating Environment

Despite facing fierce global competition, thanks to the help of wise management team, industrious employees, and loyal stakeholders, C.C.P. has successfully entered into stable growth stage. In the area of changing laws and regulations, C.C.P. will take the necessary responses, both externally and internally, to guarantee that the company stays internationally competitive. C.C.P. aims to expand its customer base, increase its resources, and ultimately become a leader in the industry. Special thanks and recognition to the shareholders who have given feedback and supports to the company; the help C.C.P. has received is invaluable.

I wish you good health and fortune.

Sincerely, Chen Chih Feng

Chairman

6

II. Company Introduction A. Establishment Date

C.C.P was officially established on Jan 22nd, 1986

B. Company History

Year Important Milestone

1986 C.C.P Industrial., Ltd established, initial capital of $6 million NT, specializes in contact probe manufacturing and sales.

1996 Passed UK BSI ISO 9002 test, international quality proven; officially reached a new milestone

1997 Awarded “Taiwan’s Model Enterprise” in the small and medium firm category by the ministry of economics.

1998 Cash investment of $52 million NTD; corporate capital totaled $58 million NTD Company restructure, name changed to “C.C.P Contact Probe Co., Ltd”

1999 Cash investment of $31 million NT, total capital at $90 million NTD Became a sales agent for Japan’s company EIGHT, sold DVD and SDD static reduction equipment Invention of production technology, manufacturing costs effectively lowered

2000

Additional $60 million NT added to corporate capital, also reinvested earnings of $14,66 million NT; corporate capital valued at $1.65 billion NTD Innovation of new manufacturing technology, lower processing time, material needed, and operating costs Obtained approval from the investment commission, set up Dongguan Contact Probe Co., Ltd

2001

Public offering approved in May Ranked 61st in the list of “100 Fastest Growing Mid-size Companies” in Common Wealth Magazine, August issue General fund transfer and reinvested earnings total $17,566,510 NTD; accumulated capital of $1.91 billion NTD

2002

Obtained UK BSI ISO 9001 (2000 version); establish electronic material department, product diversification to the cable industry Cash investment of NT$11 million, general fund transfer and reinvested earnings of $7.05 million NTD, total NT $18.05 million; accumulated capital of $1.1 billion NTD

2003 Stock publically traded on Jan. 9th Earnings reinvestment of NT $10.3 million; accumulated capital of NT $1.43 billion

2004 Earnings reinvestment of NT $30 million; accumulated capital of NT $1.74 billion

2005

Oct. 7th, Private placement of 13,000 thousand shares at $7.8 NTD per share; total privately raised capital $1.01 billion from Hanil Cement Company Dec.16th, Election of directors and supervisors in extraordinary meeting of shareholders, Hanil Cement obtained two director seats and 1 supervisor seat

2006 Jan. 11th, Privately raised capital of $1.01 billion NTD; change in capital of $4.01 billion NTD

2007 Oct. 5th, Investment reduction of 500 thousand treasury stocks

2008 Jan 15th, Inauguration of chairman Chih-Feng Chen Mar 12th, Investment reduction of 446 thousand treasury stocks

7

Year Important Milestone

2009 Aug. 31st, Issuance of secured convertible corporate bond approved by the Board of Directors

2010

Sep 30th, Issuance of employee stock option approved by the Board of Directors Oct. 1st, Official adoption of SAP corporate material management system Dec 3rd, The Board of Directors approved the case that joint venture with Liang Haw Technology

and the amount of investment is NTD 50 million

2011

Mar 14th, Second issuance of secured convertible corporate bond approved by the Board of Directors

Awarded the Deloitte Technology Fast 500 Asia Pacific Praise in 2010 Apr 29th, The Board of Directors approved to release the dividend of 2010 Apr 29th, Capital increasing via issuing new shares of 1,308,655 by retained earnings Jun 17th, Increasing investment NTD 50 million to Mega Master Technology Co., Ltd. Dec 26th, The Board of directors approved to set up a Remuneration Committee

2012

Apr 10th, Establish a Planning Office and Industrial Safety Office Apr 10th, The Board resolved an NTD 150,000 thousand investment to sub-subsidiary

Dongguan C.C.P. Contact Probes Co., Ltd. Apr 26th, The Board of Directors approved to release the dividend of 2011 Apr 26th, Capital increasing via issuing new shares of 2,257,199 by retained earnings Awarded The Deloitte Technology Fast 500 Asia Pacific Praise in 2011 Apr 26th, Disclosure the items of the financial statement influence by IFRS May 7th, Third issuance of Unsecured convertible corporate bond approved by the Board of

Directors May 21st, Obtained UK BSI ISO 14001 (2004 version) Aug 1st, Adoption of Enterprise Information Portal system to enhance e-business

2013

Awarded the Deloitte Technology Fast 500 Asia Pacific Praise in 2012 Mar 22nd, The Board of Directors approved to release the dividend of 2012 Mar 22nd, Capital increasing via issuing new shares of 481,034 by retained earnings May 20th, Sold invested company MegaMaster shares

2014 Apr 25th, The Board of Directors approved to release the dividend of 2013

8

III. Corporate governance A. Organization Structure

1. Organization Chart

9

2. Department functions Department Main Responsibilities

Chairman Office

1. Responsible for major strategic planning of corporate governance. 2. The overall financial planning and investment management development. 3. Evaluation on new technologies along with the risk and opportunities of investment.

Remuneration Committee

1. Responsible for assisting the board of directors’ implementation and evaluation of whole corporate remuneration and welfare policy.

2. Regularly review the remuneration of directors, supervisors and managers.

Audit Office

1. Ensure the efficiency of the internal control system. 2. Audit planning and execution.

President Office

1. Control of sales and execution, adjustment of supplies, operating target and related plans and execution; oversee all departments and their operations.

2. Assist the President in managing and planning for every department to ensure tasks are carried out efficiently and achieve operational goals.

Planning Office

1. Research internal, corporate, as well as global market trends and competitive analysis.

2. Promote and implement operating policies. 3. Establishment of medium and long term strategic planning, implementation and

review.

Industrial Safety Office

1. Responsible for overall planning, supervision and implementation of workplace safety and environment related matters.

2. Fire equipment maintenance, waste and waste-water treatment. 3. Ensure the operations of corporate observant of the environment standards and

industrial safety regulations.

Manufacturing Department

1. Plan, develop and improve in production process. 2. Execute capacity expansion plan to achieve operational goals of company. 3. Execute routine inspection and maintenance for production facilities. 4. Assist R&D in sample manufacturing, assembly and inspection operations.

Sales Department

1. Understand domestic and international market demand; to increase sales volume considering a particular period of time and continuously expand market share.

2. Develop domestic and international business relations, meet the customer demand with appropriate supply and also project follow-up.

3. Obligated in customer credit management, order and also payment management. 4. Emerging market development, explore customers’ potential demands and set up

marketing strategy.

Research & Development

Department

1. Keep up with the market changes and new trends; develop competitive products and appropriate mass production.

2. Bring innovative technologies into manufacturing process to enhance competitive edge.

3. Automated production technology development and adaptation.

4. Product patent applications and maintenance.

5. Provide technology assessment and function verification for new products.

10

Quality Assurance

Department

1. Inspection of raw materials as well as unfinished and finished products. 2. Continue improving inspection methods and inspectors’ efficiency, product quality

and establish the reliable quality management system. 3. Timely solutions for abnormal quality issues and customer complaints. 4. Examine, maintain, and recalibrate testing equipment. 5. Implement ISO9001 and 14001 quality policy. 6. Implement green product systems and forbid using controversial minerals to build up

a Green Supply Chain.

Material Department

1. Purchase raw materials, components, work-in-process or finished products, machine equipment, and maintain qualified vendor relationship as well as adding new vendors to get up with market trends. In addition, manage material supplies stable and shorten delivery time.

2. Total purchasing, labor cost and raw material cost analysis. 3. Capacity planning, material requirement control, warehouse storage, transportation,

and inventory management. 4. Comprehensive utilization of manufacturing sources to enhance production capacity.

Financial Department

1. Complete financial statements and disclose related information to public. 2. Budget control, cash flow planning and financial risk management. 3. Build accounting systems; maintain account books, tax filing and planning. 4. Maximize financial interests by means of investment tools and financial planning. 5. Cashier, accounting vouchers verified and filed and property management. 6. Provide timely accounting information for top management concerned with business

strategy.

Administration Department

1. Management system setup, policy declaration and notice release. 2. General administration, human resources, on-job training, maintenance of public

facilities and the environment. 3. Development and security management for MIS, network infrastructure, hardware/

software management and maintenance. 4. Corporate legal affairs and contract management. 5. Board of Directors, shareholder meeting, stock affairs and other activities

preparation.

11

B. Board of Directors, Supervisors and Key Managers Background Information 1. Information of Board of Directors and Supervisors

As of May 10th, 2014 Unit: share Initial shares Current shares Spouse and minors

share holdings Indirect share

holdings Positions occupied by family members

Position Name Date of hire Period

First Considere

d for the

Position

Number of shares

Share %

Number of share

Share % # % # %

Level of Education and Experience Current positions Positi

on Name Relationshi

p

Chairman Chih-Feng Chen

2013.06.21 3 2005.10.

26 102,735 0.21% 204,748 0.41% 0 0 0 0

MBA of American Graduate School of International Management MasterLink Securities Corporation Deputy General Manager

General Manager of C.C.P Contact Probe Co., Ltd Chairman of Amass Star Venture Capital Co., Ltd.

None None None

Director Hanil Cement Investment – Yuanta Bank

2013.06.21 3 2005.12.

16 19,290,508 40.10% 19,482,062 39.02% 0 0 0 0 - - None None None

Legal Representati

ve of Directors

Gun-Sik Jeon

2013.06.21 3 2012.01.

04 0 0 0 0 0 0 0 0

Hanyang University in Korea Hanil Cement Planning Executive Director

Planning Executive Director of Hanil Cement

None None None

Director Hanil Cement Investment – Yuanta Bank

2013.06.21 3 2005.12.

16 19,290,508 40.10% 19,482,062 39.02% 0 0 0 0 - - None None None

Legal Representati

ve of Directors

Seung-Yoon Han

(note1)

2014.04.09 3 2014.04.

09 0 0 0 0 0 0 0 0

Sungkyunkwan University in Korea Hanil Cement Planning Minister

Planning Minister of Hanil Cement

None None None

Director Nam Jin Kim

2013.06.21 3 2005.12.

16 0 0 0 0 0 0 0 0

MBA of American Graduate School of International Management Hanil Cement Minister

Controller of C.C.P Contact Probe Co., Ltd Director of Amass Star Venture Capital Co., Ltd

None None None

Director In-Sang Won

2013.06.21 3 2010.06.

24 0 0 0 0 0 0 0 0 Yonsei University in Korea

General Manager of Hanil Cement

None None None

Independent Director

Wen-Chia Tseng

2013.06.21 3 2013.06.

21 0 0 0 0 0 0 0 0

Independent Director

Ying-Jun Mao

2013.06.21 3 2011.06.

17 0 0 0 0 0 0 0 0

Doctor Graduate of Central South University of science and industrial management EZGlobal Network Service

Chairman of EZGlobal Network Service

None None None

12

Supervisor Ming-Xian Hsu

2013.06.21 3 2010.06.

24 0 0 0 0 0 0 0 0

Master of American Graduate School of International Management

Assistant General Manager of Win Ton Plastics Industry Co., Ltd

None None None

Supervisor Ying-Xi

Yang 2013.06.

21 3 2007.06.20 486,641 1.01% 491,473 0.98% 0 0 0 0

Department of Information Management TamKang University

Project Manager of Grand Pacific Investment & Development Co., Ltd

None None None

Supervisor

Zhang-Zhong Liu

2013.06.21 3 2010.06.

24 0 0 0 0 0 0 0 0 Master in Management from National Tatung University

- None None None

Note 1. Seung-Yoon Han is the Legal Representative of Directors of Hanil Cement Investment – Yuanta Bank. On Mar. 13th, 2013, Knoh-Sun Lee was replaced to Seung-Yoon Han.

13

(1) Major Shareholders of the institutional shareholders As of May 10th, 2014

Name of institutional shareholders Major shareholders of the institutional shareholders

Huh, Jung-Sub (7.95%)

Wooduk Foundation (7.14%)

Huh, Dong Sub(5.96%)

Huh, Nam Sub(5.90%)

Huh, Gi Ho(5.87%)

Joongwon Electric(2.26%)

Huh, Seo Yeon(2.25%)

Huh, Seo Hee(2.25%)

Huh, Jung Kyu(1.51%)

Hanil Cement – Account Bailee: Yuanta Commercial Bank

Huh, Jung Mi(1.25%)

(2) Major shareholders of the major shareholders that are juridical person As of May 10th, 2014

Name of juridical persons Major shareholders of the juridical persons

Joongwon Electric Huh, Gi Ho (33.96%) (3) Training of Directors and Supervisors

Position Title Name Training Date Organizers Course Name Training

Time

Meets the listed

company directors

and supervisors

training implement

Chairman Chih-Feng Chen 2013.10.29

Securities & Futures Institute

Public company insiders norms and practice of market manipulation cases

Commentary

3 Y

Director Nam-Jin Kim 2013.10.29



Commentary

3 Y

Director In-Sang Won 2013.10.29



Commentary

3 Y

14

Director Knoh-Sun

Lee (note1)

2013.09.10 2013.09.11


Director and Supervisor

research and study 12 Y

Director Gun-Sik Jeon 2013.10.29



Commentary

3 Y

Director Wen-Chia Tseng

2013.09.10 2013.09.11




Director Ying-Jun Mao 2013.10.29



Commentary

3 Y

Supervisor Ying-Xi Yang 2013.07.22

GreTai Securities

Market

Company insiders guidance meeting 3 Y

Supervisor Ming-Xian Hsu 2013.08.29

Accounting Research and Development Foundation

Corporate executive, "Forensic

Accounting" fraud audit Practices

Seminar

6 Y

Supervisor Zhang-Zhong Liu

2013.09.10 2013.09.11





15

2. Information of Key Managers As of May 10th, 2014 Unit: share

Shareholding Spouse and minors share holding

Indirect share holding Positions of Family and Relatives Position Title

Name Inauguration

Number of shares

Share %

Number of share

Share %

Number of share

Share %

Level of Education And

Past Positions Current Positions

Position Title Name Relation

ship

General Manager Chih-Feng Chen

2008.01.15 204,748 0.41 0 0 0 0

MBA of American Graduate School of International Management MasterLink Securities Corporation Deputy General Manager

Chairman of Amass Star Venture Capital Co., Ltd none none none

Chief Controller Nam Jin Kim

2006.01.15 0 0 0 0 0 0

MBA of American Graduate School of International Management Hanil Cement Minister

Director of Amass Star Venture Capital Co., Ltd none none none

Vice General Manager

Bo-Chen Tsai

2011.01.01 39,943 0.08% 0 0 0 0

Graduate institute of Engineering Science of National Cheng Kung University ITRI Deputy Manager

none none none none


Tzung-Ming Tsai

2012.02.24 21,272 0.04% 0 0 0 0

Graduate institute of Finance of National Central University Yau Thai Venture Capital Investment Manager

Supervisor of Amass Star Venture Co., Ltd. none none none


Jin-Jeng Wang

2014.03.10 0 0 0 0 0 0

Graduate institute of Finance of National Chengchi University Yau Thai Venture Capital Investment Manager

none none none none

Accounting Supervisor

Huo-Liang Chen

2011.10.15 0 0 0 0 0 0

Department of Business Administration Chung Yuan Christian University Financial manager of Syncomm technology

none none none none

Assistant General Manager

Wei-Hau Liu

2012.02.08 0 0 0 0 0 0

MBA of American Graduate School of International Management Sales Manager of IBM

none none none none

16

3. Recent Remuneration for Directors, Supervisors, General Manager, and Vice General Manager (1) Remuneration of Directors

Unit: Thousand NTD, Thousand shares Remuneration of Directors Remuneration of Employees

Return

(A)

Retirement

Pension

(B)

Earning

Distribution

(C)

Operational

Implementation

Cost

(D)

Proportion of A,

B,C,D Relative to

Total Net Income

(%)

Salary and Bonus

(E)

Retirement

Pension

(F)

Employee Bonus Earning Distribution

(G)

Employee

Stock Option

(H)

Restricted

Employee

Share

(I)

Proportion of

A, B,C,D, E, F, G Relative

to Total Net

Income (%)

CCP Subsidiaries

Position Name

CCP Subsid

iaries CCP

Subsid

iaries CCP

Subsid

iaries CCP

Subsid

iaries CCP

Subsid

iaries CCP

Subsid

iaries CCP

Subsid

iaries Cash

Dividend

Stock

Dividend

Cash

Dividend

Stock

Dividend

C

C P

Subsid

iaries

C

CP

Subsid

iaries

C

CP

Subsid

iaries

Collection of

compensation from

unrelated

business investment

Chairman Chih-Feng

Chen

Director Nam-Jin

Kim

Director

Hanil Cement Investment – Yuanta Bank

Gun-Sik Jeon

Director

Hanil Cement Investment – Yuanta Bank Seung-Yoon

Han (Note 1)

Independent

Director

Wen-Chia Tseng

Independent

Director

Ying-Jun Mao

Director In-Sang

Won

0 0 0 0 1,278 1,278 40 40 1.35% 1.35% 4,552 4,552 0 0 0 0 0 0 250 250 0 0 6.00 6.00% 0


17

(2) Remuneration of Supervisors Unit: Thousand NTD

Remuneration of Supervisors

Return

(A)

Earning Distribution (B)

Operational Implementation Cost

(C)

Proportion of A, B, C Relative to Total Net

Income

(%) Title Name

C.C.P. Subsidiaries C.C.P. Subsidiaries C.C.P. Subsidiaries C.C.P. Subsidiaries

Collection of compensation

from unrelated business

investment

Supervisor Ying-Xi Yang

Supervisor Ming-Xian Hsu

Supervisor Zhang-Zhong Liu

0 0 484 484 30 30 0.53% 0.53% 0

(3) Remuneration of General Manager and Vice General Manager

Unit: Thousand NTD, Thousand shares

Salary (A)

Retirement Pension (B)

Remuneration and Special Expenses

(C) Employee Bonus Earning Distribution (D)

Proportion of A, B,C,D Relative to Total Net Income

(%)

Employee Stock Option

Restricted Employee Share

CCP Subsidiaries Position Name

CCP Subsidiaries CCP Subsidia

ries CCP Subsidiaries Cash

Dividend Stock

Dividend Cash

Dividend Stock

Dividend

CCP Subsidiaries CCP Subsidia

ries CCP Subsidiaries

Collection of compensation from unrelated

business investment

General Manager

Chih-Feng Chen

Chief Controller Nam Jin Kim

Vice General Manager Bo-Chen Tsai


Tzung-Ming Tsai


Jin-Jeng Wang

8,218 8,218 0 0 628 628 358 0 358 0 9.40％ 9.40% 570 570 0 0 0

18

(4) Managers Responsible for the Distribution of Employee Bonus Compensation Unit: Thousand NTD

Position / Title Name Stock Dividend Cash Dividend Total

Proportion Relative to Net

Income (%)

General Manager Chih-Feng Chen

Chief Controller Nam-Jin Kim


Bo-Chen Tsai


Tzung-Ming Tsai


Jin-Jeng Wang


Huo-Liang Chen

Managers


Wei-Hau Liu

0 533 533 0.54%

Note: the distribution of employee bonuses of 2013 in 2014 is an amount under evaluation not yet approved by Shareholders meeting.

4. Analysis of All Bonus Compensation, Compensation Policy and Related Effect on the Company’s

Future Management Unit: Thousand NTD

2013 2012

Position

Title

Total

Remuneration

(note)

Net

Income

Proportion of

Remuneration

relative to Net

Income

(%)

Total

Remuneration

(note)

Net

Income

Proportion of

Remuneration

relative to Net

Income

(%)

Director 5,870 97,915 5.99% 5,402 63,532 8.50%

Supervisor 514 97,915 0.52% 227 63,532 0.36%

General Managers 9,204 97,915 9.40% 8,952 63,532 14.09%

C.C.P.’s compensation policy combines the standard policy of the industry and its own Article of Incorporation. Article 28: Any operating surplus at year-end is first prioritized to: Meeting tax obligations and covering prior year operating losses. Any residual surplus up to 10% of total surplus is designated to the general reserve fund. If remaining surplus exists afterwards, then it shall be allocated under the following provisions:

I. Employee entitled to a bonus of 8 – 12% II. Director and supervisor entitled to additional compensation payment of 1- 4% III. Shareholder dividend payment will be considered based on current business conditions.

The Board of Directors will be responsible for delivering dividend distribution proposal, and the final verdict will be determined during the shareholder meeting.

19

When employee bonuses are distributed in the form of stock-based compensation, recipients must meet certain criteria and condition set forth by the Board of Directors

Risk associated:

In the past two years, the directors and supervisors did not receive bonuses. This year, directors and supervisors remuneration accounted for $1,762 thousand NTD, equivalent of 1.8% of net income; this amount is not material enough to create any significant risk for the future.

C. Corporate Governance 1. Corporate Governance Operations and Difference in Corporate Governance from other Public traded Companies

Item Corporate Governance Operations Difference in Corporate Governance

from other Public traded Companies

1. Company Shareholder Structure and Shareholder Rights

（1）Handling of shareholder proposals and disputes

To guarantee shareholder rights, C.C.P. has assigned trained specialists to resolve shareholder concerns.

Consistent with other companies

（2）List and tracking of major shareholders

C.C.P.’s major shareholder – Hanil Cement, has delegated employees to the company, which allows for easy tracking of major shareholder relations. The company is in accordance with the provisions of Section 25 of the Securities and Exchange Act, internal people, including directors, supervisors, managers, and shareholders whose shares held more than 10 percent and the changes in the number of shares held are specified to report on the MOPS website that Securities and Futures Bureau assigned every month.


（3）Risk control and prevention of the company and its business affiliates

Responsibilities of risk management are clearly defined and assigned; internal supervision as well as independent auditors regularly conduct risk evaluation.


2. Structure and Responsibilities of Board of Directors

（1）Independent Directors Independent directors occupy two out of seven director positions.


（2）Timely assessment of contracted third party accountants

The professional competence and independence of the CPA are verified by Board of Directors every year.


3. Establishment of shareholder communication channels

C.C.P. provides fully functional website for communicating with its shareholders; spokesmen and specialists have been assigned to resolve any shareholder concern or dispute.


20

4. Information Disclosure

(1) Conveyance of financial and operational situation

Company information are readily available and listed on public official website as well as on the company’s own website: www.pccp.com.tw


(2) Other information disclosure channels

Assigned specialists are responsible for setting up company website and convey relevant information to the public


5. Operation of the company’s nomination and compensation committee

The remuneration committee was approved by Board of Directors on Dec. 26th, 2011. The remuneration responsible for assisting the board of directors implementation and evaluation of whole corporate, directors, supervisors and managers’ remuneration and welfare policy. Until Mar 31st, 2013 the remuneration committee had concluded the regulation of distribution of remuneration of directors and supervisor.


6. C.C.P. complies with the official corporate governance rules for listed companies, any existing difference: C.C.P. is working on its corporate governance guidelines; currently the company’s spokesmen and deputy spokesmen are responsible for conveying detailed company information.

7. Any company products or corporate social responsibility report that are verified by certifying organization should be noted:

(1)Training of company manager on corporate governance Position

Title Name Training

Date Organizers Course Name Training

Hours

General Manager

Chih-Feng Chen 2013.10.29 Securities & Futures

Institute


Commentary

3

2013.11.03 The Institute of Internal Auditors

Internal control and internal audit new development

6

Audit Supervisor

Hsueh-Kuei Yang

2013.12.27 Securities & Futures Institute

IFRS Financial Statement Analysis and interpretation of Audit Practice

Workshops

6


Huo-Liang Chen

2013.12.24 2013.12.26

Accounting Research and Development

Foundation

Issuers of Securities Dealers stock accounting officer continuing education classes

12

(2)Employee rights: The company handles employee matters in accordance with the Labor Standards. (3)Concern for employees: C.C.P. cares employees often in many ways, such as: holding the education

grant for employees’ children, house visits, fundraising for the hearing aids that employees need, providing nutritional supplements to hard-working staff from time to time, and consoling injured or sick employees by managers in person.

(4)Supplier relations and rights of shareholders: The company work regulations are followed and company suppliers are required to comply with contract provisions to uphold the legal rights of both parties. No relevant litigation cases have occurred this year.

(5)Investor relations: The company is highly concerned about investor rights. Relevant information is promptly posted on the Market Observation Post System as instructed by the governing

21

agency in accordance with regulations. Relevant information is also posted on the company website http://www.pccp.com.tw.

(6)The company’s directors and supervisors attend continuing education courses concerning financial, business and other professional subjects on a non-regular basis. See page 12 in the company’s Annual Report –Training of directors and supervisors Chart.

(7)Implementation of the company’s risk management policy and risk measurement standards: In recent years, C.C.P. has developed a very sound, conservative system in dealing with potential business crisis. C.C.P.’s risk management system is broken down into three levels: a. Department and department head: must remain active in detecting potential risks and devise strategies in avoiding them. b. General manager and other senior managers: help in prioritizing and organizing risk management. c. Legal and audit department: monitor potential risks carefully and have the directors and supervisors review them as well.

(8)Implementation of policies to protect consumers and customers: C.C.P is in accordance with the belief that “Quality first, Customer satisfaction” to research and develop high-end products positively as well as offering rapid, customized, high-quality service to our customers.

(9)The company began to purchase liability insurance for directors and supervisors starting in 2004. In 2008, the policy amount was increased to US$5 million.

8. Records of self-assessment reports or any delegated third party evaluations and their details: None

2. Inquiry of corporate governance code and regulation (1) Article of Incorporation

(2) Appointment of Directors and Supervisors

(3) Shareholder’s Meeting Rules of Procedure

(4) Board of Directors Standard

(5) Process of acquiring or disposing assets

(6) Operating Procedures Governing Fund Lending

(7) Process of Endorsement

(8) Regulation on the Prevention and Control of Insider Trading

All company rules and regulations are readily available on Market Observation Post System

http://mops.twse.com.tw and C.C.P. website at http://www.pccp.com.tw.

3.Other important information for furthering understanding of company should also be disclosed

Please check other information of monthly revenue, annual audit report, and stock information from the

content “Investment Service” on C.C.P. Website at http://www.pccp.com.tw.

22

D. Transfer of share ownership and shares pledged of top management with over ten percent share ownership for the most recent year ending on the reporting date

Unit: share 2013 As of May 10th,2014

Title Name Holding Increase/decrease

Pledged holding Increase/decrease

Holding Increase/decrease

Pledged holding Increase/decrease

Chairman & General Manager

Chih-Feng Chen 102,013 0 0 0

Director Hanil Cement Investment –

Yuanta Bank (major shareholder)

191,554 0 0 0

Director Representative Seung-Yoon Han 0 0 0 0

Director Representative Gun-Sik Jeon 0 0 0 0

Director & Chief

Controller Nam-Jin Kim 0 0 0 0

Director In-Sang Won 0 0 0 0

Independent Director Wen-Chia Tseng 0 0 0 0

Independent Director Ying-Jun Mao 0 0 0 0

Supervisor Ying-Xi Yang 4,832 0 0 0

Supervisor Zhang-Zhong Liu 0 0 0 0

Supervisor Ｍing-Xian Hsu 0 0 0 0

Vice General Manager Bo-Chen Tsai 95,943 0 (56,000) 0

Vice General Manager Tzung-Ming Tsai 5,209 0 0 0

Vice General Manager Jin-Jeng Wang 0 0 0 0


Wei-Hau Liu 0 0 0 0

Accounting Supervisor Huo-Liang Chen 0 0 0 0

22

E. Information on the Relationship of the Top 10 Shareholders as Stipulated in Statement of Financial Accounting Standard No. 6 or information on spouses or relatives within the second degree of kinship

As of May 10th, 2014; Unit: share

Personal Shareholdings

Shareholding of Spouse & Minor

Total Shareholdings held under other names

Top Ten Shareholders With

Relationships Stipulated In Statement of

Financial Accounting

Standard No. 6

Name

Number Percentage Number Percentage Number Percentage Name Relation

Remark

Hanil Cement Co., Ltd Investment –

Yuanta Bank 19,482,062 39.02% - - - - - - -

Chuan-Xian Zhang 971,839 1.95% - - - - - - -

Ying-Xi Yang 491,473 0.98%

Hui-Rou Wang 485,656 0.97% - - - - Hui-Bei Wang

second-degree

relatives -

Hong-Jun Chen 478,368 0.96% - - - - - - -

Hui-Bei Wang 406,285 0.81% - - - - Hui-Rou Wang

second-degree

relatives -

Xiu-Zi Wang 306,000 0.61% - - - - - - -

Concord Securities Co., Ltd. 303,342 0.61% - - - - - - -

Hsun Chieh Investment Co.,

Ltd. 300,000 0.60% - - - - - - -

Sheng-Wen Zheng 290,283 0.58% - - - - - - -

23

IV. Capitals and Stocks A. Capital and Share Ownership 1. Source of Capital

May 10th, 2014; Unit: share Authorized Shares

Share Type Shares outstanding (note) Unissued shares Total

Remark

Common shares 49,927,490 25,072,510 75,000,000 –

Note: C.C.P stock is classified as OTC (Over The Counter) stock 2. Shareholder Structure

May 10th, 2014; Unit: person, share, %

Shareholders

Numbers .

Government Investors

Financial Institutions

Other Institutions

Individuals

Foreign institutions

and foreigners

Total

Number - - 21 6,403 9 6,433

Number of Shares - - 1,581,031 28,794,452 19,552,007 49,927,490

Percentage of shares - - 3.16% 57.68% 39.16% 100%

3. List of Major Shareholders

May 10th, 2014; Unit: person, share, %

Shareholding Shareholder’s Name . Shares Percentage

Hanil Cement Investment – Yuanta Bank Account 19,482,062 39.02%

23

4. Market Price, Net Value, Profit and Dividend per share of the Past Two Years Unit: in NTD, thousand shares

Year

Item . 2012 2013 2014 Q1

Before distribution 42.95 45.45 43.8 Highest

After distribution 42.54 (Note) － Before distribution 24.30 31.00 31.05

Lowest After distribution 24.06 (Note) － Before distribution 42.68 38.78 37.42

Share Price

Average After distribution 42.26 (Note) －

Before distribution 15.70 17.44 17.76 Book value per share After distribution 15.54 (Note) －

Weighted Average number of shares 47,584 48,667 48,902

Before distribution 1.36 2.01 0.26 EPS Earnings per share After distribution 1.36 (Note) －

Before distribution 0.6 0.7 (Note)

－ Cash Dividend

After distribution 0.6 (Note) － Earnings allotment 0.1 0.1

(Note) －

Stock Dividend Capital reserve

allotment －－－

Share Dividend

Accumulated Unpaid Dividend －－－

PE Ratio 31.38 19.29 － Price-to-Cash Dividend Ratio 71.13 55.40 － Return on

Investment Cash Dividend Yield 1.41% 1.81% －

Note: The distribution of dividend of 2013 is an amount under evaluation not yet approved by Shareholders meeting.

5. C.C.P. Dividend Policy and Implementation Progress

(1) The following are the Dividend Payment Policy included in the C.C.P.’s Article of Incorporation: Article 28: Any operating surplus at year end is first prioritized to: meeting tax obligations and covering prior year operating losses. Any residual surplus up to 10% of total surplus is designated to the general reserve fund. If remaining surplus exists afterwards, then it shall be allocated under the following provisions:

i. Employee entitled to a bonus of 8 – 12% ii. Director and supervisor entitled to additional compensation payment of

1 – 4% iii. Shareholder Dividend payment will be considered based on current

business conditions. The Board of Directors will be responsible for

24

delivering dividend distribution proposal, and the final verdict will be determined during the shareholder meeting. When employee bonuses are distributed in the form of stock-based compensation, recipients must meet certain criteria and condition set forth by the Board of Directors.

Article 29: Dividend distribution policy must take into consideration of the current business environment as well as complying with the company’s long-term financial objective. In addition, the policy must preserve the company’s ability for sound operation, sustainable growth, and guarantee protection of shareholder rights. If above conditions are met, then the plan must be prepared under the following premise: The policy must keep in mind of the company’s future capital expenditure budget and needs. In principle, dividend of 5% or more is paid in the form of stock dividend, while the remaining will be distributed as cash dividend. Cash dividend must not be less than 5% of total budgeted dividend. The company also needs to evaluate the current operating condition and its short-term capital budget before choosing the most ideal dividend policy.

(2) Suggested dividend appropriate in this shareholders’ meeting

The proposed surplus dividend table for the year 2013 Unit: NTD

Item Amount Undistributed profits in the previous period

82,602,823

Plus: Available distributed profit for the current year

3,856,429

Net profit after tax for this year 86,459,252

Minus: Appropriate legal reserve (10%) 6,411,839

Profits available for distribution 92,871,091

Item of distribution: 97,914,977

Shareholder bonus–transfer raising capital share appropriate ($ 0.1 per share)

190,786,068

Shareholder bonus–cash ($ 0.6 per share) 9,791,498

End period of undistributed profits 180,994,570

Notes: Employee bouns-cash(8%) 7,049,878 Directors and Supervisor remuneration-Cash 1,762,470 Total 8,812,348

Note 1: As of December 2013, the dividends to shareholders’ capital stock amount to 489,019,710 NT

25

6. Employee bonus and rewards for directors and auditors (1) Article 28: Any operating surplus at year end is first prioritized to: meeting tax obligations

and covering prior year operating losses. Any residual surplus up to 10% of total surplus is designated to the general reserve fund. If remaining surplus exists afterwards, then it shall be allocated under the following provisions:

i. Employee entitled to a bonus of 8 – 12% ii. Director and supervisor entitled to additional compensation payment of 1 – 4%

(2) Proposal by the Board of Directors for surplus distribution in 2013 As proposed by the Board of Directors on April 25nd, 2014 surplus distribution for employee bonus and reward for directors and auditors are as follows: (a) Propose to allocate employee cash bonus amounting to NT$ 7,050 thousand dollars and

cash reward for directors and supervisors amounting to NT$1,762 thousand dollars. The difference between the planned allocation amount from expense for employee bonus

and surplus in the 2013 financial statement will be adjusted to profit and loss in 2014. (b) Propose to allocate employee bonus and reward for directors and auditors in accordance

with par value setting earnings per share at: NT$2.01. (3) The Company Board of Directors on surplus allocation in 2012

The actual surplus allocation of employee bonus and reward for directors and supervisors according to resolution adopted by the shareholders meeting on June 26th, 2013. (a) Actual reward for employee, directors and supervisors in cash respectively:

NT$4,574 thousand dollars and NT$1,143 thousand dollars, (b) The difference between the planned allocation amount from expense for employee bonus

and surplus in the 2012 financial statement had been adjusted to profit and loss in 2013 B. Corporate Bond Issuance 1. Corporate Bond Issuance

As of May 10th, 2014 Unit: NTD Corporate Bond

Type Domestic 2nd Issuing Secured Convertible Corporate Bond

Domestic 3rd Issuing Unsecured Convertible Corporate Bond

Date of Issuance May 20th, 2011 August 22nd, 2012 Par Value 100 thousand 100 thousand Place of Issuance and Trade

Not applicable Not applicable

Issued Price At par value At par value Total Value NT$ 200 million NT$ 260 million Interest Rate 0% 0% Period Three years

Maturity date: May 20th, 2014 Three years

Maturity date: August 22nd, 2015 Guaranteed Institution

Shin Kong Commercial Bank Co., Ltd.

Not applicable

Underwriters China Trust Commercial Bank Co., Ltd.

China Trust Commercial Bank Co., Ltd.

Stock Transfer Agency

Capital Securities Co., Ltd China Trust Securities Co., Ltd.

Audit Lawyer Keng-Lung Tsan Keng-Lung Tsan Audit CPA PriceWaterHouseCoopers

International Limited Han-Qi Wu and Ming Ling Xue

PriceWaterHouseCoopers International Limited

Qing-Shan Hung and Zong Xi Lai Repayment Method

With the exception of Article 10 (conversion to common share),

Article 18 (resell), and Article 17

With the exception of Article 10 (conversion to common share),

Article 20 (resell), and Article 19

26

(early recall), owners of the C.C.P. bond are guaranteed cash payment equal to the par value of the bond

upon maturity.

(early recall), owners of the C.C.P. bond are guaranteed cash payment equal to the par value of the bond

upon maturity. Unpaid Principal NT$ 163 million NT$ 243 million Early Redemption Option

1. Within 1 month after issuance and 40 days before the specified maturity date, if the market price for C.C.P.’s common stock shall close at least 30% higher than the conversion price for 30 consecutive days, then within 30 days, C.C.P. will mail out “Bond Recall Notifications” to bond holders. The recall notification is valid for 30 days, starting from the date it is sent. The date must not conflict with Article 9: restricted conversion period. Owner of the company bond should notify OTC of his interest, and his bond will be recalled and repaid at par value in cash. 2. Within 1 month after issuance and 40 days before the specified maturity date, owner of bond may request for common stock conversion. If the requested conversion bond value is less than 10% of the total initial issued value. Then C.C.P. can, at any time, mail out “Bond Recall Notifications” to bond holders. The recall notification is valid for 30 days, starting from the date it is sent. The date must not conflict with Article 9: restricted conversion period. Owner of the company bond should notify OTC of his interest, and his bond will be recalled and repaid at par value in cash.

1. Within 1 month after issuance and 40 days before the specified maturity date, if the market price for C.C.P.’s common stock shall close at least 30% higher than the conversion price for 30 consecutive days, then within 30 days, C.C.P. will mail out “Bond Recall Notifications” to bond holders. The recall notification is valid for 30 days, starting from the date it is sent. The date must not conflict with Article 9: restricted conversion period. Owner of the company bond should notify OTC of his interest, and his bond will be recalled and repaid at par value in cash. 2. Within 1 month after issuance and 40 days before the specified maturity date, owner of bond may request for common stock conversion. If the requested conversion bond value is less than 10% of the total initial issued value. Then C.C.P. can, at any time, mail out “Bond Recall Notifications” to bond holders. The recall notification is valid for 30 days, starting from the date it is sent. The date must not conflict with Article 9: restricted conversion period. Owner of the company bond should notify OTC of his interest, and his bond will be recalled and repaid at par value in cash.

27

3. If by chance holders of the bond do not send a written reply to the company’s representative stock agency, then C.C.P. shall exercise conversion of bond to common shares based on spot conversion price after 30 days.

3. If by chance holders of the bond do not send a written reply to the company’s representative stock agency, then C.C.P. shall exercise conversion of bond to common shares based on spot conversion price after 30 days.

Limitations Not applicable Not applicable Name of Credit Rating Agency, Date of Rating, and Corporate Bond Rating

Not applicable Not applicable

The dilution effect of C.C.P. equities and shareholders

Current conversion price is NT$ 37.7. If all of the CB converts to common shares, the dilution ratio is 9.55% and has no significant effect for C.C.P. equities and shareholders.

Current conversion price is NT$ 37.2. If all of the CB converts to common shares, the dilution ratio is 11.60% and has no significant effect for C.C.P. equities and shareholders.

2. Convertible Corporate Bond

Type of corporate bond Domestic 2nd Secured Convertible Corporate Bond

Domestic 3rd Unsecured Convertible Corporate Bond

Year Item

2013 As of May 10th, 2014 2013 As of May 10th,

2014

Highest 111.00 123.00 103.50 119.50

Lowest 111.00 99.50 100.20 103.00 Convertible corporate bond market price

Average 111.00 107.35 101.83 111.67

Conversion Price NT$39 NT$37.7 NT$37.7 NT$38.5 NT$37.2 NT$37.2

Issuance (handling) date & conversion price at issuance

2011.05.20 , NT$ 42.1 2012.08.22 , NT$ 38.5

Performance of conversion obligations

Within 1 month after issuance and 10 days before the maturity date, except 1)the book closure period; 2)from the15 business days before the book closure date of stock dividend distribution, cash dividend distribution and capital injection in cash to the distribution record date; 3)from the record date of capital reduction to the 1day before the re-opening trading date, bond holders can apply the bond conversion to the stock affair agent at any time and the applicable terms are Article 10, 13 and 15.

Within 1 month after issuance and 10 days before the maturity date, except 1)the book closure period; 2)from the15 business days before the book closure date of stock dividend distribution, cash dividend distribution and capital injection in cash to the distribution record date; 3)from the record date of capital reduction to the 1day before the re-opening trading date, bond holders can apply the bond conversion to the stock affair agent at any time and the applicable terms are Article 11 and 17.

28

C. Issuance of Preferred Shares: None D. Participation and Issuance of Global Depositary Receipt: None E. Issuance of Employee Stock Options 1. Act ive Employee Stock Opt ions and Its Effect on Shareho lders

May 10th, 2014

Employee Stock Option Type First Issue Employee Stock Opt ion

Head Department Authorization Date 2007/08/27

Issue (Transacted) date 2008/08/22

Number of Shares Issued 1,500,000 Shares

Share Proportion relative to total Issued Shares 3.00%

Option Effective Duration 2008/8/22~2013/8/21

Method of Performance Issuance of New Shares

Duration and Option Exercise Limitation

50% stock option exercisable after two years 75% stock option exercisable after three years 100% stock option exercisable after four years

Implemented Shares obtained [Exercised Shares redeemed] 1,203,000

Redeemed Share value 13,859,900

Non-Executed Stock Options 297,000 Shares

Subscription Price for Non-Executed Stock Options NT$ 11

Non-Executed Share Relative to Total Issued Shares 0.59%

Effect of Stock Option Execution on Shareholders

Any execution of stock option will be reflected on C.C.P. financial statements in accordance with the General Accepted Accounting Principle. Only Employees who have been granted the stock options for at least two years may exercise them. Stock options granted in less than two years time cannot be exercised and thus will not affect share values or cause any significant dilution.

29

May 10th, 2014

Employee Stock Option Type Second Issue Employee Stock Opt ion

Head Department Authorization Date 2010/10/20

Issue (Transacted) date 2010/12/30

Number of Shares Issued 2,500,000 Shares

Share Proportion relative to total Issued Shares 5.0%

Option Effective Duration 2010/12/30~2015/12/29

Method of Performance Issuance of New Shares

Duration and Option Exercise Limitation

50% stock option exercisable after two years 75% stock option exercisable after three years 100% stock option exercisable after four years

Implemented Shares obtained [Exercised Shares redeemed] 94,500

Redeemed Share value 3,383,100

Non-Executed Stock Options 2,405,500 Shares

Subscription Price for Non-Executed Stock Options 35.8 NTD

Non-Executed Share Relative to Total Issued Shares 4.82%

Effect of Stock Option Execution on Shareholders

Any execution of stock option will be reflected on C.C.P. financial statements in accordance with the General Accepted Accounting Principle. Only Employees who have been granted the stock options for at least two years may exercise them. Stock options granted in less than two years time cannot be exercised and thus will not affect share values or cause any significant dilution.

30

2. Managers with employee stock opt ions and the emplo yees with issued opt ions As of May 10th, 2014; Unit: share, NTD

Executed Unexecuted

Type Title Name Uni t s

granted (Shares)

Uni t s granted as a percentage

of out s t anding

shares

Exerci sed uni t s

( shares)

Exercised price (NTD)

Exercised amount

(thousand NTD)

E xe r c i s e d un i t s a s a

pe r ce n t a ge o f o u t s t an d i n g

s h a re s

Unexerci sed uni t s

( shares)

Price of unexercised units(NTD)

Unexercised amount

(thousand NTD)

U ne xe r c i s e d u n i t s a s a p e r c e n t a ge

o f ou t s t an d i n g

s h a re s

General Manager

Chih-Feng Chen

Chief Controller

Nam-Jin Kim


Bo-Chen Tsai


Tzung-Ming Tsai


Jin-Jeng Wang


Huo-Liang Chen

Managers


Wei-Hau Liu

775,000 1.55% 235,000 11 2,611,000 0.47% 540,000 35.8 19,332,000 1.08%

Audit Supervisor

Hsueh-Kuei Yang

General Manager of Subsidiary

Ching-Yu Lin

Employee

Assistant Manager

Chien-Chang Huang

546,750 1.09% 243,000 11 2,823,450 0.49% 303,750 35.8 10,874,250 0.61%

31

V. Operation Highlights A. Overview of Sales 1. Main Scope of Business (1) Main Focus

i. Business operation, processing, and manufacturing of pogo pin connectors (spring-loaded connectors).

ii. Business operation, processing, and manufacturing of semiconductor IC test probes. iii. Business operation, processing, and manufacturing of a variety of contact probes. iv. Business operation, processing, and manufacturing of contact probes related testing

platforms, PCB boards, and terminal block equipment. v. Business operation, processing, and manufacturing of computer related testing platforms. vi. Business operation, processing, and manufacturing of raw materials and 3C electronic

products. (2) Sales Portion

Unit: Thousands NTD; % 2013 Year

Main Products Net Sales Percentage (%) Contact Probes 869,241 81.16 Other (Note) 201,821 18.84 Total 1,071,062 100.00

Note: Mainly indirect purchase of probes, fixtures, pin trays and accessories (3) Main Products

The main products of the company are pogo pin connectors and high-end IC test probes. The pogo pin connectors are extensively used in GPS, PDAs, laptops, gaming consoles, digital cameras, and walkie talkie products. The test probes acts as a medium of connection between the tested part and the testing equipment. The tests probes can be used quite extensively, in PCB boards, wafer testing, IC packaging testing, communication products, and LCD panel testing equipment.

(4) New Products

(1) High-frequency test probes and sockets: Given the market for high-frequency IC testing requirements, to develop the corresponding high-frequency test probes and sockets, to fulfill client’s usage and performance needs. (2) Fine pitch probes: Given the growing tendency of IC miniaturization, it is only through fine pitch probes that can meet market needs and to increase the technical threshold. (3) High current probes: to decrease impedance and to increase current carrying capacity, to fulfill different IC testing requirements, to increase technical capability and to raise entry barriers. (4) Pop sockets: because of 3D IC, therefore develop the corresponding solutions to meet the market demand. (5) 1.5mils stepped MEMs probes: because of smaller IC testing points tendency, therefore develop smaller pin tips to meet the market demand.

32

2. Industry Overview (1) Current Industry Status and Developments C.C.P.’s main products are pogo pin connectors and test probes, the structure is made up of a

copper barrel, a metal plunger, and a spring, with compressibility and be able to maintain a certain contact pressure, and use surface plating treatments. The test probes are mainly used: (1) in various electronics for power and signal connections. (2) Acts as a medium between the testing platform and electronic products. (3) To meet different customization requirements set by related industry standards.

The test probes industry and electronics industry are closely related, Taiwan’s electronics industry is booming, has already developed a complete supply chain and remains in an important position in the international market. Our company’s pogo pin connectors and test probes closely follow the demands of electronics and semiconductor industries. At the same time, pogo pin connectors are becoming more diverse, to save space plus extreme low and high working height requirements, our company works closely with our customers to develop higher-end products to provide fast, customized, and high quality services.

In line with smaller and lighter trend of consumer electronics design, pogo pin connectors and test probes spec requirements geared towards more sophisticated development trend, plus various special usage customized probes, such as high-frequency probes, high current probes, recharging probes, and are used more extensively in different areas.

(2) Industry’s Upstream, Midstream, and Downstream Supplier Relationships The raw materials used in C.C.P.’s pogo pin connectors and test probes productions are

provided by upstream suppliers. These raw materials are then processed by the company to produce the plunger, inner barrel, outer barrel, and the spring that made up the test probe, and are widely used in printed circuit board, semiconductor and electronic components, telecommunication components industry related products open/short and functional test and consumer electronics connector usage, which includes the lower end supplier such as printed circuit board manufacturers, electronic components manufacturers, LCD, laptop, mobile phone, and GPS manufacturers, and IC package testing companies, and wafer testing ODM.

(3) Product Development Trends As stated above, products developed by C.C.P. are aimed to be smaller in size, deliver higher

frequency signals, be able to withstand higher current flow and have lower contact resistance, and be fast and flexible so to be able to meet our customer’s performance requirements. In the field of semiconductor testing, due to an increase in the mercerization of semiconductors, test probes produced by normal-level automatic machine cannot be used for testing. Our company has invested the production of micronized test probes using LIGA-LIKE micro-electromechanical systems technology. This technology allows us to mass-produce smaller test probes with greater precision to meet the requirements for future semiconductor testing standards, and to gain a dominant position in the future market, to create more added-value.

(4) Forecast of Industrial Applications As conventional PCB testing probes are no longer able to produce a high profit growth, we

have decided to steadily turn it into a second-line product. Looking into the future, our company anticipates focusing on semiconductor IC, LCD panels, solar panels, and biomedical technology testing probes and equipment. Our company hopes to cultivate our research and development abilities to break through technical barriers and increase the company’s revenue and profit, in the Greater China area, C.C.P. focuses on mobile phones, laptops, GPS, and other consumer electronics connectors, the company estimates that the above areas are estimated to have a high degree of growth, in addition, automotive electronics and medical electronics have

33

begun to do the initial layout, the first step C.C.P. anticipates establishing itself at the frontlines and lying the fundamentals for the next wave of high growth.

3. Research and Development Operation (1) Ratio of R&D Expense In Total Operating Cost During Recent Years

Unit: Thousands NTD Year

Invested Amount 2012 2013 2014 Q1

R&D 134,836 112,054 24,056 Operating Revenue 1,194,889 1,071,062 244,505 Ratio/ 11.28% 10.46% 9.84%

(2) Research and Development Achievements

Year Technology or Product Name

2013

1. Complete surface treatment material, to increase product competitiveness and raise entry barriers. 2. Complete IC test probes related automatic equipments. 3. Complete 010 probe development to provide fine pitch solution to customer and also raise entry barrier.

2012

1. High conductivity MEMs probes development, to enhance electrical characteristics of the pin. 2. 015 IC test probes development, raise technical entry barriers and provide smaller pitch solutions to clients. 3. Higher hardness plating and new alloy developments implemented to company products, to enhance product performance. 4. Developed pogo pin related automation equipment, to increase productivity and quality.

2011

1. 2mil, 1mil MEMS Probes. 2. Developing the company’s own production of the traditional 020 probe, greatly raises the technical threshold and decreases costs. 3. Successes in the developments of Super AW1, Ultra LU1, and the new Pd alloy material. 4. Developed spring force and contact resistance tester for pogo pins and double-ended probes, 5 pin high precision automatic crimping machine, four corners automatic pin planter, pogo pin automatic assembler. 5. HDMI, USB 3.0, pogo pin connectors, systems of pogo pin connectors custom tailored for several large 3C manufacturers.

2010

New anti-arc material developments, anti-nitric acid plating technology, 3A high-current test probes development, high-frequency analog technology development, processing and mass production of insulated springs, Pd-Co plating development, 3mil, 4mil vertical MEMs socket assembly, pogo pin automatic assembly machines, vertical high current test machine.

2009

1. Developed Pd Co Pd-Ni plating processing. 2. Semiconductor test pin high-frequency measurement techniques developed. 3. The successful development of MEMS ladder pin, applying for patent.

34

2008 Developed MEMS for wafer-level test probes, high frequency measurement techniques, TSOP-II Socket.

2007 Developed three piece low contact resistance double-ended probes, high resistance double-ended probes, low surface roughness double-ended probes.

2006 Developed outer diameter of 100μm BGA double-ended probes, pogo pin, RF type switch connectors.

4. Long Term / Short Term Business Development Plans (1) Short Term Business Development Plans

i. Direction of Product Development a. Continuously develop products for pogo pin connectors, spring connectors, MEMS

test probes, BGA package type boards, high frequency telecommunication probes, and IC product testing probes, to create higher profit margins.

b. Strengthen the developments and sales of the above related products testing instruments and equipments.

ii. Marketing Area a. Domestic Improve relationships between domestic electronics manufacturers, work with the

customers while in the development stage to come up with pogo pin connectors that meet their specification requirements. Continue to improve in new product applications other than that of GPS, PDAs and

mobile phones. Provide IC testing companies with high quality products, win over customers with

cost advantages and quick response, and develop smaller test probes using MEMS (micro-electromechanical technology).

b. Overseas Using C.C.P.’s previous pogo pin connectors experience, to develop new markets in

Europe, America, and Japan. Develop an online marketing system, to allow customers more convenient access to

our products, and place PO. Direct faster service in development and manufacturing of customized and mass

produced products for customers. iii. Production

a. Medium and low-density products and standard products are manufactured in mainland China; special orders and high precision products are manufactured in the parent company in Taiwan.

b. Shorten the delivery time of customized and standard products. iv. Operation Scale and Financials

Create a steady increase in operation scale with improvements in financial management functions.

(2) Long-term Business Development Plans i. Direction of Product Development

a. Improve relationship with customers and joint development of technology to further enhance product applications.

b. Product research and development focuses on high growth consumer electronics, communications products, and semiconductor tests needs.

35

ii. Marketing a. Using the Asia market as a base, and expand to markets in Europe and America. b. Actively cooperate with international customers to explore business opportunities.

iii. Production a. Taiwan factory: focus on production of semiconductor testing devices and high-end

custom ordered test probes. b. Mainland China factory: focus on production of all types of pogo pin connectors.

iv. Operating Scope and Financial Cooperation Believe in the philosophy of a continuous service and continue to expand the scale of

operation with a steadily built up base. B. Overview of Market and Sales Distribution

1. Market Overview and Analysis (1) Sales Breakdown of Main Products

Unit: Thousands NTD 2013 2012 2011 Year

Sales Region Amount % Amount % Amount %

Domestic 167,158 15.61 200,891 16.81 300,922 28.46 Asia 675,008 63.02 979,295 81.96 740,710 70.06

Others 228,896 21.37 14,703 1.23 15,701 1.48

International Sales Total 903,904 84.39 993,998 83.19 754,411 71.54

Total Net Sales 1071,062 100.00 1,194,889 100.00 1,057,333 100.00

(2) Market Share In the pogo pin connectors industry, primary overseas competitors are: Yokowo Japan, QA Probes US, ECT, IDI, and Mill-Max from the U.S., and also Preci-Dip Switzerland. Domestically, there is almost nowhere to compare as a competitor. In the area of IC contact probe, overseas competitors are: Yokowo from Japan, ECT and IDI from the US, and Leeno from Korea. In terms of the pogo pin connector on the 3C market, there are around 10 rivals, by 2013, they have total revenue of 1.3 billion USD, and our company currently has consolidated revenue of 40 million USD which accounts for around 3%.

(3) Future Market Prospects and Growth Opportunities Contact probe can be used extensively. Some applications include: PCB testing, wafer testing, IC packages testing, telecommunication products and its supplemental accessories, as well as LCD display-testing devices, in addition, it could also be used for laptops, mobile phones, PDAs, GPS, and other consumer electronic products’ connectors such as cell phone antennas, speakers, batteries, vibrators, and LED connection application. The semiconductor industry will continue to grow under the current laptops, GPS, and other consumer electronics trends, as such these blocks will be C.C.P.’s force to continuously grow and produce better results.

(4) Competitive Niche

Despite fluctuating business cycle and price wars, C.C.P. has not failed to expand and prosper. C.C.P.’s success comes from variety of factors, some listed below:

36

i. Competent Research and Development A strong, capable R&D team has always been a significant component of C.C.P.’s success. Having realized this strength, C.C.P. will continue to invest and discover new talent to further bolster its research development and experience.

ii. Strong Company Foundation and Brand Recognition Being the first domestic company to specialize in test probes, C.C.P.’s wealth of research and production experience as well as its long cultivation in the field of test probes enables it to meet the diversified demand of customers and to provide professional after-sales assistance. With such strong fundamentals, C.C.P. has successfully established itself as a reputable supplier and a capable industry leader.

iii. Complete Product List and Competitive Product Quality C.C.P. provides a great and extensive variety of products. Furthermore, every step of production is put under the scrutiny of a stringent quality control system, the quality control department has some state-of-the-art inspection machines, including: pin lifetime testers, hardness testers, thickness testers, X-rays, salt spray tester, hot-air reflow machines, horizontal style CCD, thermal shock machines, multi-purpose spring force/contact resistance testers, and network analyzers, etc. All product components must go through rigorous stages of testing as well, to ensure the delivery of the best quality test pins and fixtures, in order to keep the customers’ faith in the quality of the products, which will become an advantage for the company in the competitive market.

iv. Outsource to China to Reduce Production Cost In 2000, with the completion of C.C.P.’s production factory in Humen, Dongguan in China, C.C.P. has concentrated on product development in Taiwan, while outsourcing its production to China. The outsourcing allows the company to be more price-competitive, and also to decrease delivery time to many local customers.

(5) Developmental Increments, Impediments, and Potential Countermeasures

Category Increments Impediments Countermeasures

Industry Growth

Wide applications of products to be used in various industries, ranging from computer, mobile phone, electronic instruments, medical devices. Industry growth moves in sync with many other electronics industry, information systems, communications, and consumer electronics growth.

Product cycle shortens, must continuously produce new products to meet the market’s changing demand

1.Make research and development more efficient in terms of both cost and time

2.Diversify product availability, not only including test probes and sockets equipments.

Business Environment

1.Globalization 2.Gain experience to

meet customer needs

1.Outsourcing through Southeast Asia, etc.; rise of price

1.Improve process capability and business efficiency

2.Improve product quality,

37

3.Focus on long-term marketing strategy, put emphasis on developing strong relationship with its customers and suppliers

competition 2.Difficulty in

recruiting capable technical personnel

lower costs and raise business standard

3.Outsource production to China to be cost competitive

Internal Business Control

1.Meet ISO-9001 and ISO-14001 standard and continue to improve internal management, to meet client needs.

2.Provide more employment benefits to motivate employees

No apparent impediments

1.Provide more employee training; improve overall human resource efficiency

2.Improve global operating efficiency

Product Technology

Development

1.Obtaining more patents in the RD department 2.Management with technical background; detect market trend and assist development

Consistently decrease product size while increasing performance with high frequency function.

1.Develop smaller, higher frequency-enabled products

2.Continuous research and innovation; invest in more sophisticated equipments to aid development of niche products

Sales Ability

1.Encompassing product specifications; timely delivery; strong research and development; professional customer service

2.Expansion of customer network, establish domestic and non-domestic sales department to provide services to the China area and the global market

Price competition 1.Improve production process and lower costs

2.Expand customer base and market area

3.Continue to innovate and shorten delivery time to increase competitiveness

2. Production Process of Main Products

(1) Purpose of Main Products Main products of the company and their main usage and purposes

Industry Product Name Purpose

3C Electronics Test probes PCB bare and full board testing and other electronic component testing

38

Semiconductors Wafer testing probes and sockets

Carrier board, IC, wafer, logic circuit testing

Coaxial high-frequency pins

Communications testing, high-speed signal transmission

Communications

Pogo pin connectors Used in wireless products such as mobile phones, headphones, PDAs, and chargers

Batteries High-current probes Battery activation and battery testing equipment resistant to high-current flow.

Automobile Industry Pogo pin connectors GPS, audio connectors

(2) Production Process of Main Products

i. Pogo Pin

Single Pin

Turning

Barrel material

Plunger

Plating

Heat

Split Head

Plunger Material

Turning

Plating

Inner Barrel Spring

Housing+CAP

Assembly

Finished Product

39

ii. PCB Testing Probe

Test Probe Components

Casing

Assembly

Plunger Inner

Barrel Spring

Casing Square or

round PIN

OK Wire

Plating Plating Outsourcing Plating Plating

Heat Treatment Turning Shaping Outsource

Split Head Barrel

Material Turning

Turning Barrel

Material

Plunger Material

40

iii. Semiconductor Testing Probes

iv. Fixture NC

Drilling Structure Assembly

Part Assembly

Circuit Assembly

Fixture

Finished Product

Turning

Barrel Material

Plunger

Plating

Heat Treatment

Plunger Material

Turning

Plating

Inner Barrel Spring

Assembly

Plunger

Plating

Heat Treatment

Plunger Material

Turning

41

3. Situation of Main Raw Material Supply The company’s raw materials are mainly bought from outside vendors. Each type of raw materials has at least two external suppliers. Because of the vast number of suppliers, there is no fear for the lack of raw materials and the company has been signing long-term contracts with any specific raw material suppliers. Listed below are the raw materials used in C.C.P.’s test probes, which includes the plunger, the spring, the barrel material, and the wires.

Plunger：Mainly imported from overseas suppliers with a long-term cooperation. Material is

processed in the main plants and then outsourced to processing companies. All materials are restocked when needed.

Barrel：Developed long-term relationships with many outer and inner barrel suppliers. Spring：There are numerous domestic and overseas spring supplies, but their product

capabilities are incomparable. Domestic suppliers mainly produce springs using stainless steel wire with the size of φ0.08mm. On the other hand, overseas suppliers mainly produce springs using plated piano wire material with the size under φ0.08mm.

Wire：Both domestic and oversea suppliers are able to firmly meet the company’s demand, but taking cost into consideration, our company mainly procures from domestic suppliers.

In sum all the above materials can be processed within the company’s plants or outsourced to processing companies, and can be restocked whenever needed.

42

4. Major Sales and Customers In The Past Two Years (1) Information of Major Suppliers in the Past Two Years

Unit：Thousands NTD 2012 2013 2014 Q1

Item Name Amount Ratio to the total

net annual purchase〔%〕

Relationship with issuer

Name Amount Ratio to the total






1 Lei Zen (Kungshan)Electroinc

74,729 20.33 None Sheng Ya Precision

12,629 14.58 None

2 Other 311,187 79.67

Did not import up to 10% of this quarter's total

Did not import up to 10% of this quarter's total

3 Net Purchases

390,616 100 Other 565,077 100.00 Other 72,414 85.15

Net Purchases

565,077 100.00 Net Purchases

85,043 100.00

(2) Information of Major Customers in the Past Two Years Unit：Thousands NTD

2012 2013 2014 Q1 Item Name Amount Ratio to

the total net annual

sales〔%〕



net annual sales〔%〕



net annual sales〔%〕


1 A Company (Note 1)

326,404 42.44 None A Company (Note 1)

116,679 10.89 Note 1 A Company (Note 1)

Annual sales less than 10% of total sales

2 B Company (Note 1)

Annual sales less than 10% of total sales B Company (Note 1)

210,884 19.69 B Company (Note 1)

40,562 16.63 None

Note 1: The setting out the last two years more than 10% of total sales of the customer name and sales amount and proportion, but the contract agreement does not disclose customer name or transaction is a personal, non-related person, to whom the code . (3) Reason for Changes

43

Incoming Goods: In the year 2012, the company with orders from new customers demand new supplier - Lei Zen (Kungshan) Electroinc to purchase steel and magnet, but no further demand due to no customer request. The remaining suppliers have not changed much.

Sold Goods: C.C.P. actively develops international customers and become one of its components suppliers, in the years of 2012 and 2013 C.C.P's largest customers are A company. B Company had poor sales from its products, so it reduced orders. It resulted in the year 2013 that C.C.P's sales with B company for the year amount and proportion of declining sales, the rest are mainly sold to customers with the sales business needs change..

45

5. Production Volume In The Past Two Years Unit：Thousands pcs, thousands NTD

2012 2013 Year/ Production Volume/ Main Products (or departments)

Capacity Output Production Value Capacity Output Production

Value

Test Probes 546,186 365,096 738,656 898,239 279,571 938,379

Others (Note 1) - - - - - -

Total 546,186 365,096 738,656 898,239 279,571 938,379 Note 1: Indirect purchase of probes, fixtures, pin trays and accessories

6. Sales Volume In The Past Two Years Unit：Thousands pcs, thousands NTD

2012 2013 Domestic Sales Overseas Sales Domestic Sales Overseas Sales

Year/ Production Value/ Main Products Amount Value Amount Value Amount Value Amount Value Test Probe 10,739 56,426 333,728 760,239 11,416 71,133 240,447 798,108

Others (Note1) 14,286 134,770 29,556 243,454 8,432 88,640 21,640 113,181

Total 25,025 191,196 363,284 1,003,693 19,848 159,773 262,087 911,289 Note 1：Indirect purchase of probes, fixtures, pin trays and accessories.

C. Employee Information for the Past Two Years, the Number of Employees, the Average Years of Service, the Average Age, and Education Distribution Ratios

Year 2012 2013 As of May 10th,

2014

Direct Labor 57 55 54

Indirect Labor 123 93 93 Number of Employees

Total 180 148 147

Average Age 30.62 34.61 35.14 Average

Years of Service 4.74 4.83 3.98

Doctorate 1.67 1.35 1.36

Masters 15 13.51 14.29

Bachelor 53.89 53.38 52.38

High School 22.78 25.68 25.85

Academic Distribution

Ratio (%)

Under High School 6.67 6.08 6.12

46

VI. Financial Position A. Financial Position Overview for the Recent Five Years 1. Concise Summary of Financial Position Statements

Unit: Thousand NTD Financial Data for the Recent Five Years (Note 3) Year

Accounts 2009 2010 2011 2012 2013

2014 Q1 (Note 2)

Current assets 1,076,116 1,183,662 1,209,246

Property, plant & equipment

254,473 324,658 312,751

Intangible assets 27,790 27,438 23,861

Other assets 229,463 45,531 47,380

Total assets 1,587,842 1,581,289 1,593,238 Before distribution 573,750 686,201 679,482 Current

Liabilities After distribution 602,612 (Note 2) －

Non-current liabilities 264,233 42,368 42,035 Before distribution 837,983 728,569 721,517 Total

liabilities After distribution 866,845 (Note 2) －

Equity attributable to owners of parent

749,859 852,720 871,721

Capital 481,064 489,050 490,968

Capital reserve 112,720 116,351 122,209 Before distribution 165,431 236,086 248,922 Retained

Earnings After distribution 136,569 (Note 2) －

Other equity interest (9,356) 11,233 9,622

Treasury shares －－－

Non-controlling interests －－－ Before Distribution 749,859 852,720 871,721

Total equity After Distribution

(Note 3)

720,997 (Note 2) －

Note 1: The above annual financial data has been reviewed by CPA accountants. Note 2: Until Mar 31st 2014, the earnings per share of 2013 were not yet admitted by the Shareholders’ Meeting. Note 3: IFRS has been adopted since 2013; the financial statement with ROC GAAP is listed in addition.

47

2. Concise Summary of Comprehensive Income Statements Unit: Thousand NTD

Financial Data for the Recent Five Year (Note 3)

Year

Accounts

2009 2010 2011 2012 2013

2014 Q1 (Note 2)

Operating revenue 1,194,889 1,071,062 244,505

Gross profit 459,284 436,376 86,322

Net operating income

(loss) 105,962 94,835 7,923

Non-operating income and expenses 27,132 28,915 6,890

Profit before tax 78,830 123,750 14,813 Profit from continuing operations 64,906 97,915 14,813

Loss from discontinued operations －－－

Profit (loss) 64,906 97,915 12,836 Other comprehensive income, net (6,874) 27,001 (1,611)

Comprehensive income 58,032 124,916 11,225 Profit (loss), attributable to owners of parent 64,906 97,915 14,813

Profit (loss), attributable to non-controlling interests －－－

Comprehensive income attributable to owners of parent

58,032 124,916 11,225

Comprehensive income attributable to non-controlling interests

－－－

Basic earnings per share

(註 3)

1.35 2.01 0.26 Note 1: The above annual financial data has been reviewed by CPA accountants. Note 2: Until Mar 31st 2014, the earnings per share of 2013 were not yet admitted by the Shareholders’ Meeting. Note 3: IFRS has been adopted since 2013; the financial statement with ROC GAAP is listed in addition. 3. Concise Summary of Financial Position Statements－Alone

Unit: Thousand NTD Financial Data for the Recent Five Years (Note 3) Year

Accounts 2009 2010 2011 2012 2013

2014 Q1 (Note 2)

Current assets 611,580 763,233 －

Property, plant & equipment

134,565 185,774 －

Intangible assets 21,097 17,437 －

Other assets 609,751 504,692 －

Total assets

(Note 3)

1,376,993 1,471,136 －

48

Before distribution 362,901 576,048 － Current

Liabilities After distribution 391,763 (Note 2) －

Long-term l iabi l i t ies 264,233 42,368 － Before distribution 627,134 618,416 － Total

liabilities After distribution 655,996 (Note 2) －

Equity belong to mother company 749,859 852,720 －

Capital 481,064 489,050 －

Capital reserves 112,720 116,351 － Before distribution 165,431 236,086 － Retained

Earnings After distribution 136,569 (Note 2) －

Other equity interest (9,356) 11,233 － Treasury shares －－－ Non-controlling interests －－－

Total equity 749,859 852,720 － Total equity

720,997 (Note 2) － Note 1: The above annual financial data has been reviewed by CPA accountants. Note 2: Until Mar 31st 2014, the earnings per share of 2013 were not yet admitted by the Shareholders’ Meeting. Note 3: IFRS has been adopted since 2013; the financial statement with ROC GAAP is listed in addition. 4. Concise Summary of Comprehensive Income Statements-Alone

Unit: Thousand NTD

Financial Data for the Recent Five Year (Note 3) Year

Accounts 2009 2010 2011 2012 2013

2014 Q1 (Note 2)

Operating revenue 889,051 875,081 － Gross profit 276,237 246,980 － Net operating income (loss) 82,881 53,011 －

Non-operating Income and Gains (5,798) 63,398 －

Non-operating Expenses and Losses 77,083 116,409 －

Income before tax 64,906 97,915 － Income after tax －－－ Operating revenue 64,906 97,915 － Other Gain(loss)(After tax) (6,874) 27,001 －

Total gain (Loss) 58,032 124,916 － Profit belong to Mother company 58,032 124,916 －

Profit belong to uncontrolled equity －－－

Comprehensive gain (loss)

(Note 3)

58,032 124,916 －

49

Comprehensive gain (loss) －－－

EPS 1.35 2.01 Note 1: The above annual financial data has been reviewed by CPA accountants. Note 2: Until Mar 31st 2014, the earnings per share of 2013 were not yet admitted by the Shareholders’ Meeting. Note 3: IFRS has been adopted since 2013; the financial statement with ROC GAAP is listed in addition. 5. Concise Summary of Balance Sheet - ROC GAAP Unit: Thousand NTD

Financial Data for the Recent Five Years (Note 1) Year Accounts

2009 2010 2011 2012 2013

Current assets 417,110 504,865 621,073 621,097

fund and long-term investments

119,495 185,243 368,968 513,267

Fixed assets 77,365 86,520 111,715 185,943

Intangible assets 2,105 12,598 16,258 21,097

Other assets 11,098 9,467 44,919 44,494

Total assets 627,173 798,693 1,162,933 1,385,898 Before distribution 128,097 213,769 284,635 360,770 Current

Liabilities After distribution － 218,131 289,149 389,632

Long-term liabilities 5,362 189,869 225,660

Land value increment tax provisions

5,636 5,636 5,636

Other liabilities 25,986 30,053 38,476 Before distribution 240,453 250,753 510,193 630,542 Total

liabilities After distribution － 255,115 514,707 659,404

Capital 394,752 436,218 451,470 481,064

Capital reserves 13,978 41,904 66,788 112,720 Before distribution -49,455 54,344 97,697 134,143 Retained

Earning After distribution － 49,982 93,183 105,281

Unrealized gains on financial instruments

－－－－

Cumulative translation adjustments

12,294 323 21,634 12,278

Net loss not recognized as pension cost

－－－－

Unrealized revaluation increment

15,151 15,151 15,151 15,151

Total Before 386,720 547,940 652,740 755,356

Not A

vailable

50

Distribution Shareholder’s equity After

Distribution － 543,578 648,226 726,494

Note 1: The above annual financial data has been reviewed by CPA accountants. 4. Concise Summary of Income Statements - ROC GAAP

Unit: Thousand NTD

Financial Data for the Recent Five Year (Note 1) Year Accounts 2009 2010 2011 2012 2013

Operating revenue 460,061 752,539 881,326 889,051

Gross profit 135,807 239,355 250,340 275,641

Net operating income (loss) 42,679 117,576 78,663 81,226

Non-operating Income and Gains 2,474 17,385 9,789 10,823

Non-operating Expenses and Losses 6,743 24,151 13,259 16,621

Income before tax 38,410 110,810 75,193 75,428

Income after tax 32,373 90,512 60,802 63,532

Discontinued operation gain (loss) －－－－

Extraordinary gain (loss) －－－－

Cumulative account of change in accounting principle －－－－

Net income 32,373 90,512 60,802 63,532

Basic earnings per share 0.76 1.99 1.29 1.34

Not A

vailable

Note 1: The financial statements were audited or certified by CPA. 5. Name of Accounting Firm and Individual Audits and Opinion

Year Accounting Firm Name of the Auditor Auditor Opinion

2009 PricewaterhouseCoopers Taiwan Han-Qi Wu , Ming Ling Xue Modified to None

2010 PricewaterhouseCoopers Taiwan Han-Qi Wu , Ming Ling Xue None

2011 PricewaterhouseCoopers Taiwan Han-Qi Wu , Ming Ling Xue None

2012 PricewaterhouseCoopers Taiwan Qing-Shan Hung , Zong Xi Lai None

2013 PricewaterhouseCoopers Taiwan Qing-Shan Hung,Ming Chuan Fung None

51

B. Financial Analysis for the Past Five Years 1. Financial analysis

Financial Analysis for the Past Five Years Year (Note 1) Analysis (Note 3) 2009 2010 2011 2012 2013

2014 Q1

(Note 2)

Debt to asset ratio (%) 52.77 46.07 45.29 Financial

Structure Long-term fund to property, plant and equipment assets ratio (%)

398.51 275.70 292.17

Current ratio (%) 187.56 172.49 177.97

Quick ratio (%) 154.02 146.79 151.11 Solvency

Interest cover (times) 10.39 11.61 6.09

Receivables turnover

(times) 2.48 2.46 2.81

Average days of collection 147 148 130 Inventory turnover (times) 3.17 2.84 2.88 Average payables turnover 4.33 4.24 4.50 Average days of sales 115 129 127 Property, plant and equipment assets turnover 5.64 3.70 3.07

Asset

Utilization

Total assets turnover 0.85 0.68 0.62

Return on assets (%) 5.08 6.79 3.84 Return on equity (%) 9.32 12.22 5.95

Paid-in capital 16.39 25.31 12.07

Ratio % 5.43 9.14 5.25

Profitability

Net income ratio (%) 1.35 2.01 0.26

Earnings per share (NTD)

(note 3) 19.14 27.77 3.94

Cash flow ratio (%) 2.56 2.94 2.11

Cash

and

Cash Flow Cash flow adequacy ratio (%) 9.37 14.91 2.46

Cash reinvestment ratio

(%) 3.68 3.94 30.86

Leverage Operating leverage

Not Available

1.09 1.14 1.58

52

Please explain the variance of financial ratio for the most recent two years. （The analysis can be waived if the variance is less than 20%）:

Long-term fund to property, plant and equipment assets ratio (%)：Due to domestic corporate convertible bond turned into current liability, this ratio reduced. Property, plant and equipment assets turnover: In 2013, new equipment were purchased for increasing production and caused turnover rate reduced. Total assets turnover: Due to 2012 average assets value is relatively lower, then caused 2012 turn over times higher than average. Profitability: Due to net income in 2013 is higher than 2012, all ratio in 2013 will be higher. Cash flow ratio: Because 2013 net cash inflow from operating activities are more than 2012, so each cash flow ratio will be higher.

Note 1. The above annual financial data has been reviewed by CPA accountants. Note 2. For a listed company, it is necessary to provide the financial report of the first quarter for the coming year when

the financial statement is announced. IFRS has been adopted since 2013; the financial ratio with ROC GAAP is listed in addition.

Note 3. Financial ratio formulas (1) Financial structure Debt to asset ratio = Total debts/total assets Long-term fund to property, plant and equipment assets ratio = (Total equity＋Long-term liabilities)/ Total property, plant and equipment assets

(2) Solvency Current ratio = Current assets/current liabilities Quick ratio = (Current assets – inventory - prepaid expenses)/current liabilities Interest cover = Net income before tax and interest/Interest expense

(3) Asset utilization Receivables turnover (including note receivables resulted from normal operations) = Net sales / average

receivables (including note receivables resulted from normal operations) Average days of collection = 365 / receivables turnover Inventory turnover = Cost of sales / Average inventory Account payable turnover (including accounts payable and notes payable resulted from business operation) =

operating cost of goods sold / average balance of account payable (including accounts payable and notes payable resulted from business operation)

Average days of sales = 365 / Inventory turnover Total property, plant and equipment assets turnover = Net sales / Average net property, plant and equipment

assets Total asset turnover = Net sales / Average total asset

(4) Profitability Return on assets = [Net Income + interest expense x (1 – interest rate) ] / Average total asset Return on equity = Net income / Average shareholder’s equity Net income ratio = Net income / Net sales Earnings per share = (profit and loss attributable to owners of parent －Preferred stock dividend ) / Weighted

average of shares outstanding (5) Cash flow Cash flow ratio ＝Net cash flow from operating activities / Current liabilities Cash flow adequacy ratio ＝last five years’ net cash flow from operating activities / sum of last five years’

capital expenditure, inventory increase and cash dividends Cash reinvestment ratio = Net cash flow from operating activities – Cash dividends) / (Gross property, plant

and equipment assets + Long-term investment + other assets + working capital) (6) Leverage

53

Operating leverage = (Net operating income – Changes in operating costs and expenses)/ Operating profit Financial leverage = Operating profit / (operating profit - interest expense)

1. Financial analysis-Alone Financial Analysis for the Past Five Years Year (Note 1)

Analysis (Note 3) 2009 2010 2011 2012 2013

2014 Q1

(Note 2)

Debt to asset ratio (%) 45.54 42.04 － Financial Structure Long-term fund to fixed

assets ratio (%) 753.61 481.82 －

Current ratio (%) 168.53 132.49 －

Quick ratio (%) 151.34 121.50 － Solvency

Interest cover (times) 11.01 11.74 －

Receivables turnover (times) 2.39 2.76 －

Average days of collection 153 132 － Inventory turnover (times) 6.31 5.83 － Average payables turnover 5.48 7.58 － Average days of sales 58 63 － Fixed assets turnover 7.48 5.46 －

Asset Utilization

Total assets turnover 0.70 0.61 － Return on assets (%) 5.62 7.51 － Return on equity (%) 9.32 12.22 －

Paid-in capital 16.02 23.80 －

Ratio % 7.30 11.19 －

Profitability

Net income ratio (%) 1.35 2.01 － Earnings per share (NTD) (note 3) 30.25 33.08 －

Cash flow ratio (%) 4.04 4.31 －

Cash and

Cash Flow Cash flow adequacy ratio (%) 9.45 15.80 －

Cash reinvestment ratio (%) 4.56 2.71 － Leverage Operating leverage

Not Available

1.17 1.15 －

Please explain the variance of financial ratio for the most recent two years. （The analysis can be waived if the variance is less than 20%）:

Long-term fund to property, plant and equipment assets ratio (%)：Due to domestic corporate convertible bond turned into current liability, this ratio reduced. Property, plant and equipment assets turnover: In 2013, new equipment were purchased for increasing production and caused turnover rate reduced. Total assets turnover: Due to 2012 average assets value is relatively lower, then caused 2012 turn over times higher than average. Profitability: Due to net income in 2013 is higher than 2012, all ratio in 2013 will be higher. Cash flow ratio: Because 2013 net cash inflow from operating activities are more than 2012, so each cash flow ratio will be higher.

Note 1. The above annual financial data has been reviewed by CPA accountants.

54

Note 2. For a listed company, it is necessary to provide the financial report of the first quarter for the coming year when the financial statement is announced. IFRS has been adopted since 2013; the financial ratio with ROC GAAP is listed in addition.

Note 3. Financial ratio formulas (1) Financial structure Debt to asset ratio = Total debts/total assets Long-term fund to property, plant and equipment assets ratio = (Total equity＋Long-term liabilities)/ Total property, plant and equipment assets





Average days of sales = 365 / Inventory turnover Total property, plant and equipment assets turnover = Net sales / Average net property, plant and equipment

assets Total asset turnover = Net sales / Average total asset

(4) Profitability Return on assets = [Net Income + interest expense x (1 – interest rate) ] / Average total asset Return on equity = Net income / Average shareholder’s equity Net income ratio = Net income / Net sales Earnings per share = (profit and loss attributable to owners of parent －Preferred stock dividend ) / Weighted

average of shares outstanding (5) Cash flow Cash flow ratio ＝Net cash flow from operating activities / Current liabilities Cash flow adequacy ratio ＝last five years’ net cash flow from operating activities / sum of last five years’

capital expenditure, inventory increase and cash dividends Cash reinvestment ratio = Net cash flow from operating activities – Cash dividends) / (Gross property, plant

and equipment assets + Long-term investment + other assets + working capital) (6) Leverage Operating leverage = (Net operating income – Changes in operating costs and expenses)/ Operating profit Financial leverage = Operating profit / (operating profit - interest expense)

2. Financial analysis - ROC GAAP

Financial Analysis for the Past Five Years

Year Analysis (Note 1) 2009 2010 2011 2012 2013

Financial Structure Debt to asset ratio (%) 38.34 31.40 43.87 45.50 Not

Available

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Long-term fund to fixed assets ratio (%) 603.27 639.51 754.25 527.59

Current ratio (%) 325.62 236.17 218.20 172.16

Quick ratio (%) 300.85 214.03 199.37 154.87 Solvency

Interest cover (times) 62.55 53.49 22.61 10.79

Receivables turnover (times) 2.24 2.84 2.49 2.39 Average days of collection 163 129 147 153 Inventory turnover (times) 4.59 6.82 7.18 6.31 Average payables turnover 3.94 5.80 4.90 5.48 Average days of sales 80 54 51 58 Fixed assets turnover 5.77 9.18 8.89 5.97

Asset Utilization

Total assets turnover 0.80 1.06 0.90 0.70 Return on assets (%) 5.71 12.94 6.49 5.49 Return on equity (%) 8.7 19.37 10.13 9.02

Operating income 10.81 26.95 17.42 16.88 Paid-in capital Ratio % Pre-tax income 9.73 25.40 16.66 15.68

Net income ratio (%) 7.04 12.03 6.90 7.15

Profitability Profitability

Earnings per share (NTD) (note 3) 0.75 1.97 1.28 1.33 Cash flow ratio (%) － 37.40 13.31 25.49

Cash flow adequacy ratio (%) 73.95 55.77 28.11 31.05 Cash and

Cash Flow Cash reinvestment ratio (%) － 11.73 3.49 8.15

Operating leverage 2.56 1.83 2.77 2.98 Leverage

Financial leverage 1.01 1.02 1.05 1.10

Please explain the variance of financial ratio for the most recent two years. （The analysis can be waived if the variance is less than 20%）: Not applicable.

Note 1. Financial ratio formulas (1) Financial structure Debt to asset ratio = Total debts/total assets Fixed asset ratio = (Net equity＋Long-term liabilities)/Net fixed asset





Average days of sales = 365 / Inventory turnover Fixed asset turnover = Net sales / Average net fixed asset Total asset turnover = Net sales / Average total asset

56

(4) Profitability Return on assets = [Net Income + interest expense x (1 – interest rate) ] / Average total asset Return on equity = Net income / Average net shareholder’s equity Net income ratio = Net income / Net sales Earnings per share = (Net income －Preferred stock dividend ) / Weighted average of shares outstanding

(5) Cash flow Cash flow ratio ＝Net cash flow from operating activities / Current liabilities Cash flow adequacy ratio ＝last five years’ net cash flow from operating activities / sum of last five years’

capital expenditure, inventory increase and cash dividends Cash reinvestment ratio = Net cash flow from operating activities – Cash dividends) / (Gross fixed assets +

Long-term investment + other assets + working capital) (6) Leverage Operating leverage = (Net operating income – Changes in operating costs and expenses)/ Operating profit Financial leverage = Operating profit / (operating profit - interest expense)

54

C. Supervisor’s Report

D. Consolidated Financial Statements: See page 60 in Annual Report E. Impact on the Company’s financial status if Company or its affiliates

experience financial difficulty: None

The Board of Directors has prepared and submitted to us the Corporation’s 2013 financial statements. These statements have been audited by PricewaterhouseCoopers, Taiwan. The financial statements present fairly the financial position of the Corporation and the results of its operations and cash flows. I, as the Supervisor of the Corporation, have reviewed the 2013 Business Report and Financial Statements, also the profits distribution from the 2013 retained earnings. According to Article 219 of the Company Law, we hereby submit this report. 2014 Shareholders Meeting

C.C.P. Contact Probes Co., Ltd. Supervisor

Ying-Xi Yang Ming-Shan Hsu Zheng-zhong Liu

March 9, 2014

55

VII. Overview of Financial Position, Operating Results, and Risk Management

A. Financial Position

Unit: Thousand NTD Differences Year

Item 2013 2012 Amount %

Current assets 1,183,662 1,076,116 107,546 9.99 Fixed assets 324,658 254,473 70,185 27.58 Other assets 45,531 229,463 (183,932) (80.16) Total assets 1,581,289 1,587,842 (6,553) (0.41) Current liabilities 686,201 573,750 112,451 19.60 Long-term liabilities 0 225,660 (225,660) (100.00) Total liabilities 728,569 837,983 (109,414) (13.06) Share capital 489,050 481,064 7,986 1.66 Capital reserve 116,351 112,720 3,631 3.22 Retained earnings 236,086 165,431 70,655 42.71 Total shareholder’s equity 852,720 749,859 102,861 13.72 Explanations:

Fixed assets : Other assets : Long-term liability : Capital reserve :

Increase of fixed assets in 2013 is the result of additional purchase for production equipment to meet clients’ requests. The decrease of other assets is due to pre-paid equipment has been accepted and turned into fix assets. Also because of the 2nd domestic convertible bond will expired within one year, and related restricted assets turned into current assets. Long-term liability decreased is because the 2nd and 3rd domestic unsecured convertible corporate bond turned into one year expired liability or put option being executed Increase of retained earnings in 2013 is the result of continuous earning profits.

56

B. Income Statement 1. Comparison of the recent 2 years

Unit: Thousand NTD Differences Year

Item 2013 2012

Amount %

Net sales 1,071,062 1,194,889 (123,827) (10.36)

Cost of goods sold (Note1)

(634,686) (735,605) (100,919) (13.72)

Gross profit 436,376 459,284 (22,908) (4.99)

Total operating expenses(Note2)

341,541 353,322 (11,781) (3.33)

Operating income

94,835 105,962 (11,127) (10.50)

Non-operating gains(loss)

28,915 (27,132) 56,047 (206.57)

Income before income tax

123,750 78,830 44,920 56.98

Income tax expense

(25,835) (13,924) 11,911 85.54

Net income 97,915 64,906 33,009 50.86

Note1: Increase non-operating gain, Income before tax and net income is because sold investments on equity method.

Note2: Increase of tax is due to increase of profit in 2013.

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2. Gross Profit Analysis Unit: Thousand NTD

Item Year .

Operating revenues

Costs of good sold

Gross profit Gross profit margin

2013 1,071,062 634,686 436,376 41% 2012 1,194,889 735,605 459,284 39%

Explanation: Change in the gross profit margin is less than 20%, so there is no need to

analyze. C. Cash Flow Analysis

1. Cash Flow Analysis Year

Item 2013 2012 Rate of Change

Cash flow ratio 27.77 19.14 45.14

Cash flow adequacy ratio

2.94 2.56 14.96

Cash reinvestment ratio 14.91 9.37 59.17

Explanations:

Cash flow ratio increased more than 20%: Due to cash flow from operating activities increased and current liabilities reduced in 2013. Cash reinvestment ratio increased more than 20%: This was the result of the increase of cash flow from operating activities in 2013.

2. Projected Cash Flow Analysis

Unit: Thousand NTD Projected Cash

Balance Remedy to Cash

Shortage

Cash Balance

Estimated Annual

Net Cash Flow From operating

activities

Estimated Annual Cash

outflow

＋－ Investment plan

Financial plan

266,620 982,800 1,114,271 135,149 – –

D. Effect of Major Capital Expenditure on Financial Position: None

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E. The Explanation of Gain and Loss of Recent Years’ Re-investment Policy and Its Corrective Plan and Invest Plan In The Next Year Unit: Thousand NTD, shares

Investment shares Return on investment in 2012 Acquisition

date

Investee companies

Business item

Invest cost

Book value shares

Proportions of

Stockholders

Net value of shareholding Gain or

loss from investment

Main reason for gain or loss

Corrective plan

2000.08

Great Esteem Services Ltd.

General investment 388,128 484,629 12,762,342 100% 484,629 37,982

profit gained from subsidiary company

-

C.C.P. has set up management methods for investee companies, and will practice it in accordance with The Investee Companies Management Method .To improve investment results and ensure the shareholders’ rights, investee companies have to provide financial statements and business reports for review and analysis. Future investment plan is drafted according to C.C.P.s policy and executed by related investment methods.

58

C.C.P. Contact Probes Co., Ltd

Great Esteem Services Limited

DONGGUAN C.C.P. Contact Probes Co.,

Ltd.

E-Plan International

Limited

C.C.P. INTERNATIONAL

(H.K.) LIMITED

World Success Group Limited

Forefront International

Limited

VIII. Special Notes A. Company Affiliates

1. Group organization structure

100% 100%

100%

100% 100%

100%

59

2. Information of Company Affiliates

Unit: Thousand USD; Thousand NTD 3. Information of Corporate Directors, Supervisors, and General Managers

Unit: shares; % Shares held

Company Title Position Name of Representative Shares %

Great Esteem Services Limited Chairman C.C.P. representative: Chih-Feng Chen 12,762,342 100%

World Success Group Limited Chairman C.C.P. representative: Chih-Feng Chen 12,634,136 100%

E-Plan International Limited Chairman C.C.P. representative: Chih-Feng Chen 1 100%DONGGUAN C.C.P Contact Probes Co., Ltd

Chairman C.C.P. representative: Chih-Feng Chen – 100%

Forefront International Limited Chairman C.C.P. representative: Chih-Feng Chen 1 100%C.C.P. INTERNATIONAL (H.K.) LIMITED

Chairman C.C.P. representative: Chih-Feng Chen 1,000,000 100%

Company title Date of Establishment Address Paid-in

Capital Main Operational

Goals and Products

Great Esteem Services Limited 2000.7.3 Offshore Chambers, P.O. Box 217,

Apia, Samoa TWD388,128Investment

World Success Group Limited 2000.8.15 Offshore Chambers, P.O. Box 217, Apia, Samoa USD12,634Investment

E-Plan International Limited 2000.7.3 Offshore Chambers, P.O. Box 217, Apia, Samoa –Trading and

Investment DONGGUAN C.C.P. Contact Probes Co., Ltd 2000.12.8

NO.10, Nan Mian Auenue, Humen Town, Dongguan, Guangdong, China USD13,135

Testing probes, Receptacles, and Connectors Manufacturing

Forefront International Limited 2007.1.29 Offshore Chambers,P.O.Box

217,Apia,Samoa – Investment

C.C.P. INTERNATIONAL (H.K.) LIMITED 2008.10.25

Unit1, 12/F, No.31, Hung To Road, Billion Trade Center Kwun Tong, Kowloon, Hong Kong

USD128Trading

Documents

C.C.P. Contact Probes Co., Ltd. 2013 Annual Report