E.Sun Financial Holding Co., Ltd. — Capital/Financing Update 2014

US$ 400,000,000

E.Sun Financial Holding Company, Ltd.

(incorporated as a company limited by shares in Taiwan, the Republic of China)

ZERO COUPON CONVERTIBLE BONDS DUE 2009

The US$ 400,000,000 Zero Coupon Convertible Bonds Due 2009 (the “Bonds,”) will be issued by E.Sun Financial Holding Company, Ltd. (referred to in this Information Memorandum as the “Company” or “E.Sun Financial”), a company limited by shares incorporated in Taiwan, the Republic of China. Except during certain closed periods, each Bond will, at the option of the holder, be convertible into our Shares, par value of NT$10 per share (“Shares”), on or after March 27, 2006 up to and including March 7, 2009. The initial conversion price of the Bonds will be (i) NT$21.21 with respect to any conversion from March 27, 2006 to March 31, 2006 per Share and (ii) NT$24.36 with respect to any conversion after April 2, 2006 per Share.

Our Shares are listed on the Taiwan Stock Exchange, and application will be made to list the Shares issuable upon conversion of the Bonds on the Taiwan Stock Exchange. On March 14, 2006, the closing price of our Shares was NT$21 per Share.

Unless previously redeemed, repurchased and cancelled, or converted, the Bonds will be redeemed at 100% of their principal amount in US dollars on March 17, 2009. We may, at our option at any time on or after March 17, 2008 and prior to February 17, 2009, redeem the Bonds, in whole or from time to time in part (being US$100,000 in principal amount or an integral multiple thereof), at 100% of their principal amount, if the Closing Price of the Shares, translated into US dollars at the Prevailing Rate, for at least 20 out of 30 consecutive Trading Days, the last of which occurs not more than 5 Trading Days immediately preceding the date of our redemption notice, is at least 130% of the Conversion Price then in effect, translated into US dollars at a fixed exchange rate of NT$32.434 = US$1.00. We may, at our option at any time, redeem, in whole but not in part, the Bonds at 100% of their principal amount if at least 90% of the principal amount of the Bonds has already been redeemed, repurchased and cancelled, or converted. We may at any time redeem the Bonds, in whole but not in part, at 100% of their principal amount in the event of certain changes in ROC taxation that would require us to gross up for payment of interest, if any, or premium, if any, at a rate greater than 20% or to gross up for the payment of principal. Until and unless previously redeemed, repurchased and cancelled, or converted, each holder of the Bonds has the right, at such holder’s option, to require us to redeem all or a portion (being US$100,000 in principal amount or an integral multiple thereof) of such holder’s Bonds at 100% of their principal amount on March 17, 2008. In addition, each holder of the Bonds has the right to require us to redeem such holder’s Bonds in the event that our Shares cease to be listed on the Taiwan Stock Exchange or in the event of a change of control.

ISSUE PRICE 100%

The Bonds and the Shares issuable upon conversion of the Bonds have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”).

.

The Bonds will be represented by beneficial interests in a global certificate (the “Global Certificate”) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about March 17, 2006 (the “Closing Date”) with Deutsche Bank AG , London Branch, as common depositary (“Common Depositary”) for Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, société anonyme (“Clearstream”). Beneficial interests in the Bonds will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream and their participants. Except as described herein, individual definitive certificates for the Bonds will not be issued in exchange for interests in the Bonds.

This Informaiton Memorandum has been prepared by the Company for reference purposes only and accordingly the Company does not represent, warrant or give any offer assurance in respect of the information contained herein. Persons intending to purchase the Bonds shall make their investment decisions based on their own independent research and information, and not in reliance on this Information Memorandum.

Information Memorandum dated March 14, 2006

TABLE OF CONTENTS

THE OFFERING...................................................................................................................................................1
USE OF PROCEEDS ............................................................................................................................................4
BUSINESS..............................................................................................................................................................5
DESCRIPTION OF THE BONDS.......................................................................................................................7
APPENDIX 1 E. Sun Financial Holding Co., Ltd. Financial Statements for the Years Ended December
31, 2005 and 2004 ...................................................................................................................27

THE OFFERING

Terms used in this summary and not otherwise defined shall have the meanings given to them in “Description of the Bonds.”

Issuer ........................................... E.Sun Financial Holding Company, Ltd. Offering ....................................... US$400,000,000 aggregate principal amount of the Bonds are being offered to non-U.S. persons outside the United States. We have not registered, and will not register, under the securities laws of the United States, the Bonds or any of the Shares issuable upon the conversion of the Bonds. Issue Price.................................... 100% of principal amount. Status ........................................... Direct, unconditional, unsubordinated and, subject to our negative pledge covenant, unsecured debt obligations ranking pari passu and without any preference or priority among themselves and, subject to our negative pledge covenant, with all our other present and future direct, unconditional, unsubordinated and unsecured obligations. Interest......................................... No interest will accrue on the Bonds. Closing Date ................................ March 17, 2006. Maturity Date............................... March 17, 2009. Indenture...................................... The Bonds will be issued under the Indenture, to be dated as of March 17, 2006 (the “Indenture”), between us and DB Trustees (HK) Limited, as trustee. Conversion................................... Each holder of the Bonds has the right to convert any of its Bonds into Shares at any time during the Conversion Period referred to below. Conversion Period ....................... The period on or after March 17, 2006 up to and including March 7, 2009. The holders of the Bonds, however, will not be able to effect conversions into Shares during any Closed Period. A Closed Period means (i) the 60-day period prior to the date of any of our general shareholders’ meetings; (ii) the 30-day period prior to the date of any of our special shareholders’ meetings; (iii) the period from the date following the third Trading Day prior to the date of our notification to the Taiwan Stock Exchange of the record date for the determination of shareholders entitled to the receipt of dividends, subscription of new Shares or other benefits to such record date; and (iv) such other periods during which we may be required to close our stock transfer books under ROC laws and regulations applicable from time to time.

-1-

Conversion Price .........................	The initial Conversion Price will be (i) NT$21.21 with respect to any conversion
	from March 27, 2006 to March 31, 2006 per Share and (ii) NT$24.36 with
	respect to any conversion after April 2, 2006 per Share. The Conversion Price
	will be subject to adjustment for, among other things, subdivision, consolidation
	or reclassifications of Shares, bonus issues, rights issues, distributions of cash
	and stock dividends and other dilutive events. See “Description of the Bonds —
	Conversion.”
	In addition, the Conversion Price may be adjusted, at our option and within our
	sole discretion, in the event that the closing price of the Shares for certain periods
	is less than the Conversion Price then in effect. Any such adjustment to the
	Conversion Price will only be a downward adjustment and will be subject to
	certain limitations. For a discussion of our ability to adjust the Conversion Price,
	see “Description of the Bonds — Conversion — Conversion Price Reset”.
Final Redemption ........................	Unless previously redeemed, repurchased and cancelled, or converted, the Bonds
	will be redeemed at 100% of their principal amount in US dollars on March 17,
	2009. See “Description of the Bonds — Redemption, Repurchase and
	Cancellation — Redemption at Maturity.”
Redemption at the Option of	We may, at our option at any time on or after March 17, 2008 and prior to
the Company................................	Februay 17, 2009, redeem the Bonds, in whole or from time to time in part (being
	US$100,000 in principal amount or an integral multiple thereof), at 100% of their
	principal amount, if the Closing Price of the Shares, translated into US dollars at
	the Prevailing Rate, for at least 20 out of 30 consecutive Trading Days,the last of
	which occurs not more than 5 Trading Days immediately preceding the date of
	our redemption notice, is at least 130% of the Conversion Price then in effect,
	translated into US dollars at a fixed exchange rate of NT$32.434 = US$1.00. We
	may, at our option at any time, redeem, in whole but not in part, the Bonds at
	100% of their principal amount if at least 90% of the principal amount of the
	Bonds has already been redeemed, repurchased and cancelled, or converted. See
	“Description of the Bonds — Redemption, Repurchase and Cancellation —
	Redemption at the Option of the Company.”
Tax Redemption ..........................	We may at any time redeem the Bonds, in whole but not in part, at 100% of their
	principal amount in the event of certain changes in ROC taxation that would
	require us to gross up for payment of interest, if any, or premium, if any, or to
	gross up for the payment of principal. See “Description of the Bonds —
	Redemption, Repurchase and Cancellation — Redemption for Taxation
	Reasons.”
Redemption at the Option of	Until and unless previously redeemed, repurchased and cancelled, or converted,
the Holder of the Bonds...............	each holder of the Bonds has the right, at such holder’s option, to require us to
	redeem all or a portion (being US$100,000 in principal amount or an integral
	multiple thereof) of such holder’s Bonds at 100% of their principal amount on
	March 17, 2008. In addition, each holder of the Bonds has the right to require us
	to redeem such holder’s bonds in whole or in part, at 100% of their principal
	amount in the event that our Shares cease to be listed on the Taiwan Stock
	Exchange or tradings of our Shares has been suspended for a period of at least
	five consecutive Trading Days. See “Description of the Bonds — Redemption,
	Repurchase and Cancellation — Redemption at the Option of the Holders.”

-2-

Redemption at the Option of the Holder of the Bonds upon a Change of Control.....................

Until and unless the Bonds have been previously redeemed, repurchased and cancelled, or converted, each holder shall have the right, at such holder’s option, to require us to repurchase all or a portion (being US$100,000 in principal amount or an integral multiple thereof) of such holder’s Bonds at 100% of their principal amount on the Change of Control Put Date upon the occurrence of a Change of Control (each as defined herein). See “Description of the Bonds — Redemption, Repurchase and Cancellation — Redemption of the Bonds in the Event of Change of Control.”

Form and Denomination of the Bonds.....................................

The Bonds will be issued in registered form, without coupons, in the minimum denomination of US$100,000. The Bonds will be offered, sold and transferred in principal amount of US$100,000 or an integral multiple thereof.

The Bonds will be represented by a global certificate, which will be registered in the name of a nominee of, and be deposited on or about the Closing Date with, Deutsche Bank AG, London Branch, as common depositary for Euroclear and Clearstream.

• Transfer of the Bonds .................. All transfers of the Bonds and entries on the register of holders of the Bonds shall be made subject to the detailed provisions concerning transfer of the Bonds set forth in the Paying, Conversion and Transfer Agency Agreement to be dated as of March 17, 2006 among us, the Trustee, Deutche Bank AG, Hong Kong Branch as the Register and as the Principal Agent and the other paying, conversion and transfer agent appointed thereunder. In addition, transfers of interests in the Bonds and the Shares to be issued upon conversion of the Bonds will be subject to certain other restrictions. For a discussion of these restrictions, see “Description of the Bonds — Transfers of Bonds; Issue of Certificates”

• Governing Law............................ The Indenture, the Paying, Conversion and Transfer Agency Agreement and the Bonds will be governed by, and construed in accordance with, the laws of the State of New York.

• Trustee......................................... DB Trustees (Hong Kong) Limited Listing.......................................... The Shares are listed on the Taiwan Stock Exchange, and application will be made to list the Shares issuable upon conversion of the Bonds on the Taiwan Stock Exchange.

• Principal Agent............................ Deutsche Bank AG, Hong Kong Branch. Registrar ...................................... Deutsche Bank AG, Hong Kong Branch. Placement Agent.......................... Morgan Stanley Services Limited.

-3-

USE OF PROCEEDS

We estimate that the net proceeds from this Offering, after deducting the estimated expenses of this Offering, will be approximately US$ 400 million. We intend to use the net proceeds to strengthen capital adequacy level and to merge with or acquire other financial institutions.

We have no current understandings, agreements or commitments to merge with or acquire any other financial institutions, but we are actively exploring opportunities. There can be no assurance that any merger or acquisition will take place.

We have broad discretion over a large portion of the use of the net proceeds and such use is subject to application by us and approval by our board of directors and, in some cases, by applicable regulatory authorities. We may use the net proceeds in excess of, or less than, the amount required for effecting mergers or acquisitions of other financial institutions for working capital and general corporate purposes, but for which we may need to obtain certain approvals, including from our board of directors and relevant regulatory authorities.

-4-

BUSINESS

Overview

We believe we are one of the leading financial holding companies in Taiwan in terms of asset quality and customer service. We have built a strong brand name that is widely recognized in Taiwan and have cultivated a unique corporate culture that distinguishes us from many of our peer companies. We focus on providing a broad range of high-quality, competitive, innovative financial products and services to our consumer and corporate customers through our three principal subsidiaries: E.Sun Bank, E.Sun Bills Finance, and E.Sun Securities. In addition, through our flagship company, E.Sun Bank, we believe we have been able to deliver strong financial performance while maintaining industry-leading asset quality and prudent credit risk management policy.

In 2003, after conducting a comprehensive review of our operations and in pursuit of a customer-centric organization structure, we reorganized our subsidiaries' various businesses into five product-oriented business platforms, principally consumer banking, credit card, corporate banking, wealth management and treasury products, and established a group-wide management information system serving all business platforms. We believe that such reorganization of our operations will enable us to provide services to our customers more efficiently and to better marshal our resources and cross-sell financial products and services to our group customer base. In January 2004, we entered into a long-term bancassurance agreement with Prudential for distributing standard insurance products and certain insurance products that are tailor-made for the Taiwan market in Taiwan. We believe this strategic partnership will significantly strengthen our insurance distribution business and enhance the depth of our wealth management product offerings. The recent acquisition of the government-restructured Kaohsiung Business Bank (“KBB”) will be key to our future growth as it will increase our domestic branch network from 54 branches to 94 branches and further to up to 114 branches, with up to 67 branches in the greater Taipei area, by the end of 2006. We believe such expansion in distribution network will broaden our customer reach and revenue base.

Our goal is to become a leading financial institution in Taiwan renowned for superior customer service, strong asset quality, reliable operations, professionalism and integrity. We have chosen “E.Sun,” or “Yushan” in Chinese, the highest mountain in Taiwan, as our name to represent our aspiration for excellence. We also place a strong emphasis on cultivating a corporate culture that encourages teamwork, leadership and the hiring of talented and well-qualified people.

We were formed on January 28, 2002 pursuant to the ROC Financial Holding Company Act. The ROC Financial Holding Company Act permits financial institutions to be reorganized under a single financial holding company structure so that the ownership of different operating companies may be consolidated. We believe that the establishment of E.Sun Financial will further promote the integration of business units and personnel and other resources within the E.Sun Financial group and thereby provide customers with more comprehensive and highquality financial products and services.

Our Common Shares are listed on the Taiwan Stock Exchange and trade under the stock code “2884.”

Principal Subsidiaries

E.Sun Bank

E.Sun Bank was formed when its current Chairman Mr. Yung-Jen Huang brought together a group of financial professionals with the goal of forming and managing a first-class professional bank. E.Sun Bank commenced its operations on February 21, 1992 as one of the 16 New Banks that were organized after the ROC government's liberalization of the financial industry. Fourteen years later, E.Sun Bank is the core operating entity of our company, representing approximately 88.7% of our total assets as of December 31, 2005. E.Sun Bank offers a broad range of banking services and financial products to its consumer and corporate customers. As of Decemebr 31, 2005, E.Sun Bank had a client base of approximately 3.1 million distinct customer accounts, E.Sun Bank also has an extensive distribution and customer service network, currently consisting of 94 domestic branches (including 12 sub-branches),

-5-

two overseas branches, 372 ATMs and 3,139 banking staff. We expect to open up to 15 additional branches by the end of 2006 using the inactive branch licenses acquired from KBB. As of December 31, 2005, there were approximately 1.7 million active E.Sun Bank credit cards, which are credit cards that have been used for purchases or payments during the most recent six months, and approximately 2.6 million E.Sun Bank credit cards in force, which are credit cards that have been issued and not cancelled, expired or suspended. In terms of active credit cards, E.Sun Bank was the fourth largest and, in terms of credit cards in force, the fifth largest credit card issuer in Taiwan as of December 31, 2005.

E.Sun Bills Finance

E.Sun Bills Finance was established in 1995 as one of the newly established bills finance companies in Taiwan. E.Sun Bills Finance acts as a broker or dealer for fixed-income securities such as government bonds, financial debentures and short-term bills. E.Sun Bills Finance also offers underwriting services for commercial paper and other products and acts as a surety for its customers by issuing guarantees for commercial paper. As of December 31, 2005, E.Sun Bills Finance was the tweleveth largest bills finance company in Taiwan in terms of trading volume for bills, with a market share of approximately 2.1%, and the eighth largest bills finance company in Taiwan in terms of underwriting volume of commercial paper, with a market share of approximately 4.2%.

E.Sun Securities

E.Sun Securities provides a broad range of brokerage and securities products and services primarily to individuals as well as to corporations and institutions. E.Sun Securities' products and services include securities brokerage, margin trading, underwriting, financial advisory and financial products. In addition, E.Sun Securities engages in proprietary trading of equity and fixed-income securities. As of December 31, 2005, E.Sun Securities had 11 branches and more than 104 brokers throughout Taiwan.

-6-

DESCRIPTION OF THE BONDS

The following is a description of the Terms and Conditions (the “ Conditions ”) of the Bonds (subject to amendment and except for the sentences in italics), which includes summaries of, and is subject to, the more detailed provisions of the Indenture referred to below.

The issue of Zero Coupon Convertible Bonds Due 2009 (the “ Bonds ”) of E.Sun Financial Holding Co., Ltd. (the “ Company ” or “ we ”) was authorized by a resolution of our board of directors adopted on November 10, 2005. The Bonds are initially limited to US$400,000,000 aggregate principal amount. The Company may from time to time, without notice to or consent of the holders of the Bonds, issue further bonds which will form a single series with the Bonds. Any such additional bonds will be identical in all respects to the Bonds, except the bonds issued in the future will have different issuance prices and issuance dates. The Bonds will be issued on or about March 17, 2006 (the “ Issue Date ”) pursuant to an indenture (the “ Indenture ”) dated the Issue Date between us and DB Trustees (Hong Kong) Limited, as trustee (the “ Trustee ”, which term shall include all persons for the time being appointed as trustee or trustees under the Indenture) for the holders of the Bonds. We will also enter into a paying, conversion and transfer agency agreement (the “ Agency Agreement ”) dated the Issue Date with the Trustee, Deutsche Bank AG, Hong Kong Branch as the registrar (the “ Registrar ”) and as the principal paying, conversion and transfer agent (the “ Principal Agent ”) and any other paying, conversion and transfer agent appointed thereunder (each a “ Paying Agent ”, “ Conversion Agent ” and “ Transfer Agent ” and together with the Principal Agent and the Registrar, the “ Agents ”) in relation to the Bonds. The registrar, principal paying, conversion and transfer agent, paying agents, conversion agents and transfer agents for the time being are referred to below as the “ Registrar ”, the “ Principal Agent ”, the “ Paying Agents ” (which expression shall include the Principal Agent), the “ Conversion Agents ” (which expression shall include the Principal Agent) and the “ Transfer Agents ” (which expression shall include the Principal Agent and the Registrar), respectively. Copies of the Indenture and the Agency Agreement are available for inspection during normal business hours at the principal office of the Trustee and at the specified offices of each of the Agents. The holders of the Bonds are entitled to the benefit of the Indenture and are bound by, and are deemed to have notice of, all of the provisions of the Indenture and the Agency Agreement.

1. Status

The Bonds constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 3, unsecured obligations of the Company and shall at all times rank pari passu and without any preference or priority among themselves and, subject to the provisions of Condition 3, with all other present and future direct, unconditional, unsubordinated and unsecured obligations of the Company, except as may be required by mandatory provisions of law.

2. Form, Denomination and Title

(A) Form and Denomination

The Bonds shall be issued in registered form, without coupons, and shall be offered, sold and transferred in the principal amount of US$100,000 or an integral multiple thereof. The Bonds shall initially be represented by the Global Certificate (the “ Global Certificate ”), and only under the limited circumstances described in the Global Certificate and the Indenture shall definitive bond certificates (each a “ Definitive Certificate ”) be issued to holders of the Bonds in respect of their individual holdings. Each Definitive Certificate, if issued, shall be serially numbered and shall have an identifying number which shall be recorded on the relevant certificate and in the register of holders of the Bonds, which the Company shall procure to be kept by the Registrar.

(B) Title

The Bonds shall be registered instruments, and title to the Bonds shall pass by transfer and registration of title in the register of holders of the Bonds. The holder of any Bond shall, except as otherwise required by law, be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or loss of, the Definitive Certificate issued in respect of it), and no

-7-

person shall be liable for so treating the holder. In these Conditions, “ holder of the Bonds ” and “ holder ” in relation to a Bond mean the person in whose name a Bond is registered in the register of holders of the Bonds.

3. Certain Covenants

(A) Negative Pledge

So long as any of the Bonds remains outstanding, the Company will not, and will not permit any of its Principal Subsidiaries (as defined below) to create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest (“ Security ”) upon the whole or any part of the property, assets or revenues of the Company or such Principal Subsidiary, as the case may be, present or future, to secure for the benefit of the holders of any International Investment Securities (as defined below) any payment of any sum due in respect of or under any guarantee of or payment indemnity or other like obligation relating to any such International Investment Securities, unless, in any such case, at the same time or prior thereto, either (i) the same Security is granted to the holders of the Bonds or (ii) there is outstanding any guarantee, indemnity or other like obligation or such other security that is not materially less beneficial to the holders of the Bonds or as shall be approved by holders of the Bonds holding not less than 50% of the principal amount of the outstanding Bonds; provided, that the foregoing restriction shall not apply to Security on the property or assets of the Company or any of its Principal Subsidiaries for the benefit of the holders of International Investment Securities in aggregate principal amount no greater than US$10,000,000 issued by any of the Company’s Principal Subsidiary to be designated in writing by the Company to the Trustee.

For the purposes of these Conditions:

“ International Investment Securities ” means bonds, debentures, notes, or other similar investment securities of the Company or any of its Principal Subsidiaries evidencing indebtedness with a maturity of not less than one year that (a) either (i) are by their terms payable, or confer a right to receive payment, in any currency other than NT dollars or (ii) are denominated or payable in NT dollars and more than 50% of the aggregate principal amount thereof is initially distributed outside the ROC by the Company or with its authorization; and (b) are for the time being, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange, quotation system or over-the-counter or other similar securities market outside the ROC.

“ Principal Subsidiary ” means any corporation or other business entity, more than 50% of the outstanding voting stock of which is for the time being owned directly or indirectly by the Company and either (a) the net sales or net operating revenues of which, as shown by the accounts (consolidated in the case of an entity which itself has subsidiaries) of such entity upon which the most recent audited consolidated accounts of the Company have been based, are at least 10% of its consolidated net sales or net operating revenues, as the case may be, as shown by such audited consolidated accounts; or (b) the gross assets of which, as shown by the aforementioned accounts, are at least 10% of its consolidated gross assets as shown by such audited consolidated accounts; provided, however, with respect to the Company, that “P rincipal Subsidiary ” shall be deemed to include (but not limited to) each of E.Sun Bank, E.Sun Bills Finance and E.Sun Securities and their successors.

(B) Mergers and Disposals

The Company shall not merge, amalgamate or consolidate with or into any other corporation or entity (if the Company is not the surviving entity) or sell or transfer all, or substantially all, of its assets, whether as a single transaction or a number of transactions, related or not, to any corporation, entity or person or to one or more members of any group under the common control of any corporation, entity or person unless:

• (i) the Company has notified the holders of the Bonds of such event in accordance with Condition 14;

• (ii) the Company and such corporation, entity or person have executed an indenture supplemental to the Indenture, in form and substance satisfactory to the Trustee, and the supplemental indenture includes the following: (a) the express assumption by such corporation, entity or person of the Company’s obligations under the Bonds, the Indenture and the Agency Agreement, including the covenants contained in this Condition 3(B) relating to subsequent mergers, amalgamations, consolidations, sales or transfers; (b) provisions for the convertibility of each Bond then outstanding into the class and amount of Shares and other securities, cash and other property receivable upon such consolidation,

-8-

amalgamation, merger, sale or transfer by a holder of the number of Shares into which such Bonds would have been convertible immediately prior to such consolidation, amalgamation, merger, sale or transfer (assuming for such purpose that the Bonds were convertible at the time of such consolidation, amalgamation, merger, sale or transfer) at the Conversion Price as adjusted from time to time pursuant to the Indenture; and (c) provisions for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in the provisions of Condition 5(C); and

(iii) immediately after giving effect to any such consolidation, amalgamation, merger, sale or transfer, no default or Event of Default shall have occurred or be continuing or would result therefrom.

In the event of any such consolidation, amalgamation, merger, sale or transfer, the provisions described under Condition 7(C) and Condition 8 will be applicable to the corporation formed by such consolidation, amalgamation or merger or the Person as defined in Condition 7(F) acquiring such assets as appropriate and the holders of the Bonds will be entitled to the benefits under Condition 7(F), if applicable.

4. Transfers of Bonds; Issue of Certificates

(A) Transfers

A Bond may be transferred as follows: (i) in the case of a Bond represented by a Definitive Certificate, by depositing such certificate during normal business hours at the specified offices of any Transfer Agent, with the form of transfer on the back of such certificate duly completed and signed, or (ii) in the case of a Bond represented by the Global Certificate, by delivery at such office of a form of transfer duly completed and executed, and any other evidence that such Transfer Agent may require.

The forms of transfer are available at the specified offices of any Transfer Agent during normal business hours. Transfers of interests in the Bonds evidenced by the Global Certificate shall be effected in accordance with the rules of Euroclear or Clearstream.

(B) Delivery of New Definitive Certificates

Each new Definitive Certificate to be issued upon transfer of the Bonds shall, within five Business Days of receipt by the Transfer Agent of the duly signed and completed form of transfer, be mailed by uninsured mail at the risk of the holder entitled to the Bonds to the address specified in the form of transfer.

Where some but not all of the Bonds in respect of which a Definitive Certificate is issued are to be transferred, converted or redeemed, a new Definitive Certificate in respect of the Bonds not so transferred, converted or redeemed shall, within five Business Days of deposit or surrender of the original certificate with or to the relevant Agent, be mailed by uninsured mail at the risk of the holder of the Bonds not so transferred, converted or redeemed to the address of such holder appearing on the register of holders of the Bonds.

For the purposes of this Condition 4:

“ Business Day ” means a day (other than a Saturday or Sunday) on which commercial banks are open for business in the city in which the specified office of the Transfer Agent with whom a Definitive Certificate is deposited in connection with a transfer is located.

(C) Formalities Free of Charge

Registration of transfer of the Bonds shall be effected without charge by or on behalf of the Company or any of the Agents, subject to payment (and the giving of such indemnity as the Company or any of the Agents may require) in respect of any tax or other governmental charges which may be imposed in relation to it.

-9-

(D) Restricted Transfer Period

No holder of the Bonds may require the transfer of a Bond to be registered (i) during the period of 15 days ending on (and including) the due date for any payment in respect of the Bond pursuant to Condition 6 and Condition 7(A), (ii) after the Bond has been selected for redemption pursuant to Condition 7(B) or Condition 7(C), (iii) following exercise by the holder of its option to require the Company to redeem the Bond pursuant to Condition 7(D) or Condition 7(F) or (iv) following exercise by the holder of its option to convert the Bond pursuant to Condition 5(A).

(E) Provisions on Transfer

All transfers of the Bonds and entries on the register of holders of the Bonds shall be made subject to the detailed provisions concerning transfer of the Bonds set forth in the Agency Agreement. Such provisions may not be changed without the prior written approval of the Trustee and the Registrar. A copy of the current provisions shall be mailed (or sent via facsimile) by the Registrar upon written request.

5. Conversion

We have agreed in the Indenture that, within five Trading Days (as defined below) from each Conversion Date (as defined in Condition 5(B)(i)), we will issue and deliver the Shares, through book-entry or physical delivery, to the converting holder or its designee, subject to applicable law and the provisions of the Indenture relating to the conversion.

The Indenture provides that the term “ Shares ” means, when used to refer to the class or classes of our capital stock into which the Bonds are convertible and when used in certain other instances, only our Shares, NT$10 par value per Share, but when used elsewhere, including in Condition 5(C), such term also includes Shares of any other class or classes of our capital stock authorized after the date of the Indenture that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation or winding-up.

(A) Conversion Right

• (i) Conversion Period . Each holder of the Bonds has the right hereunder to convert any Bond into Shares subject to the terms set forth herein (the “ Conversion Right ”). Subject to and upon compliance with the provisions of this Condition 5, the Conversion Right attaching to any Bond may be exercised, at the option of the holder of the Bonds and to the extent provided herein, at any time (i) on or after March 27, 2006 and prior to the close of business (at the place where such Bond is deposited for conversion) on March 7, 2009 (or if such day shall not be a Business Day (as defined below) at such place, on the immediately preceding Business Day at such place) or (ii) if such Bond shall have been called for redemption on a redemption date on or prior to March 7, 2009 (or if such day shall not be a Business Day at the place where such Bond is deposited for conversion, on the immediately preceding Business Day at such place), then up to the close of business (at the place aforesaid) on the tenth day prior to the date fixed for redemption thereof (or if such day shall not be a Business Day at such place, on the immediately preceding Business Day at such place) (the “ Conversion Period ”); provided, however, that the Conversion Right during any Closed Period (as defined below) shall be suspended and the Conversion Period shall not include any such Closed Period. Holders of the Bonds shall be given not less than 7 and not more than 60 days notice in accordance with Condition 14 of the commencement of any Closed Period.

For the purposes of these Conditions:

“ Closed Period ” means (i) the 60-day period prior to the date of any of the Company’s general shareholders’ meetings; (ii) the 30-day period prior to the date of any of the Company’s special shareholders’ meetings; (iii) the period from the date following the third Trading Day (as defined below) prior to the date of the Company’s notification to the Taiwan Stock Exchange of the record date for the determination of shareholders entitled to the receipt of dividends, subscription of new Shares due to capital increase or other benefits and bonuses to such record date; and (iv) such other

-10-

periods during which the Company may be required to close its stock transfer books under ROC laws and regulations applicable from time to time.

“ Trading Day ” means a day when the Taiwan Stock Exchange is open for business.

For the purposes of this Condition 5:

“ Business Day ” means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London and the city in which the specified office of the Conversion Agent with whom a Conversion Notice is deposited in connection with the conversion is located.

Under current ROC law, regulation and policy, PRC persons are not permitted to hold or convert the Bonds or to register as our shareholders. Under current ROC law, “ PRC person ” means an individual holding a passport issued by the PRC; a resident of any area of China under the effective control or jurisdiction of the PRC (but not including a special administrative region of the PRC such as Hong Kong or Macau, if so excluded by applicable laws of the ROC); any agency or instrumentality of the PRC; and any corporation, partnership or other entity organized under the laws of any such area or controlled or beneficially owned by any such person, resident, agency or instrumentality.

Under current ROC law, a non-ROC converting holder of the Bonds, when exercising its conversion right to convert the Bonds into Shares, is required to appoint a local agent, also referred to as a Tax Guarantor, in the ROC to file tax returns and make tax payments on its behalf. In addition, a non-ROC converting holder is required to appoint a local agent in the ROC with such qualifications as are set by the ROC Securities and Futures Bureau. Such local agent shall open a securities trading account with a local brokerage firm and a NT dollar bank account, pay ROC withholding taxes, remit funds, exercise shareholders’ rights and perform such other matters as may be designated by such converting holder on behalf of and as agent for such person. In addition, such non-ROC converting holder must also appoint a custodian bank to hold the securities for safekeeping, make confirmation and settlement of trades, and report all relevant information. Without first registering with the Taiwan Stock Exchange and opening such accounts, the converting holder of the Bonds would not be able to hold or sell or otherwise transfer the Shares on the Taiwan Stock Exchange or otherwise.

• (ii) Number of Shares Issuable on Conversion . The number of Shares issuable upon conversion of any Bond shall be determined by dividing the principal amount of the Bond (translated into NT dollars at a fixed exchange rate of NT$32.434 = US$1.00, the “ Fixed Exchange Rate ”) by the Conversion Price (as defined in Condition 5(A)(iii)) in effect on the Conversion Date (as defined in Condition 5(B)(i)). If more than one Bond shall be deposited for conversion at any one time by the same holder of the Bonds, the number of Shares to be issued upon conversion thereof shall be calculated on the basis of the aggregate principal amount of the Bonds so deposited. Fractions of Shares shall not be issued on conversion, and cash adjustments shall not be made in respect thereof by the Company. Notwithstanding the foregoing, in the event of a consolidation or reclassification of Shares by operation of law or otherwise that occurs after the date of the original issuance of the Bonds, the Company shall upon conversion of the Bonds pay in US dollars a sum equal to such portion of the principal amount of the Bonds deposited for conversion as corresponds to any fraction of a Share not issued as aforesaid if such sum exceeds US$10. For the purpose of calculating the amount of such payment, the Company shall use the Fixed Exchange Rate.

• (iii) Initial Conversion Price . The price at which Shares shall be issued upon conversion (the “ Conversion Price ”) shall initially be (i) with respect to any conversion from March 27, 2006 to March 31, 2006, NT$21.21 per share, and (ii) with respect to any conversion after April 2, 2006, NT$24.36 per Share, but shall in the case of clause (ii) only be subject to adjustment in the manner provided in Condition 5(C) and Condition 5(D).

• (iv) Revival on Default . Notwithstanding the provisions of Condition 5(A)(i), if an Event of Default (as defined in Condition 9) occurs, the Conversion Right attaching to a Bond shall continue to be

-11-

exercisable up to and including the close of business at the place where the relevant Conversion Notice (as defined in Condition 5(B)(i)) is deposited for conversion on the date upon which the full amount of the monies payable in respect of such Bond has been duly received by the Trustee or the Principal Agent and notice of such receipt has been duly given to the holders of the Bonds.

(B) Conversion Procedures

• (i) Exercise Procedures; Conversion Notice; Deposit Date; Conversion Date . To exercise the Conversion Right attaching to any Bond, a holder of the Bond shall deposit the following at its own expense between 9:00 a.m. and 3:00 p.m. on any Business Day at which the Bond is presented for conversion during the Conversion Period at the specified office of a Conversion Agent outside the ROC:

• (a) a notice of conversion (a “ Conversion Notice ”) in duplicate, duly completed and signed, in the then-current form obtainable from the specified office of any Conversion Agent, together with the relevant Definitive Certificate, if issued, in respect of the relevant Bond;

• (b) any certificates and other documents as may be required under the law of the ROC or the jurisdiction in which such Conversion Agent shall be located; and

• (c) any amount required to be paid by the holder of the Bond referred to in Condition 5(B)(ii) below.

Any of the above items deposited after 3:00 p.m. as specified above or on a day that is not a Business Day shall for all purposes be deemed to have been deposited with that Agent on the immediately succeeding Business Day. The Conversion Notice shall contain, among other things, (i) the appointment of a local agent; (ii) an irrevocable instruction to convert the Bonds into Shares; and (iii) other information required by ROC laws and regulations. Once deposited, the Conversion Notice may not be withdrawn without the Company’s consent in writing. Holders of the Bonds who deposit a Conversion Notice on the final Business Day prior to a Closed Period or who deposit a Conversion Notice during a Closed Period will not be permitted to convert their Bonds until the Trading Day following the last day of that Closed Period which (if all other conditions to conversion have been fulfilled) will be the Conversion Date for such Bonds. Such holders will not be registered as holders of the Shares until the Conversion Date. The price at which such Bond shall be converted shall be the Conversion Price in effect on the Conversion Date (as defined below).

We will covenant in the Indenture that we will send to the Trustee an officer’s certificate, which certificate the Trustee may exclusively rely on, certifying that to the best knowledge of such officer, there has been no change in the laws or regulations of the ROC affecting the conversion of the Bonds, including any change in the ROC laws or regulations in connection with any certificates or other documents required for the conversion of the Bonds.

For the purposes of these Conditions:

“ Deposit Date ” means the Business Day on which (i) the Definitive Certificate, if issued, in respect of the Bond to be converted, (ii) a duly signed and completed Conversion Notice (in duplicate), (iii) any certificates or other documents, as may be required, relating thereto, and (iv) the payments referred to in Condition 5(B)(ii) below, as may be required, have all been deposited with a Conversion Agent.

“ Conversion Date ” means the Business Day next following the Deposit Date that must be a Trading Day with respect to the Shares and must fall within the Conversion Period and is not within a Closed Period.

• (ii) Taxes and Expenses . As conditions precedent to the exercise of the Conversion Right attaching to any Bond, together with the delivery of the Conversion Notice, the Definitive Certificate, if issued, and any certificates or other documents as may be required, the holder of the Bond must pay, when the Bond is deposited for conversion, to the relevant Conversion Agent all stamp, issue, registration and similar taxes or duties or transfer costs, if any, arising on conversion in the country in which the Bond is deposited for conversion, or all stamp, issue, registration and similar taxes or duties or transfer costs

-12-

payable to the relevant authorities in any jurisdiction upon the issue or delivery of Shares or any other property or cash upon conversion to or to the order of a person other than the converting holder of the Bond. Except as aforesaid, the Company shall pay the expenses arising in the ROC on the issue of Shares upon conversion of the Bond and all charges of the Conversion Agents in connection therewith as provided in the Agency Agreement.

• (iii) Holder of Record . With effect from the opening of business in the ROC on the Conversion Date, the Company shall deem the converting holder of a Bond as indicated in the Conversion Notice to have become the holder of record of the number of Shares to be issued upon such conversion, disregarding any retroactive adjustment of the Conversion Price referred to below prior to the time such retroactive adjustment shall have become effective. At such time, subject to Condition 5(B)(iv), the rights of such converting holder with respect to the Bond deposited for conversion shall cease, except rights arising under Condition 5(B)(v).

• (iv) Delivery of Shares . On the Conversion Date the Company shall register the converting holder of a Bond or its designee in its register of shareholders as the owner of the number of Shares to be issued pursuant to Condition 5(B)(iii) upon conversion of such Bond. Subject to any applicable limitations then imposed by ROC laws and regulations, the Company shall deliver in accordance with the Indenture and the request made in the relevant Conversion Notice as soon as practicable, and in any event within five Trading Days (subject to applicable law) from the Conversion Date, for the benefit of the converting holder the following:

• (a) the relevant Shares, through book-entry transfer to an account registered in the name of the converting holder or its designee at Taiwan Securities Central Depository Co., Ltd. or physical delivery;

• (b) any other property or cash (including, without limitation, cash payable pursuant to Condition 5(A)(ii)) required to be delivered upon conversion; and

• (c) such documents as may be required by law to effect the delivery thereof.

• (v) Retroactive Adjustment of Conversion Price . If (a) the Conversion Date in relation to any Bond shall be on or after a date with effect from which an adjustment to the Conversion Price takes retroactive effect pursuant to any of the provisions referred to in Condition 5(C) and the Indenture and (b) the relevant Conversion Date falls on a date when the relevant adjustment has not been reflected in the Conversion Price, the Company shall, within 20 days after the date of such adjustment of the Conversion Price, issue and deliver by book-entry or physical delivery to the local agent appointed by the converting holder of the Bond such number of Shares as is equal to the excess of (1) the number of Shares that would have been required to be issued on conversion of such Bond if the relevant retroactive adjustment had been made as of the said Conversion Date over (2) the number of Shares previously issued pursuant to such conversion (the “ Excess Shares ”); and in such event and in respect of such number of Shares, references in Conditions 5(B)(iii) and 5(B)(iv) to the Conversion Date shall be deemed to refer to the date upon which such retroactive adjustment becomes effective disregarding the fact that it becomes effective retroactively. Fractions of Shares shall not be issued, and no cash adjustment shall be made in respect thereof.

• (vi) Dividend and Other Entitlement . The converting holder of a Bond shall be entitled to any annual dividend distributions of the Company if the Conversion Date is prior to the relevant record date (and the relevant closure of the shareholders’ register) for determining the identity of shareholders who are entitled to such dividend distributions.

• (vii) Conversion Agents . The Company reserves the right, subject to the provisions of the Agency Agreement and with the prior written consent of the Trustee, to vary or terminate the appointment of any Conversion Agent and to appoint other Conversion Agents at any time. Notice of any such termination or appointment and of any changes in the specified offices of the Conversion Agents shall be given promptly by the Company to the holders of the Bonds in accordance with Condition 14.

-13-

• (viii) Depositary Receipts . The Company may, at its option, but is not required to, make arrangements satisfactory to the Trustee for the Bonds to be converted into depositary receipts or other scrip evidencing Shares. Any such arrangements shall be in addition to the provisions of these Conditions relating to conversion into Shares.

(C) Adjustments to Conversion Price

The Conversion Price shall be subject to adjustment in the manner set forth in the Indenture upon the occurrence of certain events set out in the Indenture, including:

• (i) the making of a free distribution of Shares, including distribution from retained earnings or capital reserve;

• (ii) subdivisions, consolidations or reclassifications of Shares;

• (iii) the declaration of a dividend in Shares;

• (iv) the issue of (a) securities convertible into or exchangeable for Shares at less than the then Current Market Price or (b) options, rights or warrants to subscribe for or purchase Shares at less than the then Current Market Price or to subscribe for or purchase securities convertible into or exchangeable for Shares at less than the then Current Market Price;

• (v) a Capital Distribution (as defined below) or other distribution to the holders of Shares of (a) evidences of indebtedness of the Company, (b) share of capital stock (other than Shares) of the Company, (c) assets or (d) options, rights or warrants to subscribe for or purchase shares (other than Shares) or securities (other than those mentioned in (iv) above);

• (vi) the issue of Shares (other than (a) Shares issued upon conversion of the Bonds; (b) Shares issued to shareholders of any company that merges with the Company upon such merger in proportion to their shareholdings in such company immediately prior to such merger; and (c) Shares issued in any of the circumstances (i) through (v) described above), including Shares issued in any employee dividend or employee profit-sharing arrangements, at less than the then Current Market Price; and

• (vii) any other event or circumstance that would have, in the Company’s determination, an analogous effect to any of the events in (i) to (vi) above.

The Trustee shall not be obligated to monitor whether any event has occurred that might fall within (i) to (vii) above and shall assume that no such event has occurred until it has actual knowledge by way of notice in writing from the Company to the contrary.

For the purposes of these Conditions:

“ Capital Distribution ” means any dividend or distribution by the Company, whether of cash, assets or other property (other than Shares), for any financial period and whenever paid or made and however described (and for these purposes a distribution of assets includes, without limitation, an issue of other securities credited as fully or partly paid up); provided, that, where a cash dividend is announced which is to be, or may at the election of a holder or holders of Shares be, satisfied by the issue or delivery of other property or assets then the Capital Distribution in question shall be treated as a Capital Distribution of (a) the cash dividend so announced or (b) the Fair Market Value of such property or assets to be issued or delivered in satisfaction of such cash dividend (or which would be issued if all holders of Shares elected therefor, regardless of whether any such election is made) if the Fair Market Value of such property or assets is greater than the cash dividend so announced.

“ Closing Price ”, in relation to the Shares for any Trading Day, means the last reported transaction price or, if no transaction takes place on such day, the last available reported transaction price of the Shares on the Taiwan Stock Exchange in effect on the Trading Day immediately preceding such day or, if the Shares are not at that time listed or admitted to trading on the Taiwan Stock Exchange, the average of the closing bid and offered prices of

-14-

Shares for such day as furnished by a leading independent securities firm licensed to trade on the Taiwan Stock Exchange selected by the Company for that purpose.

“ Current Market Price ”, in relation to the Shares, for any day means (a) the average of the Closing Prices for the 30 consecutive Trading Days commencing 45 Trading Days before such day and (b) when used with respect to any issuance or distribution, the average of the Closing Prices for the 30 consecutive Trading Days commencing not more than 45 Trading Days (with the commencement date selected by the Company) before the first day on which the Shares without the right to receive such issuance or distribution trade in a regular way on the Taiwan Stock Exchange, other applicable securities exchange or any applicable securities market; provided, however, if no Closing Price is available for one or more Trading Days, such day or days shall be disregarded in any relevant calculation and shall be deemed not to have existed when ascertaining any period of consecutive Trading Days.

(D) Conversion Price Reset

If the average of the Closing Prices of the Shares for 20 consecutive Trading Days (the “ Average Closing Price ”) immediately prior to January 1, 2007 and January 1, 2008, respectively (each, a “ Reset Date ”), converted into US dollars at the Prevailing Rate on the Reset Date, is less than the Conversion Price then in effect converted into US dollars at the Fixed Exchange Rate, the Conversion Price may be adjusted, at the option and within the sole discretion of the Company, in accordance with the following formula:

Fixed Exchange Rate Adjusted Conversion Price = 116% x Average Closing Price x Prevailing Rate

Such Adjusted Conversion Price shall be rounded upwards, if necessary, to the nearest NT$0.01.

Provided that:

• (i) any adjustment to the Conversion Price pursuant to this Condition 5(D) shall be limited so that the Conversion Price so adjusted shall not be less than 80% of the initial Conversion Price (but adjusted to reflect any adjustments which may have occurred prior to the relevant Reset Date pursuant to Condition 5(C));

• (ii) the provisions of Condition 5(D) shall apply mutatis mutandis to the provisions relating to Condition 5(C) to ensure that appropriate adjustments shall be made to any Closing Price to reflect any adjustment made to the Conversion Price pursuant to Condition 5(C); and

• (iii) for the avoidance of doubt any adjustments to the Conversion Price made pursuant to this Condition 5(D) shall only be downward adjustments.

Any such adjustments shall become effective as of the relevant Reset Date and shall be notified to the holders of the Bonds in accordance with Condition 14 by the Company within two days of such Reset Date.

(E) Provisions Applicable to All Conversions and Adjustments of Conversion Price

No adjustment shall be made where such adjustment would be less than 1% of the then Conversion Price, but any adjustment that otherwise would be required to be made shall be carried forward and taken into account in determining any subsequent adjustment. Any adjustment shall be notified promptly by the Company to the Principal Agent, the Trustee, the Conversion Agents and the holders of the Bonds in accordance with Condition 14.

As a result of any adjustment required by this Condition 5, the Conversion Price may be reduced to an amount below the par value of the Shares to the extent permitted by ROC law, provided that any Shares issued upon the conversion of a Bond at such reduced Conversion Price will be legally issued, fully-paid and non-assessable.

-15-

We have covenanted in the Indenture not to take any action that would reduce the Conversion Price to an amount below the par value of the Shares unless the Bonds could be converted at such reduced Conversion Price into legally issued, fully-paid and non-assessable Shares.

6. Payments

(A) Manner of Payment

Payment in respect of a Bond shall be made (i) by transfer to the registered account of the holder of the Bond or (ii) if such holder does not have a registered account, by a US dollar check mailed to its registered address. The registered account and address of a holder of the Bonds mean its account and address appearing on the register of holders of the Bonds at the close of business on the second Business Day (as defined below) before the due date for payment.

References in these Conditions, the Indenture and the Agency Agreement to payment in respect of a Bond shall, where the context so permits, be deemed to include not only a reference to the principal of, but also to any premium, interest and other amounts payable on, such Bond.

For the purposes of this Condition 6 and Condition 3(B) and Condition 7:

“ Business Day ” means a day (other than a Saturday or Sunday) on which commercial banks are open for business in The City of New York, in London, in Hong Kong, in Taiwan and, in the case of the surrender of a Definitive Certificate, in the place where the Definitive Certificate is surrendered.

(B) Commissions and Expenses

All payments are subject in all cases to any applicable fiscal or other laws and regulations, but without prejudice to the provisions of Condition 8. No commissions or expenses shall be charged to the holders of the Bonds in respect of such payments.

(C) Date of Payment

Where payment is to be made by transfer to a registered account, payment instructions for value the due date (or, if that date is not a Business Day, for value on the next Business Day) shall be initiated. Where payment is to be made by check, the check shall be mailed (at the risk of the holders of the Bonds) on the Business Day preceding the due date for payment. Notwithstanding the above, payment of principal of a Bond represented by a Definitive Certificate shall not be made earlier than the Business Day on which the relevant Certificate is surrendered at the specified office of an Agent.

(D) Default Interest and Payment Delay

If the Company fails to pay any sum in respect of the Bonds when the same becomes due and payable under these Conditions, interest shall accrue on the overdue sum at the rate of 3.0% per annum from the due date and ending on the date that the Trustee determines to be the date on and after which payment is to be made to the holders of the Bonds in respect thereof (both dates inclusive) as stated in a notice given to the holders of the Bonds in accordance with Condition 14. Such default interest shall accrue on the basis of the actual number of days elapsed and a 360-day year consisting of 12 months of 30 days each.

A holder of the Bonds shall not be entitled to any interest or other payment for any delay in receiving the amount due if (i) the due date is not a Business Day, (ii) the Bond is represented by a Definitive Certificate and the holder is late in surrendering its Definitive Certificate (if required to do so) or (iii) a check mailed in accordance with this Condition 6 arrives after the due date for payment.

-16-

7. Redemption, Repurchase and Cancellation

(A) Redemption at Maturity

Unless the Bonds have been previously redeemed, repurchased and cancelled, or converted as herein provided, the Company shall redeem the Bonds at 100% of their principal amount in US dollars on March 17, 2009 (the “ Maturity Date ”) or if such day shall not be a Business Day, on the immediately preceding Business Day. The Bonds may be redeemed prior to that date only as provided in Conditions 7(B), (C), (D) and (F) below, but without prejudice to Condition 9.

(B) Redemption at the Option of the Company

At any time on or after March 17, 2008 and prior to February 17, 2009, the Company may, having given not less than 30 or more than 60 days notice to the holders of the Bonds (which notice shall be irrevocable and delivered in accordance with Condition 7(I) and Condition 14), redeem the Bonds in whole, or from time to time in part (being US$100,000 in principal amount or an integral multiple thereof), at 100% of their principal amount if the Closing Price (as defined in Condition 5(C)) of the Shares, translated into US dollars at the Prevailing Rate (as defined below) on the same day, for at least 20 out of 30 consecutive Trading Days, the last of which occurs not more than 5 Trading Days immediately preceding the date of such notice of redemption, is at least 130% of the Conversion Price then in effect, translated into US dollars at the Fixed Exchange Rate. If an event giving rise to a change in the Conversion Price occurs during such 30 consecutive Trading Days, appropriate adjustments for the relevant days shall be made for the purpose of calculating the Closing Price for such days.

Notwithstanding the conditions to the Company’s right to redeem the Bonds set forth in the paragraph above, at any time, the Company may, having given not less than 30 or more than 60 days notice to the holders of the Bonds (which notice shall be irrevocable and delivered in accordance with Condition 7(I) and Condition 14), redeem the Bonds in whole, but not in part, at 100% of their principal amount if at least 90% in principal amount of the Bonds has already been redeemed, repurchased and cancelled or converted.

For the purposes of these Conditions:

“ Prevailing Rate ” for any Trading Day means the last available buying rate for the purchase of US dollars against the sale of NT dollars quoted by Taipei Forex Inc. (or a replacement agency selected by the Company and approved by the Trustee) on such Trading Day or, if no buying rate is quoted on such Trading Day, the last available buying rate quoted on the immediately preceding Trading Day.

(C) Redemption for Taxation Reasons

At any time, the Company may, having given not less than 30 or more than 60 days notice to the holders of the Bonds (which notice shall be irrevocable and delivered in accordance with Condition 7(I) and Condition 14), redeem the Bonds in whole, but not in part, at 100% of their principal amount, provided that the Company satisfies the Trustee that, immediately prior to the giving of such notice:

• (i) the Company has become obliged to pay Additional Amounts (as defined in Condition 8) as a result of any change in, or amendment to, the laws or regulations of the ROC or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective after the date of the original issuance of the Bonds and would require the Company to gross up for payment of interest or premium, if any, at a rate greater than 20% or to gross up for the payment of principal; and

• (ii) such obligation cannot be avoided by the Company taking reasonable measures available to it.

Notwithstanding the foregoing, no such notice of redemption shall be given earlier than 30 days prior to the earliest date on which the Company would be obliged to pay such Additional Amounts.

Prior to the delivery of any notice of redemption pursuant to this Condition 7(C), the Company shall deliver to the Trustee (1) a certificate signed by two of its authorized officers stating that the obligation referred to in (i) above

-17-

cannot be avoided by taking reasonable measures available to it, and the Trustee shall be entitled to accept such certificate as sufficient and conclusive evidence of the satisfaction of the condition precedent set out in clause (ii) above and (2) an opinion addressed to the Trustee by an independent law firm of recognized standing admitted to practice in the ROC or a written advice of a qualified tax expert addressed to the Trustee to the effect that the Company has or will become obliged to pay such Additional Amounts as a result of such change or amendment, and the Trustee shall be entitled to accept such certificate and opinion or advice as sufficient and conclusive evidence of the conditions precedent referred to in this Condition 7(C), in which event it shall be conclusive and binding on the holders of the Bonds. The Bonds in respect of which a notice of redemption has been given under Condition 7(B), 7(D) or 7(F) shall not be affected by any notice given subsequently under this Condition 7(C).

(D) Redemption at the Option of the Holders

Each holder of the Bonds shall have the right (the “ Holders’ Put Right ”) to require the Company to redeem in whole, or in part only (being US$100,000 in principal amount or an integral multiple thereof), the Bonds held by such holder on March 17, 2008 (the “ Holders’ Put Date ”) at 100% of their principal amount. Not less than 30 or more than 60 days prior to this date, the Company shall notify the holders of the Holders’ Put Right which notice shall be delivered in accordance with Condition 7(I) and Condition 14.

In the event that the Shares cease to be listed or admitted to trading on the Taiwan Stock Exchange or the trading of the Shares has been suspended for a period of at least five consecutive Trading Days (as defined in Condition 5(A)) (a “ Delisting ”), the Company shall notify the holders promptly (which notice shall be delivered in accordance with Condition 7(I) and Condition 14), and each holder of the Bonds shall have the right (the “ Delisting Put Right ”) to require the Company to redeem such holder’s Bonds in whole or in part, at 100% of their principal amount on the 20th Business Day (as defined in Condition 6) after the date of such notice.

(E) Non-Redemption Option of the Holders

If the Company gives a notice of redemption of the Bonds under Condition 7(C), each holder of the Bonds shall have the right (the “ Non-Redemption Right” ) to elect that all or a portion (being US$100,000 in principal amount or an integral multiple thereof) of its Bonds not be redeemed. Upon the exercise of the Non-Redemption Right with respect to such Bonds, no Additional Amounts referred to in Condition 8 shall be payable on the payments due after the relevant date in respect of such Bonds and, notwithstanding Condition 8, such payments shall be made subject to the deduction or withholding required under the laws or regulations of the ROC. For the avoidance of doubt, any increased amounts that had been payable in respect of the Bonds under Condition 8 as a result of the laws or regulations of the ROC in effect on the original date of their issuance shall continue to be payable to such holders of the Bonds.

(F) Redemption of the Bonds in the Event of Change of Control

If a Change of Control, as defined below, occurs with respect to the Company, each holder of the Bonds shall have the right (the “ Change of Control Put Right ”) at such holder’s option, to require the Company to repurchase all (or any portion of the principal amount thereof which is US$100,000 or any integral multiple thereof) of such holder’s Bonds on the date set by the Company for such repurchase (the “ Change of Control Put Date ”), which shall not be less than 30 nor more than 60 days following the date on which the Company notifies the Trustee of the Change of Control, at a price equal to 100% of their principal amount.

The definitions of certain terms used in this section are listed below.

The term “Control” as used in this section means the right to appoint and/or remove all or the majority of the members of the Company’s board of directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise.

A “ Change of Control ” occurs when:

• (1) any Person or Persons (as defined below) acting together acquires Control of the Company if such Person or Persons does not or do not have, and would not be deemed to have, Control of the Company on the Closing Date;

-18-

• (2) the Company consolidates with or merges into or sells or transfers all or substantially all of the Company’s assets to any other Person, unless the consolidation, merger, sale or transfer will not result in the other Person or Persons acquiring Control over the Company or the successor entity; or

• (3) one or more other Persons acquires the legal or beneficial ownership of all or substantially all of the Company’s total issued and outstanding Capital Stock (as defined below).

However, a Change of Control will not be deemed to have occurred (i) solely as a result of the issuance or transfer, with the Company’s cooperation, of any preferred shares in the Company’s capital or (ii) if the Closing Price per Share for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the later of the Change of Control or the public announcement of the Change of Control equals or exceeds 110% of the Conversion Price in effect on each of those five Trading Days.

“ Capital Stock ” means, with respect to any Person, any and all shares, ownership interests, participation or other equivalents (however designated), including all common stock and all preferred stock, of such Person.

“ Person ” means any individual, limited liability company, corporation, company, firm, partnership, joint venture, tribunal, undertaking, association, organization, trust, government or political subdivision or agency or instrumentality thereof or any other entity or organization, in each case whether or not being a separate legal entity; provided, however, that “Person” does not include (a) the Company’s board of directors, supervisors or any other governing board or (b) the Company’s wholly owned direct or indirect subsidiaries.

(G) Repurchase and Cancellation

The Company or any Subsidiary (as defined below) may at any time and from time to time repurchase the Bonds in the open market or otherwise at any price. The Company shall surrender any Bonds so repurchased to the Principal Agent or the Registrar for cancellation. For the purpose of these Conditions:

“ Subsidiary ” means any company or other business entity more than 50% of the issued share capital or other ownership interest of which is for the time being owned, directly or indirectly, by the Company.

(H) Cancellation

All Bonds that are redeemed, repurchased or converted and surrendered to any Agent shall forthwith be cancelled. In the case of Bonds represented by Definitive Certificates, certificates in respect of all Bonds cancelled shall be forwarded to or to the order of the Registrar or the Principal Agent. Bonds cancelled may not be reissued or resold.

(I) Redemption Procedures

In the event that the Company is required to deliver a notice to the holders of the Bonds under this Condition 7, the Company shall provide, or procure the provision by the Principal Agent of, the notice to each holder of the Bonds in accordance with Condition 14 and the provisions of the Agency Agreement, which notice shall state, to the extent applicable:

• (i) the date fixed for redemption;

• (ii) in the case of a Delisting, the date of such Delisting and, briefly, the events that resulted in such Delisting;

• (iii) in the case of a Change of Control, the date of such Change of Control and, briefly, the events causing such Change of Control;

• (iv) the date by which the Exercise Notice (as defined below) must be given by the holder;

• (v) the applicable redemption price of a Bond on the redemption date and the method by which such redemption price will be paid;

-19-

• (vi) the names and addresses of all Paying Agents;

• (vii) the Conversion Price then in effect;

• (viii) the procedures that holders must follow and the requirements they must satisfy in order to exercise their Holders’ Put Right, Delisting Put Right, Non-Redemption Right, Change of Control Put Right and/or Conversion Right, as the case may be;

• (ix) that an Exercise Notice, once validly given, may not be withdrawn; and

• (x) in the case of a redemption of less than all of the Bonds then outstanding pursuant to Condition 7(B), the identifying numbers of the Bonds drawn for redemption.

To exercise its Holders’ Put Right, Non-Redemption Right, Delisting Put Right or Change of Control Put Right, as the case may be, a holder must deliver at its own expense a written irrevocable notice of the exercise of such right (an “ Exercise Notice ”) in the form obtainable from any of the Agents, to any Paying Agent during normal business hours on any Business Day that is not fewer than ten (10) Business Days prior to the date fixed for redemption.

Payment of the redemption price upon exercise of the Holders’ Put Right, Delisting Put Right or Change of Control Put Right attaching to any Bond represented by a Definitive Certificate for which an Exercise Notice has been delivered is conditioned upon the delivery of such Definitive Certificate (together with any necessary endorsements) to any Paying Agent during normal business hours on any Business Day, together with the delivery of such Exercise Notice, and shall be made promptly following the later of the relevant redemption date and the time of delivery of such Definitive Certificate. If the Paying Agent holds on a redemption date money sufficient to pay the redemption price for a Bond for which an Exercise Notice has been delivered, then, whether or not the Definitive Certificate representing such Bond is delivered to the Paying Agent, on and after such redemption date (i) such Bond shall cease to be outstanding; (ii) such Bond shall be deemed paid; and (iii) all other rights of the holder shall terminate, other than the right to receive the redemption price.

(J) Partial Redemption

In the case of a redemption of less than all of the Bonds then outstanding pursuant to Condition 7(B), the Bonds to be redeemed shall, upon notification being given by the Company to the Principal Agent, be selected individually by lot by the Principal Agent, in such place as the Trustee shall approve and in such manner as the Trustee shall deem to be appropriate and fair, not more than 70 days or less than 40 days prior to the date fixed for redemption. Any such selection by the Principal Agent will be conclusive and binding on the Company and the holders of the Bonds. In case of partial redemption of Bonds in registered form represented by the Global Certificate, the Bonds to be redeemed shall be selected in accordance with the rules and procedures of Euroclear and Clearstream.

8. Taxation

Subject to Condition 7(E), all payments in respect of the Bonds by the Company shall be made free and clear of and without any deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature (“ Taxes ”) imposed, levied, collected, withheld or assessed by or on behalf of the government of the ROC or any authority thereof or therein having power to tax, provided that, in respect of any such deduction or withholding from any such payment, the Company shall pay such additional amounts (“ Additional Amounts ”) as will result in the receipt by the holders of the Bonds of the amounts that would have been receivable in the absence of any such deduction or withholding, except that no Additional Amounts shall be payable in respect of any Bond:

• (iii) to, or on behalf of, a holder who is subject to such taxes, duties, assessments or governmental charges in respect of such Bond by reason of its being connected with the ROC otherwise than merely by holding such Bond or by the receipt of payments in respect of the Bond;

• (iv) to or on behalf of a holder of the Bond or its beneficial owner to the extent that such holder or beneficial owner would not be liable for or subject to such deduction or withholding by making a declaration of non-residence or other claims for exemption or deduction to the relevant tax authorities

-20-

if such holder or beneficial owner is eligible to make such declaration or claim and, such holder or beneficial owner fails to timely do so; or

• (v) if the Definitive Certificate, if issued, in respect of the Bond is presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder would have been entitled to such additional amount on surrendering the relevant certificate for payment on the last day of such 30-day period.

The Company will not pay Additional Amount if the registered holder of the Bond is a fiduciary, partnership or other than the sole beneficial owner of any payment to the extent that a beneficiary or settlor with respect to a fiduciary, a member of a partnership or the beneficial owner of that payment would not have been entitled to the Additional Amount if it had been the registered holder of the Bond.

References in these Conditions to payments in respect of the Bonds shall be deemed also to refer to any Additional Amounts that may be payable in respect thereof under this Condition 8.

For the purposes of these Conditions:

“ Relevant Date ” in relation to any Bonds means (a) the due date for payment in respect thereof, or (b) if the full amount of the monies payable on such due date has not been received by the Trustee or the Principal Agent on or prior to such due date, the date on which notice is duly given to the holders of the Bonds that such monies have been so received.

9. Events of Default

The Trustee at its discretion may, and if so requested in writing by the holders of the Bonds of not less than 25% in principal amount of the Bonds then outstanding shall (in each case subject to being indemnified and/or secured by the holders of the Bonds to its satisfaction), give notice in writing to the Company that the Bonds are immediately due and payable, if an Event of Default (as defined below) shall have occurred and be continuing. Upon any such notice being given to the Company, the Bonds shall immediately become due and payable at 100% of their principal amount plus any overdue interest payable in accordance with Condition 6(D). Notwithstanding the foregoing, if any of the events specified in clauses (vi), (vii) and (viii) shall have occurred, the Bonds shall forthwith become immediately due and payable at 100% of their principal amount, plus any overdue interest payable in accordance with Condition 6(D), without regard to the giving of any such notice. An “ Event of Default ” occurs if:

• (i) the Company fails to pay the principal of, premium or interest, if any, on, any of the Bonds within seven days after the same shall become due and payable; or

• (ii) the Company fails to deliver Shares as and when such Shares are required to be delivered upon the conversion of a Bond which failure is not remedied within 2 Trading Days; or

• (iii) the Company defaults in performance or observance of or compliance with any of its other obligations set out in the Bonds or the Indenture, which default is incapable of remedy or, if in the opinion of the Trustee such default is capable of remedy, such default is not remedied within 30 days after written notice of such default shall have been given to the Company by the Trustee; or

• (iv) (a) any other present or future indebtedness of the Company or any of its Principal Subsidiaries (as defined in Condition 3) for or in respect of monies borrowed or raised becomes due and payable prior to its stated maturity by reason of an event of default, howsoever described, or any such indebtedness is not paid when due or, as the case may be, within any applicable grace period originally provided for or (b) the Company or any of its Principal Subsidiaries fails to pay when due any amount payable by the Company or such Principal Subsidiary, as the case may be, under any present or future guarantee or indemnity or arrangement or obligation having a like or similar effect, howsoever described, for any monies borrowed; provided that the aggregate amount of the relevant indebtedness or amount payable in respect of which one or more events mentioned above in this paragraph (iv) have occurred equals or exceeds US$15,000,000 or its equivalent in any other currency; or

-21-

• (v) there shall have been entered against the Company or any of its Principal Subsidiaries a final judgment, decree or order by a court of competent jurisdiction for the payment of money in excess of US$20,000,000 with respect to the Company or any of its Principal Subsidiaries (or its equivalent in any other currency or currencies) and 60 days shall have passed since the entry of the order without it being bonded, satisfied, discharged or stayed; provided, that where two or more of the Company and/or its Principal Subsidiaries are liable for the payment of the same relevant debt, whether liable jointly and severally, by way of guarantee, surety or otherwise, any such amount shall be counted once without duplication; or

• (vi) a decree or order by a court having jurisdiction shall have been entered adjudging the Company or any of its Principal Subsidiaries bankrupt or insolvent, or approving a petition seeking the Company’s reorganization or that of any of its Principal Subsidiaries under any applicable bankruptcy, insolvency or reorganization law, or for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of, or all or substantially all of the business or assets of, or for the windingup or liquidation of the affairs of, the Company or any of its Principal Subsidiaries; or

• (vii) an effective resolution shall be passed for the winding-up or liquidation of the Company or of any of its Principal Subsidiaries, or the Company or any of its Principal Subsidiaries shall institute proceedings to be adjudicated as a voluntary bankruptcy, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or arrangement under any applicable bankruptcy, insolvency or reorganization law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of all or substantially all of its business or assets, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or corporate action shall be taken by the Company or any of its Principal Subsidiaries in furtherance of any of the aforesaid purposes; or

• (viii) proceedings shall have been initiated against the Company or any of its Principal Subsidiaries under any applicable bankruptcy, insolvency, or reorganization law and such proceedings shall not have been discharged or stayed within a period of 90 days (or such longer period as the Trustee may consider appropriate on the advice of counsel); or

• (ix) it is or will become unlawful for the Company to perform or comply with one or more of its obligations under any of the Bonds, the Indenture or the Agency Agreement.

10. Prescription

Claims against any payment in respect of the Bonds shall be prescribed unless made within six years from the relevant date of payment in respect thereof.

Under ROC laws, claims in respect of (i) payment of principal would become unenforceable after 15 years and (ii) payment of interest and premium would become unenforceable after five years, each measured from the relevant date for payment in respect thereof.

11. Enforcement

At any time after the Bonds have become due and payable, the Trustee may, at its discretion and without further notice, take such proceedings against the Company as it may think fit to enforce payment in respect of the Bonds, including any premium and interest, and to enforce the provisions of the Indenture; provided, however, that the Trustee shall not be bound to take any such actions unless (a) it shall have been so requested in writing by the holders of at least 25% in principal amount of the Bonds then outstanding and (b) it shall have been indemnified and/or secured to its satisfaction. No holder of the Bonds shall be entitled to proceed directly against the Company, unless (i) such holder has previously given written notice to the Trustee of a continuing Event of Default; (ii) the holders of the Bonds of not less than 25% in aggregate principal amount of the Bonds then outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (iii) such holder of the Bonds or holders of the Bonds have offered to the Trustee indemnity and/or security to its satisfaction against the costs, expenses, and liabilities to be incurred in compliance with such

-22-

request; (iv) the Trustee, having become bound to take proceedings against the Company, fails to do so and such failure shall have continued for a period of 60 days and (v) no direction inconsistent with the Trustee taking such proceedings has been given to the Trustee during such 60-day period by the holders of not less than a majority in principal amount of the Bonds then outstanding.

12. Meetings of Holders of the Bonds, Modification and Waiver

(A) Meetings

The Indenture will contain provisions for convening meetings of holders of the Bonds to consider any matter affecting their interests, including the approval of amendments or modifications of the terms and conditions of the Bonds or the provisions of the Indenture upon either the written consent of the holders of not less than a majority in principal amount of the Bonds then outstanding or the approval at a meeting of holders duly called by persons entitled to vote not less than a majority in principal amount of the Bonds then outstanding, with a quorum of persons holding or representing over 50% in principal amount of the Bonds then outstanding; provided that no such modification of the terms and conditions of the Bonds or the provisions of the Indenture may, without the consent of holders representing at least 75% in principal amount of the Bonds then outstanding:

• (i) change the place or currency of payment of principal of, or interest, if any, on, any Bond or the method of calculating any such payment;

• (ii) alter the Company’s obligations relating to the mergers and disposals, and the payment of Additional Amounts, as described in Conditions 3(B) and 8, respectively;

• (iii) modify the provisions concerning the voting and quorum required at any meeting of holders of the Bonds; or

• (iv) release the Company from any obligation under the Indenture other than in accordance with the provisions of the Indenture, or amend or modify any provision relating to such release;

provided, further , that no such modification of the terms and conditions of the Bonds or the provisions of the Indenture may, without the consent of each holder of the Bonds affected thereby:

• (i) modify the Maturity Date;

• (ii) reduce the principal, redemption price of, the rate of interest, if any, on, any Bond or increase the Conversion Price (as adjusted in accordance with the provisions of the Indenture);

• (iii) impair the right to institute suit for the enforcement of any payment on any Bond;

• (iv) alter the Company’s obligations relating to the negative pledge as described in Condition 3(A);

• (v) except to the extent permitted by Condition 12(B) below, modify, cancel or adversely affect the Conversion Right, Holders’ Put Right, Delisting Put Right, Non-Redemption Right or the Change of Control Put Right;

• (vi) reduce the above-stated percentage of outstanding Bonds the consent of whose holders of the Bonds is necessary to modify or amend the Indenture; or

• (vii) reduce the percentage or aggregate principal amount of outstanding Bonds the consent of whose holders of the Bonds is necessary for waiver of compliance with provisions of the Indenture or for waiver of certain defaults under the Indenture.

The Indenture will provide that, in determining whether the holders of the Bonds representing the requisite principal amount of Bonds then outstanding are present at a meeting of holders of the Bonds for quorum purposes or have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, Bonds owned by the Company or any other obligor upon the Bonds or any affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be

-23-

protected in relying upon any such determination as to the presence of a quorum or upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds as to which the Trustee has actually received written notice shall be so disregarded.

(B) Modification of Conversion Right

Notwithstanding Condition 12(A) above, the Trustee may agree to, without the consent of the holders of the Bonds, any modification to the Conversion Right that (i) is in the Trustee’s opinion necessary or desirable to effect or facilitate conversion as contemplated in these Conditions and (ii) is not materially prejudicial to the interests of the holders of the Bonds. The Trustee’s agreement may be subject to any condition which the Trustee requires, including but not limited to the delivery of an opinion of a financial or legal or other expert, and shall be binding on the holders of the Bonds. Unless the Trustee instructs the Company otherwise, any such modification shall be notified by the Company to the holders of the Bonds as soon as practicable thereafter in accordance with Condition 14.

(C) Other Modifications and Waivers

The Trustee may, in its sole discretion, also agree to, without the consent of the holders of the Bonds, (i) any modification of, or the waiver or authorization of any breach or proposed breach of, the Bonds, the Indenture or the Agency Agreement that is not, in the Trustee’s opinion, materially prejudicial to the interests of the holders of the Bonds or (ii) any modification of the Bonds or the Indenture that, in the Trustee’s opinion, is of a formal, minor or technical nature or to correct a manifest error or an error which is proven or to comply with mandatory provisions of law. In connection with such modification, waiver or authorization, the Trustee may require a certificate from the Company certifying, and a legal opinion advising the Trustee, that the modification, waiver or authorization is of a formal, minor or technical nature or to correct a manifest error or an error which is proven or to comply with a mandatory provision of law. Any such modification, waiver or authorization shall be binding on the holders of the Bonds. Unless the Trustee instructs the Company otherwise, any such modification, waiver or authorization shall be notified by the Company to the holders of the Bonds as soon as practicable thereafter in accordance with Condition 14.

(D) Exercise of Trustee’s Functions

Where the Trustee is required in connection with the exercise of its powers, trusts, authorities, duties and discretions to have regard to the interests of the holders of the Bonds, it shall have regard to the interests of the holders of the Bonds as a class and, in particular but without prejudice to the generality of the foregoing, the Trustee shall not have regard to, or be in any way liable for, the consequences of such exercise for any individual holder resulting from it being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory. In connection with any such exercise, the Trustee shall not be entitled to require, and no holder of Bonds shall be entitled to claim, from the Company, the Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon such individual holder of the Bonds.

13. Replacement of Certificates

Any replacement of mutilated, defaced, destroyed, stolen or lost Definitive Certificates shall take place at the specified offices of the Registrar and Paying Agents in accordance with the provisions of the Indenture, which provisions include the following:

• (i) replacement certificates shall only be issued upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Company and the Registrar may reasonably require;

• (ii) mutilated or defaced certificates must be surrendered before replacements will be issued;

-24-

• (iii) in the event any Bonds represented by a mutilated, destroyed, lost or stolen Definitive Certificate has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Definitive Certificate representing such Bonds, make payment as consideration for the cancellation of the Bonds represented thereby in accordance with the Conditions.

14. Notices

All notices to holders of the Bonds shall be validly given if made in writing in English and mailed to them at their respective addresses in the register of holders of the Bonds maintained by the Registrar. So long as the Bonds are represented in the form of the Global Certificate and held on behalf of Euroclear or Clearstream or the alternative clearing system (as defined in the form of the Global Certificate), notice to holders of the Bonds may alternatively be given by delivery of the relevant notice to Euroclear or Clearstream or the alternative clearing system, for communication by it to entitled account holders.

Any such notice shall be deemed to have been given on the seventh day after being so mailed.

15. Indemnification

The Indenture contains provisions for the indemnification of the Trustee and its directors, officers, employees or agents and for its and their relief from responsibility, including provisions relieving it and/or them from taking proceedings to enforce payment unless indemnified (to the reasonable satisfaction of the Trustee).

16. Agents

The Company reserves the right, subject to the provisions of the Agency Agreement, at any time to vary or terminate the appointment of Agents. Notice of any such termination or appointment, of any changes in the specified offices of the Agents, or of any change in the identity or specified office of any Paying, Conversion and Transfer Agent shall be given promptly by the Company to the holders of the Bonds in accordance with Condition 14.

17. Governing Law and Jurisdiction

(A) Governing Law

The Indenture, the Agency Agreement and the Bonds are governed by and shall be construed in accordance with the laws of the State of New York.

(B) Jurisdiction

The courts of the State of New York sitting in the Borough of Manhattan, The City of New York, and the federal courts of the United States sitting in the Borough of Manhattan, The City of New York, are to have jurisdiction to settle any disputes that may arise out of or in connection with the Bonds and accordingly any legal action or proceedings arising out of or in connection with the Bonds (“ Proceedings ”) may be brought in such courts. The Company has in the Indenture irrevocably submitted to the jurisdiction of such courts.

(C) Agent for Service of Process

The Company has irrevocably appointed National Corporate Research, Ltd., 225 W. 34[th] Street, Suite 910, New York NY, 10011, United States of America, as its agent in the State of New York to receive service of process in any Proceedings in the State of New York based on any of the Bonds.

(D) Disclosure Requirement

The Indenture provides that the Company may have certain disclosure and reporting obligations under ROC laws and regulations if:

the person to be registered as a shareholder is a “related party” of the Company under Statement of Financial Accounting No. 6 of the ROC and such person beneficially owns Shares converted from the Bonds; or

-25-

the person to be registered as a shareholder owns Shares converted from the Bonds and the Shares converted exceed 10% of the total number of the Shares expected to be converted based on the Conversion Price at the time of issuance of the Bonds.

Due to these obligations, if so instructed by the Company and/or Conversion Agent, the Trustee may ask the converting holders of the Bonds to disclose the name of the person to be registered as the shareholder and to provide proof of identity and authenticity of any signature and other documents before it will convert the Bonds. The conversion of the Bonds may be delayed until the Trustee receives the requested information and satisfactory evidence of the compliance with all laws and regulations by the holders of the Bonds. The information the holders of the Bonds are required to provide may include the name and nationality of the person to be registered as shareholder and the total number of Shares which such person has or will receive in connection with the Bonds such person is converting or has converted in the past.

-26-

APPENDIX 1

E. Sun Financial Holding Co., Ltd. Financial Statements for the Years Ended December 31, 2005 and 2004

-27-

E.SUN FINANCIAL HOLDING CO., LTD.

BALANCE SHEETS DECEMBER 31, 2005 AND 2004 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 16) Receivables (Notes 2, 5 and 16) Deferred income tax assets - current (Notes 2 and 13) Prepaid expenses (Note 16) Total current assets LONG-TERM EQUITY INVESTMENTS (Notes 2 and 6) Equity method Cost method Total long-term investments PROPERTIES (Note 2) Miscellaneous equipment Accumulated depreciation Net properties OTHER ASSETS Deferred pension costs (Notes 2 and 10) Deferred income tax assets - noncurrent (Notes 2 and 13) Refundable deposit (Notes 16 and 17) Total other assets	2005	% 8 1 - - 9 91 - 91 - - - - - - -	2004	% - 2 - - 2 98 - 98 - - - - - - -
	Amount $ 4,003,158 647,499 - 959 4,651,616 44,629,600 40,000 44,669,600 943 52 891 2,278 - 1,433 3,711		Amount $ 56,436 967,648 688 3 1,024,775 43,383,341 40,000 43,423,341 - - - 1,041 688 - 1,729

TOTAL $ 49,325,818 100 $ 44,449,845 100

LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current portion of long-term liabilities (Note 9) Payables (Notes 2, 7 and 16) Advances Deferred income tax liabilities - current (Notes 2 and 13) Total current liabilities CORPORATE BONDS PAYABLE (Notes 2 and 8) LONG-TERM DEBTS, NET OF CURRENT PORTION (Notes 6 and 9) ACCRUED PENSION COST (Notes 2 and 10) Total liabilities STOCKHOLDERS’ EQUITY Capital stock - NT$10 par value, authorized 5,000,000 thousand shares, issued 3,027,000 thousand shares in 2005 and 2,930,610 thousand shares in 2004 Capital surplus Paid-in capital in excess of par value From treasury stock Total capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Unrealized loss on long-term equity investments Cumulative translation adjustments Net loss not recognized as net pension cost Total stockholders’ equity TOTAL	2005	% - 1 - - 1 10 - - 11 61 9 7 16 2 - 10 12 - - - 89 100	2004
	Amount $ - 371,273 - 19,940 391,213 5,000,000 200,000 4,337 5,595,550 30,270,000 4,383,057 3,224,587 7,607,644 936,547 103,008 4,891,495 5,931,050 (73,877 ) (2,888 ) (1,661 ) 43,730,268 $ 49,325,818		Amount $ 838,000 851,274 292 - 1,689,566 - 400,000 1,041 2,090,607 29,306,096 4,383,057 3,224,587 7,607,644 452,903 53,767 5,041,836 5,548,506 (89,856 ) (13,152 ) - 42,359,238 $ 44,449,845	% 2 2 - -
				4 - 1 -
				5
				66
				10 7
				17
				1 - 11
				12
				-
				-
				-
				95
				100

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

-3-

E.SUN FINANCIAL HOLDING CO., LTD.

STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2005 AND 2004 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES (Note 2) Income from long-term equity investments under the equity method (Note 6) Other operating revenue Total operating revenues OPERATING COSTS Loss from long-term equity investments under the equity method (Notes 2 and 6) GROSS PROFIT OPERATING EXPENSES (Notes 10, 11 and 16) OPERATING INCOME NONOPERATING INCOME AND GAINS Interest income (Note 16) Others Total nonoperating income and gains NONOPERATING EXPENSES AND LOSSES Interest expense Foreign exchange loss, net (Notes 2 and 16) Amortization of bond issuance expense (Note 2) Loss on short-term investments Others Total nonoperating expenses and losses INCOME BEFORE INCOME TAX INCOME TAX BENEFIT (Notes 2 and 13) NET INCOME	2005	% 99 1 100 - 100 1 99 - - - 1 - - - - 1 98 3 101	2004
	Amount $ 4,560,451 56,785 4,617,236 18,145 4,599,091 49,431 4,549,660 1,832 - 1,832 27,152 56 - - - 27,208 4,524,284 132,065 $ 4,656,349		Amount $ 4,806,239 30,623 4,836,862 54,317 4,782,545 49,663 4,732,882 102,973 42 103,015 19,858 55,686 34,622 2,493 74 112,733 4,723,164 113,273 $ 4,836,437	% 99 1
				100 1
				99 1
				98
				2 -
				2
				- 1 1 - -
				2
				98 2
				100

(Continued)

-4-

EARNINGS PER SHARE (Note 15) Basic Diluted	2005 Before After Income Income Tax Tax $ 1.49 $ 1.54 $ 1.49 $ 1.54	2004	2004
	Before Income Tax $ 1.49 $ 1.49	Before Income Tax $ 1.84 $ 1.68	After Income Tax $ 1.88 $ 1.73

Pro forma information under the assumption that the shares of E.Sun Financial Holding Co., Ltd. held by its subsidiaries were not treated as treasury stock:

NET INCOME BASIC EARNINGS PER SHARE DILUTED EARNINGS PER SHARE		2004 $ 8,060,541 2004	2004 $ 8,060,541 2004
	Before Income Tax $ 2.82 $ 2.61		After Income Tax $ 2.86 $ 2.65

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

(Concluded)

-5-

E.SUN FINANCIAL HOLDING CO., LTD.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2005 AND 2004 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2004 Appropriation of prior year’s earnings Legal reserve Special reserve Dividend - Cash - Stock Remuneration to directors and supervisors Bonus to employees - 8,773 thousand shares and $26,781 thousand in cash Balance after appropriation Conversion of corporate bonds payable to capital stock Treasury stock transaction recognized by subsidiaries Subsidiary’s transfer of shares to employees by a Subsidiary Cash dividends from the Company received by the Subsidiaries Net income in 2004 Translation adjustments on long-term equity Investments Unrealized loss on long-term equity investments BALANCE, DECEMBER 31, 2004 Appropriation of prior year’s earnings Legal reserve Special reserve Dividend - Cash - Stock Remuneration to directors and supervisors Bonus to employees - 8,472 thousand shares and $43,493 thousand in cash Balance after appropriation Net income in 2005 Additional minimum pension liability in excess of the sum of unrecognized prior service cost and unrecognized transitional net obligation based on actuarial calculations Translation adjustments on long-term equity Investments Reversal of unrealized loss on long-term equity Investments BALANCE, DECEMBER 31, 2005	Capital Stock (Note 12) Shares (Thousands) Amount 2,506,367 $ 25,063,669 - - - - - - 84,560 845,603 - - 8,773 87,728 2,599,700 25,997,000 330,910 3,309,096 - - - - - - - - - - - - 2,930,610 29,306,096 - - - - - - 87,918 879,183 - - 8,472 84,721 3,027,000 30,270,000 - - - - - - - - 3,027,000 $ 30,270,000	Capital Surplus (Notes 2	Capital Surplus (Notes 2	and 12) Total $ 1,769,432 - - - - - - 1,769,432 2,613,625 3,015,943 483 208,161 - - - 7,607,644 - - - - - - 7,607,644 - - - - $ 7,607,644		Retained Earnings (Note 12)	Unrealized Net Loss Not Loss on Recognized Long-term Cumulative as Net Equity Translation Pension Cost Investments Adjustments (Notes 2 Total (Note 2) (Note 2) and 10) $ 4,529,029 $ (56,391 ) $ 2,624 $ - - - - - - - - - (2,818,678 ) - - - (845,603 ) - - - (38,170 ) - - - (114,509 ) - - - 712,069 (56,391 ) 2,624 - - - - - - - - - - - - - - - - - 4,836,437 - - - - - (15,776 ) - - (33,465 ) - - 5,548,506 (89,856 ) (13,152 ) - - - - - - - - - (3,223,670 ) - - - (879,183 ) - - - (42,738 ) - - - (128,214 ) - - - 1,274,701 (89,856 ) (13,152 ) - 4,656,349 - - - - - - (1,661 ) - - 10,264 - - 15,979 - - $ 5,931,050 $ (73,877 )$ (2,888 ) $ (1,661 )	Treasury Stock (Notes 2 and 14) $ (4,503,276 ) - - - - - - (4,503,276 ) - 4,005,259 498,017 - - - - - - - - - - - - - - - - $ -	Total Stockholders’ Equity $ 26,805,087 - - (2,818,678 ) - (38,170 ) (26,781 ) 23,921,458 5,922,721 7,021,202 498,500 208,161 4,836,437 (15,776 ) (33,465 ) 42,359,238 - - (3,223,670 ) - (42,738 ) (43,493 ) 39,049,337 4,656,349 (1,661 ) 10,264 15,979 $ 43,730,268
		Paid-in Capital in Excess of Par Value $ 1,769,432 - - - - - - 1,769,432 2,613,625 - - - - - - 4,383,057 - - - - - - 4,383,057 - - - - $ 4,383,057	From Treasury Stock $ - - - - - - - - - 3,015,943 483 208,161 - - - 3,224,587 - - - - - - 3,224,587 - - - - $ 3,224,587
	Shares (Thousands) 2,506,367 - - - 84,560 - 8,773 2,599,700 330,910 - - - - - - 2,930,610 - - - 87,918 - 8,472 3,027,000 - - - - 3,027,000				Legal Reserve $ - 452,903 - - - - - 452,903 - - - - - - - 452,903 483,644 - - - - - 936,547 - - - - $ 936,547	Special Unappropriated Reserve Earnings $ - $ 4,529,029 - (452,903 ) 53,767 (53,767 ) - (2,818,678 ) - (845,603 ) - (38,170 ) - (114,509 ) 53,767 205,399 - - - - - - - - - 4,836,437 - - - - 53,767 5,041,836 - (483,644 ) 49,241 (49,241 ) - (3,223,670 ) - (879,183 ) - (42,738 ) - (128,214 ) 103,008 235,146 - 4,656,349 - - - - - - $ 103,008 $ 4,891,495

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

-6-

E.SUN FINANCIAL HOLDING CO., LTD.

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2005 AND 2004 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net income Equity in net income of equity-method investees Cash dividend received from equity-method investees Amortization of premium on bonds payable Amortization of bond issuance expense Depreciation expense Deferred income tax Others Net changes in operating assets and liabilities: Receivables Prepaid expenses Payables Advances Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Decrease in short-term investments Increase in long-term equity investments Acquisition of properties Increase in refundable deposit Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in bonds payable Redemption of bonds payable Increase in long-term debts Repayment of long-term debts Payment of cash dividend Payment of bonus to employees and remuneration to directors and supervisors Net cash provided by (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2005 $ 4,656,349 (4,542,306 ) 3,322,290 - - 52 21,316 398 320,149 (956 ) (481,477 ) (292 ) 3,295,523 - - (943 ) (1,433 ) (2,376 ) 5,000,000 - 590,000 (1,628,000 ) (3,223,670 ) (84,755 ) 653,575 - 3,946,722 56,436 $ 4,003,158	2004 $ 4,836,437 (4,751,922 ) 2,942,225 (24,516 ) 34,622 - (1,376 ) 74 (820,987 ) (3 ) 718,635 292 2,933,481 364,493 (6,000,000 ) - - (5,635,507 ) - (50,565 ) 350,000 (291,000 ) (2,818,678 ) (64,951 ) (2,875,194 ) (59,729 ) (5,636,949 ) 5,693,385 $ 56,436

(Continued)

-7-

2005 2004

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION Interest paid Income tax paid NONCASH INVESTING AND FINANCING ACTIVITIES Proceeds from sales or exchange of parent’s shares Costs of treasury stock Capital surplus from treasury stock Conversion of corporate bonds payable to capital stock Current portion of long-term liabilities	$ 22,155 $ 17,036 $ - - $ - $ - $ -	$ 19,801
		$ 10,236
		$ 7,021,202 4,005,259
		$ 3,015,943
		$ 5,922,721
		$ 838,000

The accompanying notes are an integral part of the financial statement

(Concluded)

-8-

NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2005 AND 2004 (In Thousands of New Taiwan Dollars, Unless Otherwise Stated)

E.SUN FINANCIAL HOLDING CO., LTD.

1. ORGANIZATION AND OPERATIONS

E.Sun Financial Holding Company, Ltd. (the “Company” or “ESFHC”) was established by E.Sun Commercial Bank Ltd. (“E.Sun Bank”), E.Sun Bills Finance Corp. (“E.Sun Bills”) and E.Sun Securities Corp. (“E.Sun Securities”) through a share swap on January 28, 2002 based on the Financial Holding Companies Law and related regulations in the Republic of China (the “ROC”). The ESFHC’s shares have been listed on the Taiwan Stock Exchange (TSE) since January 28, 2002. After the swap, E.Sun Bank, E.Sun Bills and E.Sun Securities became 100% subsidiaries of the Company.

E.Sun Securities Investment Trust Corp. (“ESSIT”) became a 100% subsidiary of the Company through a share swap on September 16, 2003.

The Company invests in and manages financial institutions.

As of December 31, 2005 and 2004, the Company had 60 and 66 employees, respectively. 35 and 56 employees also served in the subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements had been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Financial Holding Companies and accounting principles generally accepted in ROC.

In preparing financial statements in conformity with these guidelines and principles, the Company is required to make certain estimates and assumptions that could affect the amounts of property depreciation, impairment loss of assets, income tax and pension etc. Actual results could differ from these estimates.

For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

The Company’s significant accounting policies are summarized as follows:

Current and Noncurrent Assets and Liabilities

Assets that are expected to be converted or consumed within one year are classified as current. Obligations to be liquidated or settled within one year are classified as current. All other assets and liabilities are classified as noncurrent.

• 9 -

Long-term Investments

Under a directive of the Accounting Research and Development Foundation of the ROC, a financial holding company should treat the investees’ net worth as paid-in capital if the holding company is incorporated or the affiliated company becomes the subsidiary of the holding company through stock conversion. The stock issued by the holding company is accounted for as capital stock, and the amount in excess of the par value of the issued stock is accounted for as capital surplus.

Investments in shares of stock of companies in which the Company exercises significant influence on their operating and financial policy decisions are accounted for by the equity method. Under the equity method, the investments are carried at cost on the acquisition date and subsequently adjusted for the Company’s proportionate share in the net income or loss of the investees. The proportionate share in the net income or loss is recognized as current income or loss, and any cash dividends received are reflected as a reduction of the carrying values of the investments. A capital increase of investees that results in the increase in the Company’s equity in the investees’ net assets is credited to capital surplus, and any decrease is charged to capital surplus to the extent of the available balance, with the difference charged to unappropriated earnings. The Company recognizes the investees’ cumulative translation adjustments and unrealized losses on long-term equity investments proportionately. If the impairment in investment value is permanent and the probability of a recovery in value is remote, on investment loss is recognized.

Other long-term equity investments are accounted for by the cost method and are stated at cost. Cash dividends received are recorded as investment income. For the stocks with no quoted market price, the carrying amount of the investment is reduced to reflect other than temporary decline in the value of the investments, with the related loss charged to current income.

For both equity-method and cost-method investments, stock dividends received are recognized only as increases in the number of shares held, and not as income.

The cost of long-term equity investments sold is determined by the weighted-average method.

Properties

Properties are stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method over five years. If an asset reaches its residual value but is still in use, it is further depreciated over its newly estimated service life.

On the balance sheet date, an impairment loss should be recognized if the recoverable amount of a property is below its carrying amount. If asset impairment loss is reversed, the increase in the carrying amount resulting from the reversal is credited to current income. However, loss reversal should not be more than the carrying amount (net of depreciation) had the impairment not been recognized.

The cost and accumulated depreciation are removed from the accounts when an item of property is disposed of or retired, and any gain or loss is credited or charged to current income.

Amortization of Bond Issuance Expenses

The direct and necessary costs related to the issuing of Euro-convertible bonds are recognized as other assets - other and amortized by the straight-line method over the period from the issuance date to the expiration date of the put option.

Corporate Bonds Payable

The net carrying amount of the Euro-convertible bonds (the face amount adjusted by unamortized premium and bond issuance expenses) at the date of conversion is credited to the appropriate capital accounts (capital stock equal to par value, with the balance credited to capital surplus) upon bond conversion.

• 10 -

Pension Costs

The Company has two types of pension plans: Defined benefit and defined contribution.

For the defined benefit plan, the Company recognizes pension costs on the basis of actuarial calculations, and unrecognized net transitional obligation is amortized over 28 years. For defined contribution plan, the Company recognizes pension costs based on the Company’s contributions to the employees’ individual pension accounts during the employees’ service periods.

Treasury Stock

Under a directive issued by the Securities and Futures Bureau (SFB), if a financial institution (“FI”) repurchases its own capital stock pursuant to the Securities and Exchange Law and becomes a wholly owned subsidiary of a financial holding company (“FHC”), resulting in the conversion of the FI’s treasury stocks to the FHC’s stock, the FHC’s shares held by the FI should be treated as treasury stock. The FHC should also present the shares it issued in exchange for FI’s capital stock as treasury stock. If shares of the FIs under the same FHC were held among each other before the share swap, these shares will be stated as equity investments after the swap. However, the FHC should state these shares as treasury stocks.

Foreign Currency Transactions

Foreign-currency transactions (except forward transactions) are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Gains or loss resulting from the application of prevailing exchange rates when foreign-currency assets and liabilities are settled, are credited or charged to income in the period of settlement. The year-end balances of foreign-currency assets and liabilities are restated at the prevailing exchange rates, and the resulting differences are recorded as credits or charges to income.

Recognition of Revenue

Revenue is recorded when a major part of the earnings process is completed and revenue is realized.

Income Tax

Provision for income tax is based on inter-period tax allocation. The tax effects of deductible temporary differences, unused tax credits and operating loss carryforwards are recognized as deferred income tax assets, and those of taxable temporary differences are recognized as deferred tax liabilities. Valuation allowance is provided for deferred tax assets that are not probable to be realized. Deferred tax liabilities and assets are classified as current or noncurrent on the basis of classification of the related asset or liability for financial reporting. A deferred tax asset or liability that cannot be related to an asset or liability for financial reporting, such as the deferred tax assets related to net loss carryforwards, is classified according to the expected reversal or realization date of the temporary difference.

The Company and its subsidiaries elected to file a consolidated tax return from 2003. The difference between consolidated income tax payable and the sum of income tax payable of the entities included in the consolidated tax return is considered as a tax consolidation adjustment which is shown on the Company’s income tax expense or benefit. Any distribution of cash payments and receipts among the consolidated group members is recorded as receivable or payable.

Adjustments to prior year’s tax liabilities are added to or deducted from the current year’s tax expense.

Income taxes (10%) on undistributed earnings are recorded as expense in the year when the stockholders resolve to retain the earnings.

• 11 -

Derivatives

Forward exchange contracts entered into for nontrading purposes are recorded in New Taiwan dollars as assets or liabilities, using the spot rates on the starting dates of the contracts. The premium or discount, computed using the foreign currency amount of the contract multiplied by the difference between the contracted forward rate and the spot rate on the contract starting dates, is also recognized. These premiums or discounts are amortized over the terms of the forward contracts, and the amortizations are recognized in income.

3. ACCOUNTING CHANGE

The Company began applying ROC Statement of Financial Accounting Standards No. 35, “Accounting for Asset Impairment,” on January 1, 2005. This accounting change had no significant effect on the financial statements.

4. CASH AND CASH EQUIVALENTS

Demand deposits Checking deposits Time deposits - interest rate at 1.42%	December 31	December 31
	2005 $ 202,403 10,755 3,790,000 $ 4,003,158	2004 $ 49,562 6,874 -
		$ 56,436

5. RECEIVABLES

Other receivables - consolidated corporate tax (Note 16) Other receivables - tax refundable Other	December 31	December 31
	2005 $ 504,145 141,140 2,214 $ 647,499	2004 $ 825,340 141,146 1,162
		$ 967,648

6. LONG-TERM EQUITY INVESTMENTS

Long-term equity investments are summarized below:

December 31

Equity method E.Sun Bank E.Sun Bills E.Sun Securities	2005 % of Owner- Amount ship $ 33,489,685 100.00 6,438,531 100.00 3,206,033 100.00	2004
		% of Owner Amount ship $ 32,644,613 100.00 5,971,533 100.00 3,185,334 100.00

(Continued)

• 12 -

E.Sun Venture Capital Co., Ltd. (ESVC) ESSIT E.Sun Insurance Broker Co., Ltd. (ESIB) Cost method Taiwan Debt Instruments Depository and Clearing Co., Ltd.	December 31	December 31
	2005 % of Owner- Amount ship $ 1,026,131 100.00 329,517 100.00 139,703 100.00 44,629,600 40,000 2.00 $ 44,669,600	2004
		% of Owner- Amount ship $ 1,021,077 100.00 417,562 100.00 143,222 100.00 43,383,341 40,000 2.00 $ 43,423,341

Under the revised ROC Statement of Financial Accounting Standards No. 7, “Consolidated Financial Statements,” all direct and indirect subsidiaries as well as other investees in which the Company has controlling interests are included in the 2005 consolidated financial statements. In the 2004 consolidated financial statements, E.Sun Bank, E.Sun Bills, E.Sun Securities and E.Sun Insurance Brokers had been included, but not ESVC and ESIB. ESVC and ESIB were not consolidated because neither their total assets nor total operating revenues reached at least 10% or collectively reached at least 30% of those of the Company.

The carrying value of the investments accounted for by the equity method and the related income were based on audited financial statements. As of December 31, 2004, E.Sun Bank’s 454,000 thousand shares were secured as collaterals for long-term debts.

The net income from long-term equity investments under the equity method for the years ended December 31, 2005 and 2004 were $4,542,306 thousand and $4,751,922 thousand, respectively.

On December 29, 2005, the board of directors resolved to acquire 100,000 thousand shares of E.Sun Bank at NT$20.00 per share, amounting to $2,000,000 thousand. The Financial Supervisory Commission approved the application.

7. PAYABLES

Tax Other payables - consolidated corporate tax (Note 16) Other	December 31	December 31
	2005 $ 239,669 111,642 19,962 $ 371,273	2004 $ 683,144 159,786 8,344
		$ 851,274

8. CORPORATE BONDS PAYABLE

On June 27, 2003, the Company issued US$178,200 thousand zero coupon Euro convertible bonds with par value of US$1,000 dollars in Luxembourg. All the convertible bonds had been converted and redeemed as of December 31, 2004.

• 13 -

On December 15, 2005, the Company made a first issue of unsecured subordinated corporate bonds with aggregate face value of $5,000,000 thousand and par value of $10,000 thousand. The bond will mature in seven years, and principal is repayable on maturity. Interest is payable quarterly at the floating rate for the one-year time savings deposit of Chunghwa Post Co., Ltd. plus 0.4%.

9. LONG-TERM DEBTS

Secured debts - interest rate at 1.6150%-1.7759% Credit debts - interest rate at 2.088% Less due in one year	December 31	December 31
	2005 $ - 200,000 200,000 - $ 200,000	2004 $ 1,238,000 -
		1,238,000 838,000
		$ 400,000

The secured debts above had been repaid as of December 31, 2005. The Company provided securities for the long-term debts; please refer to Note 6.

The Company obtained a $390,000 thousand loan from Shanghai Commercial Bank in June 2005, repayable from June 2005 to July 2006. As of December 31, 2005, the Company had fully repaid this loan. The Company also obtained a $200,000 thousand loan from First Bank in December 2005, repayable from December 2005 to December 2008. As of January 2006, the Company had fully repaid this loan.

10. PENSION PLAN

The Company has pension plans for all regular employees. Upon retirement, an employee will receive the Company’s contributions calculated based on length of service and monthly average basic pay for the six months before retirement. The Company makes monthly contributions, equal to 5.54% of salaries, to a pension fund. The fund is deposited in the Central Trust of China in the name of the workers’ fund administration committee, which manages the fund.

The Labor Pension Act (the “Act”) took effect on July 1, 2005. A new defined contribution pension plan is stipulated by this Act. Employees may choose the pension mechanism under the Labor Standards Act or the mechanism under the Act. For those employees who were subjected to the Labor Standards Act before the enforcement of this Act, still work for the same business entity after the enforcement of this Act, and choose to be subject to the pension mechanism under this Act, their service years before the enforcement of this Act will be retained. Under the Act, the rate of an employer’s monthly contribution to the Labor Pension Fund should be at least 6% of the employee’s monthly wages. For employees who chose to keep on using the pension mechanism under the Labor Standards Act, the Company still makes monthly contributions to the pension fund from July 1, 2005 at the same rate of 5.54% of salaries. In the second half of 2005, the Company recognized a pension cost of $290 thousand based on the Act.

• 14 -

Pension information for 2005 and 2004 is as follows:

• a. Net pension cost

Service cost Interest cost Actual return on plan assets Amortization Net pension cost Reconciliation of the plan funded status to balance sheet amounts Benefit obligation: Vested benefit obligation Non-vested benefit obligation Accumulated benefit obligation Additional benefits based on future salaries Projected benefit obligation Fair value of plan assets Funded status Unrecognized transitional net obligation Unamortized net pension gains or losses Addition minimum pension Accrued pension cost Vested benefits Actuarial assumptions Discount rate Rate of increase in compensation Expected long-term rate of return on plan assets Pension fund changes were as follows: Balance, January 1 Contributions Interest income Balance, December 31

2005 2004 $ 379 $ 192 137 - (5 ) - 164 - $ 675 $ 192 December 31 2005 2004 $ - $ - (4,811 ) (1,203 ) (4,811 ) (1,203 ) (3,609 ) (1,324 ) (8,420 ) (2,527 ) 475 163 (7,945 ) (2,364 ) 2,278 2,364 5,270 - (3,940 ) (1,041 ) $ (4,337 ) $ (1,041 ) $ - $ - 2.5% 3.0% 2.5% 3.0% 2.5% 3.0% 2005 2004 $ 192 $ - 278 192 5 - $ 475 $ 192

2005 $ - (4,811 ) (4,811 ) (3,609 ) (8,420 ) 475 (7,945 ) 2,278 5,270 (3,940 ) $ (4,337 ) $ - 2.5% 2.5% 2.5% 2005 $ 192 278 5 $ 475

b. Reconciliation of the plan funded status to balance sheet amounts

c. Actuarial assumptions

• d. Pension fund changes were as follows:

• 15 -

11. PERSONNEL AND DEPRECIATION EXPENSES

		2005		2004
Personnel expenses
Salaries	$	10,128	$	31,665
Insurance		744		415
Pension		965		192
Other		397		261
Depreciation expenses		52		-

The personnel and depreciation expenses were part of operating expenses.

12. STOCKHOLDERS’ EQUITY

• a. Capital stock

In the 2004 stockholder’s meeting, the stockholders resolved to transfer unappropriated earnings of $933,331 thousand as stock dividends of 93,333 thousand shares. These appropriations were approved by the Financial Supervisory Commission (FSC) and Ministry of Economic Affairs (MOEA).

The Euro convertible bonds issued by the Company were converted into 330,910 thousand shares in 2004.

In 2005, the stockholders resolved to use the unappropriated earnings of $963,904 thousand as stock dividends of 96,390 thousand shares. This appropriation was approved by the FSC and MOEA. As of December 31, 2005, the paid-in capital was $30,270,000 thousand.

To dispose the Company’s shares held by E.Sun Bank, the Company issued 6,800 thousand units of Global Depositary Shares (GDS) (one unit represents 25 commons shares), which equals to 170,000 thousand common shares, at US$14.5 per shares, on the Luxembourg Stock Exchange on September 27, 2004.

The GDS holders are entitled to present their GDSs for cancellation and receive the corresponding number of underlying common shares, and the common shares can be traded in domestic stock exchange market. As of December 31, 2005, the GDS holders had cancelled 6,133 thousand units (equaled 153,326 thousand shares), the Company issued 66 thousand units (equaled 1,657 thousand shares) because of stock dividend distribution, and the deposit agents reissued 1,711 thousand units (equaled 42,768 thousand shares). Therefore, the outstanding GDSs were 2,444 thousand units, which equaled 61,099 thousand shares, or 2.02% of the Company’s total outstanding common shares.

On November 10, 2005, the board of directors resolved to enhance the Company’s financial structure by issuing Euro convertible bonds or domestic convertible bonds. The bond issuance date and other terms will be determined by the Chairman, who will authorize personnel to frame related details.

b. Capital surplus

Under related regulations, capital surplus may only be used to offset a deficit. However, capital surplus arising from issuance of shares in excess of par value (issuance in excess of common stock par value, capital surplus from issuance of common stock for combination and treasury stock transactions) and donation may be transferred to common stock on the basis of the percentage of shares held by the stockholders. Any capital surplus transferred to common stock should be within a certain percentage prescribed by law.

Capital surplus from long-term equity method investments can not be distributed for any purpose.

• 16 -

Under the Financial Holding Company Law and related directives issued by the SFB, the distribution of the ex-conversion unappropriated earnings that are generated by financial institutions (the subsidiaries) and become part of capital surplus of the financial holding company through stock conversion, is exempted from the appropriation restriction of the Securities and Exchange Law.

The subsidiaries’ unappropriated retained earnings before stock conversion amounted to $2,919,727 thousand, which was already stated as the Company’s capital surplus as of its establishment date. In 2002, the stockholders resolved to increase the Company’s capital by $1,800,000 thousand through the issuance of stock dividends from capital surplus.

The capital surplus as of December 31, 2005 came from treasury stock and the issuance of shares in excess of par value. Capital surplus sources and uses were as follows:

Sources

From subsidiaries Capital surplus (mainly paid-in capital in excess of par value) Legal reserve Special reserve Unappropriated earnings Proportionate share in the unrealized loss on long-term equity investments Total capital stock of subsidiaries in excess of the Company’s issuance Balance on January 28, 2002 From ESSIT which became a 100% subsidiary of the Company in 2003 through a share swap Legal reserve Unappropriated earnings Corporate bonds payable converted into capital stock In 2003 In 2004 Treasury stock transaction recognized from subsidiaries Transfer the shares to employees by subsidiary Cash dividends from the Company received by subsidiaries Uses Remuneration to directors and supervisors and Bonus to employees of subsidiaries Issuance of the Company’s stock dividends in 2002 Offset of deficit in 2003

$ 413,733 2,776,834 109,230 2,919,727 (23,399 ) 6,196,125 600,000 6,796,125 4,350 7,861 6,808,336 9,005 2,613,625 3,015,943 483 208,161 12,655,553 (156,458 ) (1,800,000 ) (3,091,451 ) $ 7,607,644

• c. Appropriation of earnings and dividend policy

When the Company appropriates its earnings, legal reserve should be appropriated from the annual net income less any accumulated deficit. A special reserve may then be appropriated. Any remainder should be appropriated as follows:

• 1) 96% as dividends

• 2) 1% as remuneration to directors and supervisors

• 3) 3% as bonus to employees.

Under the Company’s Articles of Incorporation, the stockholders may decide not to declare any dividends or declare only a portion of distributable earnings as dividends.

• 17 -

Under the Company’s dividend policy, the issuance of stock dividends takes precedence over the payment of cash dividends to strengthen the Company’s financial structure. This policy is also intended to improve the Company’s capital adequacy ratio and keep it at a level higher than the ratio set under relevant regulations. However, when dividends are declared, cash dividends must be at least 10% of total dividends declared, unless the resulting cash dividend per share falls below NT$0.10 dollar.

Under the Company Law, legal reserve should be appropriated until the reserve equals the Company’s paid-in capital. This reserve may be used only to offset a deficit. When the reserve exceeds 50% of the Company’s paid-in capital, the amount over 50% of the Company’s paid-in capital may be declared as stock dividends or bonus when the Company has no earnings, and only an amount of over 25% of the Company’s paid-in capital may be declared as stock dividends when the Company has no deficit.

Under an SFB directive, a special reserve is appropriated from the balance of the retained earnings at an amount that is equal to the debit balance of accounts in the stockholders’ equity section (such as unrealized loss on long-term equity investments and cumulative translation adjustments, except treasury stocks). The balance of the special reserve is adjusted to reflect any changes in the debit balance of the related accounts on the balance sheet dates.

Appropriations of earnings should be resolved by the stockholders in the following year and reflected in the financial statements of the year.

On June 11, 2004, the stockholders of the Company resolved the appropriation of earnings in 2003, which were resolved by the Company’s board of directors on February 12, 2004, as follows:

Legal reserve	$	452,903
Special reserve		53,767
Dividend - cash, NT$1 dollar per share		2,818,678
- stock, NT$0.3 dollar per share		845,603
Remuneration to directors and supervisors		38,170
Bonus to employees- cash		26,781
- stock		87,728

The dividend per share amount is calculated by 2,506,367 thousand shares issued by the Company and 312,311 thousand shares which were converted from all outstanding Euro convertible bonds as of December 31, 2003. The dividend per share amount will change if the holder of the convertible bonds does not convert the bonds into the Company’s shares or the treasury stock for reissuance to employees was not transferred before ex-rights or ex-dividend date. The actual dividend per share is NT$1.0856 dollars in cash and NT$0.3257 dollar in stock.

On June 10, 2005, the stockholders of the Company resolved the appropriation of earnings in 2004, which were resolved by the Company’s board of directors on February 14, 2005, as follows:

Legal reserve	$	483,644
Special reserve		49,241
Dividend - cash, NT$1.1 dollars per share		3,223,670
- stock, NT$0.3 dollar per share		879,183
Remuneration to directors and supervisors		42,738
Bonus to employees- cash		43,493
- stock		84,721

The basic earnings per share (after income tax) for 2004 would have been decreased from NT$1.88 to NT$1.83 if the aforementioned remuneration to directors and supervisors and bonus to employees had been recognized as expenses.

• 18 -

As of February 8, 2006, the date of the accompanying auditors’ report, the board of directors had not resolved the appropriations of the 2005 earnings.

Information on the appropriation of earnings or deficit offsetting can be accessed through the Web site of the Taiwan Stock Exchange (http://emops.tse.com.tw).

Under the integrated income tax system, certain stockholders are allowed tax credits for the income tax paid by the Company.

13. INCOME TAX

Under Article 49 of the Financial Holding Company Law, a financial holding company (FHC) can elect to file consolidated income tax returns for the regular corporate income tax as well as the 10% income tax on undistributed earnings for FHC and its domestic subsidiaries if the FHC held more than 90% of the subsidiaries’ outstanding shares for the entire tax year. The Company is qualified in the regulations.

The Company and its subsidiaries started to file consolidated tax returns since 2003.

• a. Income tax information was as follows:

Income tax expense - current before tax credits Net change in deferred income tax Organization costs Adjustment of prior year’s tax Tax effect on consolidated tax returns Income tax benefit	2005 $ - 688 20 (132,773 ) $ (132,065 )	2004 $ 11,622 (1,376 ) (11,011 ) (112,508 ) $ (113,273 )

• b. A reconciliation of income tax expense - current before tax credits and income tax expense on income before income tax was shown below:

Income tax expense on income before income tax at statutory rate (25%) Permanent differences Temporary differences Income tax expense - current before tax credits	2005 $ 1,131,061 (1,130,373 ) (688 ) $ -	2004 $ 1,180,781 (1,170,535 ) 1,376 $ 11,622

• c. Net deferred income tax assets(liabilities) were as follows:

Deferred income tax assets (liabilities) - current Organization costs Tax effect on consolidated tax returns	December 31	December 31
	2005 $ 688 (20,628 ) $ (19,940 )	2004 $ 688 -
		$ 688

(Continued)

• 19 -

Deferred income tax assets - noncurrent Organization costs Imputed tax credit was summarized as follows: Balance of stockholder’s imputed tax credit	December 31	December 31
	2005 $ - $ 668,351	2004 $ 688
		$ 373,286

• d. Imputed tax credit was summarized as follows:

The Company’s actual creditable tax ratio was 21.59% for distributing 2004 earnings. The Company estimated the creditable tax ratio for distributing 2005 earnings at 17.45%. The actual creditable tax ratio may differ from the estimated creditable tax ratio since such ratio is computed on the date the dividend is actually paid or distributed.

• e. The Company has no unappropriated earnings generated before January 1, 1998 as of December 31, 2005 and 2004.

• f. The Company’s 2002 income tax returns had been examined by the tax authorities.

14. TREASURY STOCK

Reason for Redemption 2004 Reissuance to employees - held by E.Sun Bank Treasury stock previously classified by E.Sun Bank and E.Sun Securities as long-term investments	Shares at Beginning of the Year 40,000 334,629 374,629	(Unit: Thousand Shares) Share Share Increase Decrease During During Shares at the the End of the Year Year Year - 40,000 - 6,248 340,877 - 6,248 380,877 -

Under the Financial Holding Company Law, when a financial institution (a subsidiary) holds the shares of a financial holding company (FHC) as a result of a share swap, those shares should be sold to the FHC or the subsidiary’s employees or exchanged for other purposes - e.g., sold on the Taiwan Stock Exchange or over-the-counter exchange - within three years from the swap date. Otherwise, the shares will be regarded as the FHC’s unissued capital, and the FHC may change the amount of its registered capital.

On August 26, 2004, E.Sun Bank reissued 40,000 thousand shares of the Company to employees.

On December 1, 2003, the board of directors of E.Sun Bank resolved to issue bonds for exchange with the underlying shares of the Company within the limit of 150,000 thousand shares under Article 31 of the Financial Holding Company Law. On January 23, 2004, E.Sun Bank issued three-year debenture exchangeable bonds amounting to $2,696,100 thousand at 0% interest. On June 14, 2004, all the exchangeable bond holders had exchanged bonds to the Company’s common stock.

On February 12, 2004, the board of directors of E.Sun Bank resolved to authorize the chairman to dispose of the shares of the Company with in the limit of 184,449 thousand shares as required under the Financial Holding Company Law.

• 20 -

For E.Sun Bank’s purpose of disposing the Company’s shares amounting to 170,000 thousand shares, the Company issued 6,800 thousand units of Global Depositary Shares on September 27, 2004 (please refer to Note 12).

On June 23, 2004, the board of directors of E.Sun Securities resolve to authorize the chairman to dispose the Company’s stock as a result of the share swap within the 8,850 thousand shares limit.

As of December 31, 2004, E.Sun Bank and E.Sun Securities have disposed all of the treasury stock.

Under the Securities and Exchange Law, the Company is not allowed to buy more than 10% of its issued and outstanding capital stock. In addition, the Company may not spend more than the sum of retained earnings and all realized capital surplus. Further, the Company can not pledge or hypothecate any treasury stock and exercise stockholders’ rights before reissuance of the stocks.

Except for the shares which had been bought by subsidiaries before the Company’s establishment, the subsidiaries can only exercise the earnings distribution, and surplus capitalization rights.

Under SFB regulations, to maintain the stability of the Company’s financial structure and protect stockholders, the Company appropriated a special reserve from retained earnings at an amount equal to the carrying value of the treasury stock held by subsidiaries in excess of the market value at balance sheet date. The special reserve may be reversed if the market value recovers.

15. EARNINGS PER SHARE

The numerators and denominators used in computing earnings per share (EPS) are summarized as follows:

2005 Basic and diluted EPS 2004 Basic EPS Effect of diluted common shares: Convertible bonds Diluted EPS	Amounts (Numerator) Shares Before After (Denominator Income Tax Income Tax In Thousands) $ 4,524,284 $ 4,656,349 3,027,000 $ 4,723,164 $ 4,836,437 2,571,609 (49,549 ) (37,162 ) 207,980 $ 4,673,615 $ 4,799,275 2,779,589	Earnings Per Share (Dollar)	Earnings Per Share (Dollar)
		Before Income Tax $ 1.49 $ 1.84 $ 1.68	After Income Tax $ 1.54
	Before Income Tax $ 4,524,284 $ 4,723,164 (49,549 ) $ 4,673,615
			$ 1.88
			$ 1.73

• 21 -

Pro forma information under the assumption that shares of E.Sun Financial Holding Co., Ltd. held by its subsidiaries were not treated as treasury stock was summarized as follows:

2004 Basic EPS Effect of diluted common shares: Convertible bonds Diluted EPS	Amounts (Numerator) Shares Before After (Denominator Income Tax Income Tax In Thousands) $ 7,947,268 $ 8,060,541 2,819,020 (49,549 ) (37,162 ) 207,980 $ 7,897,719 $ 8,023,379 3,027,000	Earnings Per Share (Dollar)	Earnings Per Share (Dollar)
		Before Income Tax $ 2.82 $ 2.61	After Income Tax $ 2.86
			$ 2.65

The number of shares outstanding was retroactively adjusted to reflect the effects of the stock dividends distributed in the year following earnings appropriation. As a result of this adjustment, the basic and diluted EPS after income tax decreased from NT$1.94 to NT$1.88 and from NT$1.78 to NT$1.73 in 2004.

16. RELATED-PARTY TRANSACTIONS

In addition to those mentioned in other notes, the relationship with the Company and significant related party transactions were summarized as follows:

• a. Related parties

Related Party E.Sun Bank, E.Sun Bills, E.Sun Securities, ESVC, ESSIT and ESIB E.Sun Foundation and E.Sun Volunteer & Social Welfare Foundation E.Sun Finance & Leasing Co. (E.Sun Leasing), E.Sun Insurance Agent Co., Ltd., E.Sun Securities Investment Consulting Co., Ltd. (ESSIC) and E.Sun Capital Co., Ltd. Kao Li Real-Estate Management Co., Ltd. E.Sun Technologies Co., Ltd. Fubon Securities Finance Co. and Bank-Pro E-Service Technology Co., Ltd. Globaltop Partner I Venture Capital Co., Ltd. Others

Relationship with the Company Subsidiaries One-third of the funds are donated by E.Sun Bank and E.Sun Bills Equity-method investees of subsidiaries Equity-method investee until its liquidation in June 2005 Equity-method investee until the Company’s sale of its holdings in November 2005 E.Sun Bank is a director of the Company ESVC is a supervisor of the Company The Company’s and subsidiaries’ chairman, president, directors, supervisors, and managers and their relatives

• 22 -

• b. Significant transactions with related parties

December 31 Deposits (part of cash and cash equivalents) - E.Sun Bank Interest receivables (part of receivables) - E.Sun Bank Other receivables (part of receivables) E.Sun Bank E.Sun Securities ESIB ESVC ESSIT Prepaid rent (part of prepaid expenses) - E.Sun Bank Refundable deposits - E.Sun Bank Other payables (part of payables) E.Sun Bank E.Sun Securities E.Sun Bills ESSIT Year ended December 31 Interest revenue - E.Sun Bank Rent expense (part of operating expense) - E.Sun Bank Foreign exchange loss, net - E.Sun Bank	2005 % to Amount Total $ 4,003,158 100 $ 1,736 - $ 459,146 71 32,925 5 9,554 2 2,206 - 314 - $ 504,145 78 $ 956 99 $ 1,433 100 $ 80,131 21 14,025 4 10,304 3 7,182 2 $ 111,642 30 $ 1,832 100 $ 3,344 7 $ 56 100	2004	2004
		% to Amount Total $ 56,436 100 $ - - $ 786,427 81 - - 15,171 2 1,940 - 21,802 2 $ 825,340 85 $ - - $ - - $ 80,131 10 18,894 2 60,761 7 - - $ 159,786 19 $ 67,951 66 $ - - $ 115,415 207
			-
			81 - 2 - 2
			85
			-
			-
			10 2 7 -
			19
			66
			-
			207

The Company and its subsidiaries started to file consolidated corporate tax returns from 2003. Any distribution of cash payments and receipts among the consolidated group members is recorded as receivables or payables.

The term of the above transactions were similar to or approximate those made with third parties.

• c. Subsidiaries’ related-party transactions that amounted to more than $100,000 thousand in 2005 and 2004

1) E.Sun Bank

2005

December 31

a) Loans b) Deposits	% to Interest Amount Total Rate (%) $ 315,292 - 1.225-4.27 $ 5,571,157 1 0-8.88	Revenue (Expense) Amount $ 9,830 $ (26,961 )

• 23 -

2004 a) Loans b) Deposits c) Securities sold under repurchase agreement d) Other payables (part of payables) ESFHC	December 31	December 31	December 31	December 31	December 31
		2005	% 4		2004
		Amount $ 459,146		Amount $ 786,427

The other payables were created because ESFHC filed consolidated corporate tax returns from 2003.

• e) Purchases and sales of securities

Related Party E.Sun Bills E.Sun Securities E.Sun Leasing f) Foreign exchange gain, net ESFHC	Year Ended December 31 2005 2004 Purchases Purchases Amount Sales Amount Amount Sales Amount $ 11,645,678 $ 3,170,072 $ 847,459 $ 2,698,469 248,430 199,511 200,480 216,309 - 1,053 - - 2005 2004 $ 56 $ 115,415	Year Ended December 31 2005 2004 Purchases Purchases Amount Sales Amount Amount Sales Amount $ 11,645,678 $ 3,170,072 $ 847,459 $ 2,698,469 248,430 199,511 200,480 216,309 - 1,053 - - 2005 2004 $ 56 $ 115,415
	2005 Purchases Amount Sales Amount $ 11,645,678 $ 3,170,072 248,430 199,511 - 1,053
		Purchases Amount $ 847,459 200,480 - 2005 $ 56

The interest rates shown above are similar to, or approximate, those offered to third parties. However, the interest rates on deposits given to managers of the E.Sun Bank are the same as the interest rates on a certain amount of employees’ savings deposits.

Under the Banking Law, except for consumer loans and government loans, credits extended by E.Sun Bank to any related party should be 100% secured, and the terms of credits extended to related parties should be similar to those extended to third parties.

2) E.Sun Bills

Year ended December 31, 2005

			Highest
			Balance
			During		Year-End	Interest Rate	Interest
			the Year		Balance	(%)	Revenue
a)	Call loans to banks - E.Sun Bank	$	400,000	$	-	1.19	$	13
b)	Deposits - E.Sun Bank		919,224		469,202	1.15-1.8		7,112

• 24 -

• c) Purchases and sales of negotiable instruments and bonds

										Sales Under	Sales Under
										Repurchase		Purchases Under
			Purchases			Sales				Agreements		Resell Agreements
	Related Party		Amount	%		Amount		%		Amount	%	Amount		%
	E.Sun Bank	$	3,170,072	-	$	11,645,678		-	$	-	-	$	51,567	-
	E.Sun Securities		49,134	-		98,984		-		-	-		-	-
	ESSIT		-	-			-	-		825,031	-		-	-
Year ended December 31, 2004
				Highest
				Balance									Interest
				During				Year-End Interest Rate					Revenue
				the Year				Balance			(%)		(Expense)
a)	Call loans from banks -
	E.Sun Bank			$	330,000		$			- 0.925-1.175			$	(26 )
b)	Bank deposits and deposits		for
	bond clearance (paid through time
	deposits, recorded as refundable
	deposits) - E.Sun Bank			1,622,698				880,629 1.15-1.85					12,573
c)	Purchases and sales of negotiable instruments and bonds
										Sales Under
										Repurchase		Purchases Under
			Purchases			Sales				Agreements		Resell Agreements
	Related Party		Amount	%		Amount		%		Amount	%	Amount		%
	E.Sun Bank	$	2,698,469	-	$	847,459		-	$	199,656	-	$	730,047	-
	E.Sun Securities		413,451	-		553,207		-		-	-		70,000	-
	ESSIT		-	-			-	-		938,648	-		-	-

3) E.Sun Securities

• a) Deposit in E.Sun Bank as of December 31, 2005 and 2004

Demand Checking Pledged time deposits Operation deposits Settlement account Cash and cash equivalents - prepaid underwriting stock value Short-term investment Funds managed by ESSIT	December 31	December 31
	2005 2004 $ 11,036 $ 4,051 1 1 10,000 10,000 340,000 305,000 224 624 17,745 - December 31
	2005 $ 101,276	2004 $ 70,323

b) Short-term investment

• 25 -

• c) Securities purchased under resell agreements

Related Party E.Sun Bank d) Securities sold under repurchase agreements Related Party Funds managed by ESSIT e) Bond transactions Purchases from: Related Party E.Sun Bank E.Sun Bills Sales to: Related Party E.Sun Bank E.Sun Bills	December 31	December 31	December 31	December 31
	2005			2004
					% to Total 70
	2005		2004 % to % to Total Amount Total 16 $ 607,666 34 2005 2004 199,511 $ 216,309 98,984 553,207 298,495 $ 769,516 2005 2004 248,430 $ 200,480 49,134 413,451 297,564 $ 613,931	2004
	Amount $ 330,000 $ $ $ $
		$
		$
		$

• f) E.Sun Securities entrusted to E.Sun Bank the deal settlement of securities in 2005 and applied for a guarantee overdraft amounting to $1,300,000 thousand in 2004. For this overdraft, E.Sun Securities provided securities to E.Sun Bank as collaterals as of December 31, 2005 and 2004 and added real estate as collateral on February 1, 2005. Taishin International Bank and Far Eastern International Bank provided guarantee for the overdraft both in 2005 and 2004. As of December 31, 2005 and 2004, there was no overdraft amount.

4) ESSIT

a) Brokerage service fee - funds managed by ESSIT b) Bond and bills transactions with E.Sun Bills Purchase	2005 $ 120,122 $ 825,031	2004 $ 192,216
		$ 938,648

• 26 -

• c) To meet the authorities’requirements and to dispose of structured bonds held by E.Sun New Era Bond Fund (the “Fund”)and managed by ESSIT. ESSIT bought bonds with an aggregate face amount of $2,000,000 thousand from the Fund and paid $2,028,217 thousand for this purchase. ESSIT then sold these bonds to another bank, and this sale resulted in a loss of $25,700 thousand.

5) ESVC

6)	Deposits - E.Sun Bank ESIB Short-term investments - funds managed by ESSIT	December 31	December 31
		2005 2004 $ 203,444 $ 308,324 December 31	2004 $ 308,324
		2005 $ 113,869	2004 $ 101,001

17. CONTINGENCIES AND COMMITMENTS

To help ESSIT in dealing with structured bonds, the Company committed to increase ESSIT’s capital in cash if ESSIT’s net worth is lower than the par value of its stock when it compensates E.Sun Bank for the securitization of the structured bonds (E.Sun CBO 2005-2) at the end of the trust period.

As of December 31, 2005, the Company was leasing certain properties from E.Sun Bank under operating lease agreements expiring in February 2010. Rentals are calculated on the basis of the leased areas and payable quarterly. As of December 31, 2005, refundable deposits on these leases totaled $1,433 thousand (shown as “refundable deposits”). Future minimum annual rentals for the next five years are as follows:

Year		Amount
2006	$	5,733
2007		5,733
2008		5,733
2009		5,733
2010		956

The contingencies and commitments of subsidiaries are as follows:

a. E.Sun Bank

• 1) Securities acquired for $2,601,670 thousand under resell agreements will be sold for $2,602,830 thousand by January 20, 2006; securities sold for $10,104,894 thousand under repurchase agreements will be purchased for $10,111,256 thousand by April 20, 2006.

• 27 -

• 2) Renewable operating lease agreements on premises occupied by E.Sun Bank’s branches, which will expire on various dates by July 2015. Rentals are calculated on the basis of the leased areas and are payable monthly, quarterly or semiannually. Refundable deposits on these leases totaled $781,105 thousand as of December 31, 2005. Minimum annual rentals for the next five years are as follows:

Year		Amount
2006	$	347,252
2007		284,236
2008		221,626
2009		167,065
2010		76,021

Total rentals for 2011 to 20l5 aggregate $11,773 thousand. The present value of these rentals is $10,249 thousand, based on 1.915% annual interest.

• 3) Agreements for decoration of buildings and various purchases related to the improvements of existing premises occupied by E.Sun Bank’s branches, which amounted to approximately $1,389,479 thousand. As of December 31, 2005, the remaining unpaid amount was approximately $736,370 thousand.

• 4) Derivatives transaction: Please refer Note 18.

b. E.Sun Bills

• 1) Arising in the ordinary course of business

Securities sold under repurchase agreements (purchase amount)	$ 46,675,082
Securities purchased under resell agreements (sale amount)	2,480,877
Guarantees on commercial paper	18,335,200
Negotiable instruments underwritten	681,000
Buying fixed rate commercial paper	610,000

• 2) Leases

E.Sun Bills leases certain properties under operating lease agreements expiring on various dates by July 2009. The rentals are payable monthly or quarterly. Refundable deposits on these leases aggregated $3,477 thousand as of December 31, 2005.

Future minimum annual rentals are as follows:

Year		Amount
2006	$	9,962
2007		9,165
2008		9,165
2009		3,813

• 3) Derivates transaction: Please refer to Note 18.

• 28 -

c. E.Sun Securities

• 1) Securities acquired under resell agreements amounted to $394,760 thousand will be sold for $394,983 thousand; securities sold under repurchase agreements amounted to $2,072,925 thousand will be purchased for $2,074,053 thousand.

• 2) E.Sun Securities leases certain properties under operating lease agreements expiring on various dates. Future minimum annual rentals are as follows:

Year						Amount
2006					$	27,134
2007						21,913
2008						11,692
2009						9,094
2010						1,516
E.Sun Securities entered into agreements to	acquire	fixed assets.	As of December			31, 2005, th
related contracts are summarized as follows:
		Contract		Paid		Unpaid
		Amount		Amount		Balance
Lease improvement	$	18,854	$	8,685	$	10,169

• 3) E.Sun Securities entered into agreements to acquire fixed assets. As of December 31, 2005, the related contracts are summarized as follows:

• 4) For the issuance of stock warrants, E.Sun Securities provided TSE with Taishin Bank’s letter guaranteeing $40,000 thousand of this transaction.

• 5) Derivates transaction: Please refer to Note 18.

d. ESSIT

ESSIT leases certain properties under operating lease agreements expiring on various dates. Future minimum annual rentals are as follows:

Year		Amount
2006	$	4,270
2007		4,879
2008		4,879
2009		4,879
2010		1,830

In order to disposal of structured bonds held by E.Sun New Era Bond Fund, which is managed by ESSIT, ESSIT indirectly sold these bonds to E.Sun Bank and E.Sun Securities. ESSIT also promised to bear the related losses under the transactions. The above transactions had been approved by the board of director’s and related authorities.

• 29 -

e. ESVC

ESVC leases certain properties from E.Sun Bank under operating lease agreements expiring in February 2010. Rentals are calculated on the basis of the leased areas and payable quarterly. As of December 31, 2005, refundable deposits on the leases aggregated $132 thousand. Future minimum annual rentals are as follows:

Year		Amount
2006	$	529
2007		529
2008		529
2009		529
2010		88

f. ESIB

ESIB entered into insurance agent contracts with various insurance companies. The contracts are summarized as follows:

Insurance Company Contract Date Commission Received Contract Period

Prudential Insurance 2004.01.09 Billed and received Effectively starts on January 9, according to contract 2004 and will expire on January terms 9, 2014. The contract may be undated according to the parties written notice when the contract expired. Tokio Marine Newa 2005.10.15 Billed and received Effectively starts on October 15, according to contract 2005 and will expire on October terms 15, 2014. The contract may be undated according to the parties written notice when the contract expired.

ESIB leases certain properties from E.Sun Bank under operating lease agreements expiring in February 2010. Rentals are calculated on the basis of the leased areas and payable quarterly. As of December 31, 2005, refundable deposits on these leases totaled $132 thousand. Future minimum annual rentals for the next five years are as follows:

Year		Amount
2006	$	529
2007		529
2008		529
2009		529
2010		88

18. FINANCIAL INSTRUMENT TRANSACTIONS

• a. Derivative transactions:

The Company uses forward exchange contracts to hedge the exchange rate exposure related to its foreign assets and liabilities.

• 30 -

The net foreign exchange gains on the forward exchange contracts in 2004 were $212,096 thousand. The Company does not have any derivative transaction in 2005.

The derivative transactions of subsidiaries are as follows:

E.Sun Bank

E.Sun Bank uses forward exchange, currency swap, interest rate swap, cross-currency swap, foreign-currency margin, currency option, government bonds option, credit-linked loan, credit default swap and futures contracts as hedging instruments for exchange rate and interest rate exposures primarily related to its clients’ import obligations and export receipts and remittances. It also uses these contracts to cover its own exposures. Furthermore, E.Sun Bank uses cross-currency swap, interest rate swap, asset swap and credit default swap contracts to hedge its exchange rate and interest rate exposures as well as its credit risks as a bond issuer.

Credit risk represents the exposure of E.Sun Bank to potential losses due to defaults by counter-parties or issuers. To manage this risk, E.Sun Bank reviews the credit history and credit rating of individual customers before entering into any derivative contracts with them. The general terms of acceptable arrangement (including maximum limits on contractual amounts and, if necessary, required guarantees) are approved by E.Sun Bank on the basis of the results of the reviews. The transactions are carried out within the approved terms and limits.

The acceptability of doing business with another bank is evaluated on the basis of its world ranking and credit rating. The evaluation also includes determining the limits on contractual amounts with respect to the bank counter-parties, and the transactions are made within this limit. In addition, E.Sun Bank has entered into futures contracts with international futures and options exchanges; thus, no significant credit risk is expected.

The contract (notional) amounts, credit risks, and fair values of derivative transactions as of December 31, 2005 and 2004 were as follows:

Trading purposes Forward exchange contracts Currency swap contracts Interest rate swap contracts Cross-currency swap contracts Foreign-currency margin contracts Credit-link loan contracts Option contracts Buy Sell Futures contracts Buy Sell Credit default swap contracts Buy Sell Nontrading purposes Asset swap contracts Cross-currency swap contracts Interest rate swap contracts Credit default swap contracts

December 31 2005 2004 Contract Contract (Notional) (Notional) Amount Credit Risk Fair Value Amount Credit Risk Fair Value $ 2,858,443 $ 40,825 $ 15,728 $ 9,750,002 $ 90,833 $ (34,974 ) 37,528,415 4,630 (882 ) 6,037,084 8,115 5,182 35,388,070 342,455 74,758 3,424,200 15,182 3,010 6,752,192 162,818 91,302 5,321,177 270,825 222,495 1,305,865 - 41,362 2,615,236 - 127,564 4,370,380 6,219 6,219 - - - 26,502,935 173,156 173,156 25,631,023 534,367 534,367 27,155,153 - (319,055 ) 24,361,892 - (563,393 ) 509,330 - 14 - - - 673,630 - 36 - - - 2,550,000 - (511 ) - - - 328,600 - (178 ) - - - 5,528,695 195,062 115,660 8,894,881 463,428 260,784 6,165,319 53,251 7,176 6,159,825 246,415 210,230 32,700,000 920,645 282,151 19,300,000 389,273 (140,533 ) - - - 317,680 266 144

2005 Contract (Notional) Amount Credit Risk Fair Value $ 2,858,443 $ 40,825 $ 15,728 37,528,415 4,630 (882 ) 35,388,070 342,455 74,758 6,752,192 162,818 91,302 1,305,865 - 41,362 4,370,380 6,219 6,219 26,502,935 173,156 173,156 27,155,153 - (319,055 ) 509,330 - 14 673,630 - 36 2,550,000 - (511 ) 328,600 - (178 ) 5,528,695 195,062 115,660 6,165,319 53,251 7,176 32,700,000 920,645 282,151 - - -

E.Sun Bank calculates the fair value of each forward contract at the forward rate for the remaining term, quoted from Reuters or the Telerate Information System.

• 31 -

The contract or notional amount is used to calculate the amounts for settlement with the counter-parties, so it is neither the actual amount delivered nor the cash requirement for E.Sun Bank. Also, E.Sun Bank has ability to enter into derivative financial contracts at reasonable market terms. Thus, E.Sun Bank does not expect significant cash flow requirements to settle these contracts.

The gains and losses on the derivative transactions were as follows:

Forward exchange contracts (under “foreign exchange gain, net”) Currency swap contracts Interest revenue Interest expense Asset swap contracts (under “interest revenue”) Cross-currency swap contracts Interest revenue Interest expense Gains on derivative transactions Interest rate swap contracts Gains on derivative transactions Loss from derivative transactions Interest expenses reduction Foreign-currency margin contracts (under “foreign exchange gain, net”) Option contracts Gains Loss Credit-default swap contracts Gains Loss Futures contracts Gains Loss Credit-link loan contracts (under “interest revenue”)	2005 $ 894 $ 143,979 (140,931 ) $ 3,048 $ 539,910 $ 317,325 (433,111 ) 3,329 $ (112,457 ) $ 218,002 (112,036 ) 89,027 $ 194,993 $ 66,018 $ 1,985,414 (1,822,441 ) $ 162,973 $ 1,244 (3,718 ) $ (2,474 ) $ 5,334 (5,799 ) $ (465 ) $ 53,579	2004 $ 34,436 $ 72,906 (9,246 ) $ 63,660 $ 24,703 $ 172,305 (160,126 ) - $ 12,179 $ 244,091 (725 ) 207,962 $ 451,328 $ 119,523 $ 1,031,511 (921,417 ) $ 110,094 $ - - $ - $ - - $ - $ -

• 32 -

E.Sun Bills

E.Sun Bills used interest rate swap to hedge interest rates exposure primarily to its issuance of corporate bonds.

Credit risk is the exposure to loss on any counter-party’s default on contracts. To manage this risk, E.Sun Bills enters into derivative transactions only with known international financial institutions among the top 500 listed in “The Banker” magazine or rated as “A-” in the S&P (Standard & Poor) classification or “A3” in Moody’s. Thus, E.Sun Bills’ credit risk is minimal.

The contract (notional) amounts, credit risks, and fair value of derivative transactions were as follows:

December 31

Nontrading Purposes Interest rate swap contracts	2005 Contract (Notional) Credit Fair Amount Risk Value $ 5,000,000 $ - $ (129,010)	2004
		Contract (Notional) Credit Fair Amount Risk Value $ 5,000,000 $ 24,016 $ 24,016

E.Sun Bills calculates the fair value of each contract at the interest rate shown on TWD-T6165 from the Telerate Information System.

The contract (notional) amount is used to calculate the amount of settlement with a counter-party, so it is neither the amount to be actually delivered to nor it is the cash required from E.Sun Bills. Also, for corporate bonds issued, E.Sun Bills will hold the contracts to maturity to hedge the related interest rate fluctuations. Thus, E.Sun Bills does not expect significant cash flow requirements to settle these instruments.

The gains and losses on the derivative transactions were as follows:

Interest rate swap contracts Interest income Interest expense	2005 $ 74,916 (50,066 ) $ 24,850	2004 $ 169,455 (37,853 ) $ 131,602

E.Sun Securities

The E.Sun Securities’ purpose of issuing derivative financial instruments is to generate reasonable profit by controlling the risk within a tolerable limit. As premium from the stock warrants issued by E.Sun Securities were all received, there is no credit risk.

E.Sun Securities is in a short position for the stock warrants issued, which is in reverse to the investors’ position. As the investors may exercise their option rights before expiration of the contracts because of the fluctuations in the underlying securities’ fair values, E.Sun Securities’ position is expected to be exposed to market risk. To reduce the uncertainty, E.Sun Securities mainly adopts delta and vega risk hedging strategies which are summarized below.

1) Delta risk hedging strategy

The hedge instruments are mainly the underlying securities. The dynamic hedging method is adopted by referring to the delta risk value calculated using E.Sun Securities’ risk model.

• 33 -

• 2) Vega risk hedging strategy

The hedge instruments are mainly the warrants listed in the domestic market with the same underlying securities. The strategy adopted in vega hedge is primarily through buying the significantly under priced stock warrants with the same underlying securities, of which the price volatility will partly offset the price volatility of the stock warrants issued by E.Sun Securities.

Future cash flows refer to the cash inflows or outflows resulting from the settlements of stock warrants by cash or securities when the warrants are exercised. The amount and timing of future cash flows depend on the amount and timing of the stock warrants exercised.

The stock warrant (E.Sun 01-07) issued by E.Sun Securities, which underlying securities are First Financial Holding Co., Ltd., Asia Cement Corporation, BenQ Corp., Chi Mei Optoelectronics Corp., Realtek Semiconductor Corp., Tung Ho Steel Enterprise Corp., and Acer Incorporated were summarized as follows:

Price at Issuance (in New Taiwan Stock Warrants Dollars) E.Sun 04 $2.10 E.Sun 05 1.90 E.Sun 06 1.33 E.Sun 07 0.49 Less gains on change in market value of stock warrants liabilities Market value Price at Issuance (in New Taiwan Stock Warrants Dollars) E.Sun 01 $3.5 Less gains on change in market value of stock warrants liabilities Market value	December 31, 2005	Gain (Loss) on Change in Market Value of Issued Stock Warrants Amount Liabilities in 2005 $ 42,000 $ 39,400 38,000 16,000 26,600 26,000 14,700 (1,800 ) (79,600 ) $ 79,600 $ 41,700 Gain on Change in Market Value of Issued Stock Warrants Amount Liabilities in 2004 $ 87,500 $23,750 (23,750 ) $ 63,750
	Market Price (in New Taiwan Dollars) Unit Issued $0.13 20,000,000 1.10 20,000,000 0.03 20,000,000 0.55 30,000,000 December 31, 2004
	Market Price (in New Taiwan Dollars) Unit Issued $2.55 25,000,000

The information of stock warrant was summarized as follows:

Stock	Warrants	Type	Expired Day	Exercise Day	Settlements
E.Sun	01, 03-07	American	Six months after	From listed date	Cash or securities chosen by
			listed	to expired day	E.Sun Securities
E.Sun	02	American	Nine months after	From listed date	Cash or securities chosen by
			listed	to expired day	E.Sun Securities

• 34 -

Details of repurchase of stock warrants issued were as follows:

E.Sun 01 E.Sun 04 E.Sun 05 E.Sun 06 E.Sun 07 Less losses on change in market value of stock warrants repurchased Market value Gains of stock warrants issued are as follows: Stock warrants liabilities Gains on change in market value Gains on expiry of warrant Stock warrants repurchase Loss from disposal Gains (loss) from change in market value Gains on stock warrants issued		December 31	December 31
	2005	Amounts $ - 3 2,190 2,593 14,479 (2,240 ) $ 17,025	2004
	Units Repurchase - 69,000 1,557,000 13,543,000 37,085,000

There was no exercise for the duration of the expired stock warrants.

ESSIT

ESSIT buys inverse-floating structured bonds to earn interest revenue. Bonds held by ESSIT as December 31, 2005 and 2004 were as follows:

Counter party Taipei Fubon Bank	December 31	December 31	December 31
	2005 Carrying Value Fair Value $ 245,775 $ 245,775	2004
	Carrying Value $ 245,775	Carrying Value $ 300,000	Fair Value $ 300,000

ESSIT bought bonds from a bank with a strong credit rating; thus, the probability of default by the counter-party is expected to be extremely low. The liquidity risk and market risk are also very low because the bonds can be easily traded in the market and ESSIT will receive the entire principal on bond maturity. In addition, ESSIT had evaluated the effects of bond purchase on its capital before investing in the bonds.

• 35 -

• b. Fair value of nonderviative financial instruments

Assets Assets with fair value the same as carrying value Liabilities Liabilities with fair value the same as carrying value	December 31	December 31
	2005 Carrying Fair Value Value $ 48,676,406 $ 48,676,406 5,219,962 5,219,962	2004
		Carrying Fair Value Value $ 43,480,938 $ 43,480,938 1,246,344 1,246,344

Methods and assumptions used in estimating the fair value of nonderivative financial instruments were as follows:

• 1) The carrying values of cash and cash equivalents, receivables, refundable deposits and payables approximate fair values because of the short maturity of these instruments; thus, their carrying value also approximates its fair value.

• 2) If market prices for long-term equity investments are available, the fair value of these financial instruments should be based on the market price. Otherwise, carrying value represents current fair value.

• 3) Bonds payable are listed financial liabilities, thus, their market value represents fair value.

• 4) Long-term debts are interest-bearing financial liabilities. Thus, their carrying value represents current fair values.

Only the fair values of financial instruments were listed above, thus, the total of the fair values listed does not represent the fair value of the Company.

19. CAPITAL ADEQUACY RATIO

Under the Financial Holding Company Law and related regulations, the Company should maintain a consolidated capital adequacy ratio (CAR) of at least 100%. If the ratio falls below 100%, the appropriation of earnings as cash dividends or others assets will be restricted, and the authorities may discipline the Company, depending on the situation. The consolidated CARs of the Company were 115.69% and 120.84% as of December 31, 2005 and 2004, respectively.

The Banking Law and related regulations require that E.Sun Bank maintain both stand-alone and consolidated CARs at a minimum of 8% each. If E.Sun Bank’s CAR falls below 8%, the authorities may impose certain restrictions on the amount of cash dividends that E.Sun Bank may declare or, in certain conditions, totally prohibit E.Sun Bank from declaring cash dividends. As of December 31, 2005 and 2004, the non-consolidated CARs of E.Sun Bank were 10.00% and 11.51%, respectively and the consolidated CARs of E.Sun Bank were 10.01% and 11.52%, respectively.

Under the law governing bills finance companies and related regulations, E.Sun Bills should maintain a CAR of at least 8%. If the CAR falls below 8%, the authorities might subject E.Sun Bills’ earnings appropriations to certain restrictions. The CARs of E.Sun Bills were 15.78% and 15.39% as of December 31, 2005 and 2004, respectively.

• 36 -

Under the rules governing securities firms and related regulations, the CAR of a securities firm should be at least 200% to ensure its stability as well as maintain the health of the security markets. If the ratio is below 200%, the authorities may impose certain restrictions on a firm’s operations. The CARs of E.Sun Securities were 514.57% and 835.20% as of December 31, 2005 and 2004, respectively.

20. CONDENSED FINANCIAL STATEMENTS OF SUBSIDIARIES

• a. Condensed balance sheets

E.Sun Commercial Bank, Ltd.

Condensed Balance Sheets December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars)

Assets Cash and cash equivalents Due from the Central Bank of China and banks Securities purchased, net Receivables, net Securities purchased under resell agreements Prepaid expenses Bills, discounts and loans, net Long-term investments Other financial assets Net properties Goodwill Other assets, net Total	2005 $ 11,287,638 35,209,053 69,179,983 33,315,178 2,601,670 422,842 368,000,876 22,363,856 1,926,343 10,135,784 3,662,701 5,389,095 $ 563,495,019	2004 $ 7,899,575 27,671,867 54,815,405 30,520,884 5,569,238 307,262 275,359,584 11,624,627 - 8,991,839 4,661,587 5,899,032 $ 433,320,900	Liabilities and Stockholders’ Equity Liabilities Securities sold under repurchase agreements Due to the Central Bank of China and other banks Payables Advance Deposits and remittances Bonds Other long-term liabilities Other Total liabilities Stockholders’equity Capital stock Capital surplus Retained earnings Unrealized loss on long-term equity investments Cumulative translation adjustments Total stockholders’ equity Total	2005 $ 10,104,894 24,240,441 11,116,923 659,746 440,482,626 39,200,000 3,550,000 650,704 530,005,334 22,313,550 4,233,985 7,038,864 (93,826 ) (2,888 ) 33,489,685 $ 563,495,019	2004 $ 10,676,519 21,568,711 6,464,381 589,965 330,971,515 29,600,000 - 805,196 400,676,287 20,175,000 4,233,985 8,359,984 (111,204 ) (13,152 ) 32,644,613 $ 433,320,900

• 37 -

E.Sun Bills Finance Corp.

Condensed Balance Sheets December 31, 2005 and 2004

(In Thousands of New Taiwan Dollars)

Assets Cash Call loans to banks Bills and bonds, net Other short-term investments Receivables Other financial assets - current Securities purchased under resell agreements Other current assets Total current assets Long-term bond investments Other financial assets - noncurrent Net properties Other assets Total	2005 $ 4,889,992 - 50,137,130 70,000 418,767 556,400 2,479,827 8,547 58,560,663 3,979,819 - 23,194 504,383 $ 63,068,059	2004 $ 5,485,154 180,000 49,548,257 100,000 706,075 - 645,000 5,251 56,669,737 1,257,510 300,000 97,644 425,182 $ 58,750,073	Liabilities and Stockholders’ Equity Liabilities Securities sold under repurchase agreements Call loans from banks Payables Total current liabilities Corporate bonds payable Reserve for losses on guarantees Reserve for losses on sale of bonds Total liabilities Stockholders’equity Capital stock Capital surplus Retained earnings Total stockholders’ equity Total	2005 $ 46,617,365 4,460,000 84,159 51,161,524 5,000,000 324,910 143,095 56,629,529 4,265,000 87,500 2,086,030 6,438,530 $ 63,068,059	2004 $ 42,267,206 4,950,000 138,418 47,355,624 5,000,000 323,124 99,793	2004 $ 42,267,206 4,950,000 138,418 47,355,624 5,000,000 323,124 99,793
						47,355,624 5,000,000 323,124 99,793
						52,778,541
						4,265,000 87,500 1,619,032
						5,971,532
					$ 58,750,073

E.Sun Securities Corp.

Condensed Balance Sheets December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars)

Liabilities and Stockholders’

Assets Current assets Long-term investments Net properties Intangible assets Other assets Securities brokerage accounts, net Total	2005 $ 5,906,354 71,382 375,113 7,130 519,979 - $ 6,879,958	2004 $ 4,963,325 72,675 368,758 3,637 480,617 12,365 $ 5,901,377	Equity Liabilities Current liability Other Securities brokerage accounts, net Total liabilities Stockholders’equity Capital stock Retained earnings Total stockholders’ equity Total	2005 $ 3,584,293 55,746 33,887 3,673,926 3,060,000 146,032 3,206,032 $ 6,879,958	2004 $ 2,688,938 27,105 -
					2,716,043
					3,060,000 125,334
					3,185,334
					$ 5,901,377

• 38 -

E.Sun Insurance Broker Co., Ltd.

Condensed Balance Sheet December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars)

Assets Current assets Long-term investments Intangible assets Other assets Total	2005 $ 146,664 4,632 - 132 $ 151,428	2004 $ 160,987 4,568 127 - $ 165,682	Liabilities and Stockholders’ Equity Liabilities Current liability Other Total liabilities Stockholders’equity Capital stock Retained earnings Total stockholders’ equity Total	2005 $ 11,700 25 11,725 62,000 77,703 139,703 $ 151,428	2004 $ 22,324 136
					22,460
					62,000 81,222
					143,222
					$ 165,682

b. Condensed income statements

E.Sun Commercial Bank, Ltd.

Condensed Income Statements Years Ended December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item Operating revenues and gains Operating cost Gross profit Operating expenses Operating income Nonoperating income and gains Nonoperating expenses and losses Income before income tax Net income Earnings per share - before income tax Earnings per share - after income tax	2005 $ 20,944,170 8,723,004 12,221,166 7,402,428 4,818,738 85,262 120,984 $ 4,783,016 $ 3,829,944 $ 2.14 $ 1.72	2004 $ 20,279,496 4,635,001	2004 $ 20,279,496 4,635,001
		15,644,495 6,101,229
		9,543,266 47,254 1,218,764
		$ 8,371,756
		$ 7,283,936
			$ 4.15
			$ 3.61

• 39 -

E.Sun Bills Finance Corp.

Condensed Income Statements Years Ended December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item Operating income Operating expenses Income before income tax Net income Earnings per share - before income tax Earnings per share - after income tax	2005 $ 1,916,787 861,503 $ 1,055,284 $ 906,337 $ 2.47 $ 2.13	2004 $ 1,409,368 645,921	2004 $ 1,409,368 645,921
		$ 763,447
		$ 611,393
			$ 1.79
			$ 1.43

E.Sun Securities Corp.

Condensed Income Statements Years Ended December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item Operating income Operating expenses Income before income tax Net income Earnings per share - before income tax Earnings per share - after income tax	2005 $ 834,732 752,191 $ 82,541 $ 60,182 $ 0.27 $ 0.20	2004 $ 688,407 638,983	2004 $ 688,407 638,983
	$	$	49,424
	$	$	55,971
			$ 0.16
			$ 0.18

E.Sun Insurance Broker Co., Ltd.

Condensed Income Statement Years Ended December 31, 2005 and 2004 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item Operating income Operating expenses Nonoperating revenue and expense Income before income tax Net income Earnings per share - before income tax Earnings per share - after income tax	2005 $ 112,352 27,939 542 $ 84,955 $ 63,001 $ 13.70 $ 10.16	2004 $ 122,256 22,781 142	2004 $ 122,256 22,781 142
	$	$	99,617
	$	$	74,619
			$ 16.07
			$ 12.04

• 40 -

21. ALLOCATION OF REVENUE, COST AND EXPENSE RESULTING FROM INTERCOMPANY SHARING OF RESOURCES

Under cooperation arrangements, E.Sun Bank and E.Sun Securities shared some equipment and operating sites; thus, related expenses were allocated as follows:

Year ended December 31, 2005 Rental expense Fixture Broadcasting and security systems Networking, monitoring and telephone systems Others Year ended December 31, 2004 Rental expense Broadcasting and security systems Networking, monitoring and telephone systems Others	E.Sun Bank $ 4,774 172 286 156 21,631 $ 27,019 $ 4,738 36 - 1,354 $ 6,128	E.Sun Securities $ 3,626 - 36 - 80,113 $ 83,775 $ 3,879 36 282 2,634 $ 6,831	Total Allocation Method $ 8,400 All branches, except Chiayi Branch: E.Sun Bank - 2/3; E.Sun Securities - 1/3; and E.Sun Bank’s Chiayi Branch - 1/3 and E.Sun Securities - 2/3. 172 Based on area actually occupied. 322 50% each (except E.Sun Bank’s Chiayi Branch), and E.Sun Bank’s Chiayi Branch - 100%. 156 Based on actual number of equipment used. 101,744 Signboard, telephone and miscellaneous expenses - based on actual occurrence. Insurance and cleaning expenses - 50% each. Utilities - based on the actual number of employees, but for E.Sun Bank’s North Hsin Chuang and Tucheng Branch - 50% each. Building maintenance expenses - based on space actually occupied. $110,794 $ 8,617 E.Sun Bank (except Chiayi Branch) - 2/3 and E.Sun Securities - 1/3, and E.Sun Bank’s Chiayi Branch - 1/3 and E.Sun Securities - 2/3. 72 50% each 282 Based on actual number of equipment used. 3,988 Signboard, telephone and miscellaneous expenses - based on actual occurrence. Insurance and cleaning expenses - 50% each. Utilities - based on the actual number of employees. Building maintenance expenses - based on space actually occupied. $ 12,959

• 41 -

Under cooperation arrangements, E.Sun Bank and E.Sun Bills shared some equipment and operating site; thus, related expenses were allocated as follows:

Year ended December 31, 2005 Rental expense Fixtures Broadcasting and security systems Monitoring, telephone and networking systems Other Year ended December 31, 2004 Rental expense Fixtures Broadcasting, security and networking systems Other	E.Sun Bank $ 2,566 - 36 85 288 $ 2,975 $ 1,432 3,153 749 298 $ 5,632	E.Sun Bills $ 1,524 418 53 40 321 $ 2,356 $ 836 1,881 666 251 $ 3,634	Total Allocation Method $ 4,090 Based on space actually occupied 418 Based on space actually occupied 89 E.Sun Bank Kaohsiung Branch, E.Sun Bills and ESC - 1/3 each, but E.Sun Bank Panchiao Branch - 100% 125 Based on actual number of equipment used 609 Signboard, telephone and miscellaneous expenses - based on actual occurrence. Kaohsiung Branch’s utilities - E.Sun Bank, E.Sun Bills and E.Sun Capital Co., Ltd. - 1/3 each Panchiao Branch’s utilities - based on actual incurrence and actual number of employees $ 5,331 $ 2,268 Based on space actually occupied 5,034 Based on space actually occupied 1,415 Broadcast and network - based on actual number of equipment used. Security system - E.Sun Bank, E.Sun Bills and E.Sun Capital Co., Ltd. 1/3 each. 549 Signboard, telephone and miscellaneous expenses - based on actual occurrence. Insurance and cleaning expenses - 50% each Utilities - based on the actual number of employees. Building maintenance expenses - based on space actually occupied. $ 9,266

Under cooperation arrangements, E.Sun Bank and ESIB shared some equipment and operating site, personnel, internet service system and provide cross-selling financial services starting in 2004. The service fees earned by E.Sun Bank are based on 10% of the gross revenue derived from the insurance companies’ products sold by E.Sun Bank. In 2005 and 2004, ESIB should have paid E.Sun Bank $11,564 thousand and $12,996 thousand, respectively; the unpaid amount was $726 thousand and $2,738 thousand, respectively.

E.Sun Bank received $46,608 thousand in cross-selling advance revenue from ESSIT and realized $32,900 thousand of these revenues in 2005. E.Sun Bank also received $326 thousand and $2,083 thousand of cross-selling revenues from ESSIT in 2005 and 2004, respectively.

• 42 -

The cross-selling transactions between E.Sun Bank and E.Sun Securities were as follows:

Revenue Expense	Year Ended December 31	Year Ended December 31
	2005 $ 500 $ 5,956	2004 $ 16,110
		$ -

22. SUBSIDIARIES' ASSET QUALITY, MANAGEMENT INFORMATION, PROFITABILITY, LIQUIDITY AND SENSITIVITY TO MARKET RISK

• a. Asset quality

1) E.Sun Bank

Items	December 31, 2005	December 31, 2004
Nonperformingloans(overdue loans included)	$2,936,430	$2,438,734
Overdue loans	2,133,457	1,829,381
Nonperformingloans ratio	0.79%	0.88%
Surveillance loans	-	787,924
Surveillance loans/Total loan	-	0.28%
Allowance forpossible losses on loans and receivables	1,580,195	1,811,699

• Note 1: Nonperforming loans on December 31, 2005 represent the amounts of nonperforming loans reported to the authorities and disclosed to the public, as required by the Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans which took effect from July 1, 2005.

• Note 2: Nonperforming loans on December 31, 2004 represent the amounts of nonperforming loans reported to the authorities and disclosed to the public, as required by the Ministry of Finance (MOF) rulings dated February 16, 1994 (Ref. No. Tai-Tsai-Zong-832292834) and December 1, 1997 (Ref. No. Tai-Tsai-Zong-86656564).

• Note 3: Nonperforming loans ratio = Nonperforming loans (including overdue loans)/Total loans

Note 4: Surveillance loans as of December 31, 2004

• a) Midterm and long-term loans repayable in installments, with repayments overdue for more than three months but less than six months.

• b) Other loans, with principal repayments overdue by less than three months and interest overdue by more than three months but less than six months.

• c) Nonperforming loans exempted from reporting (including rescheduled loans which repayment terms meeting the criteria under relevant regulations; nonperforming loans which are to be repaid through a credit insurance fund and settlement fund; nonperforming loans with the same amount of certificates of time deposits as collaterals; and loans extended under other approved exemption programs).

• d) Loans of companies experiencing financial difficulty do not qualify as overdue loans.

• 43 -

2) E.Sun Bills

Items	December 31, 2005	December 31, 2004
Nonperformingloans	$ -	$ -
Overdue loans	-	-
Nonperformingloans/Total loan	-	-
Allowance forpossible losses on loans and receivables	324,910	323,124

• b. Management information

• 1) Concentration of credit risk

E.Sun Bank

Items	December 31, 2005		December 31, 2004
Credit to interestedparty	$3,365,506		$5,171,371
Credit to interestedparty/Total credit	0.90%		1.84%
Credit with stockpledged/Total credit	0.28%		0.40%
Loan concentration by industry	Type of Industry	%	Type of Industry	%
	a. Manufacturing	16	a. Manufacturing	15
	b. Finance, insurance and real estate	9	b. Finance, insurance and real estate	10
	c. Wholesale, retail and catering	6	c. Wholesale, retail and catering	6

• Note: a) Total credits included bills, discounts and loans (including import and export negotiations), acceptances and guarantees.

• b) Ratios of credit extensions to interested parties: Credit to interested parties ÷ Total credit.

• c) Ratios of credit extensions secured by pledged stocks: Credit with stocks pledged ÷ Total credit

• d) The calculation of amounts of credit extensions to interested parties should be based on the Banking Law provisions.

E.Sun Bills

Items	December 31, 2005		December 31, 2004
Credit to interestedparty	$127,900		$179,000
Credit to interestedparty/Total credit	0.70%		1.02%
Credit with stockpledged/Total credit	23.06%		18.80%
Loan concentration by industry	Type of Industry	%	Type of Industry	%
	Finance and insurance	41	Finance and insurance	38
	Manufacturing	34	Manufacturing	38
	Real estate and leasing	14	Wholesale, retail and catering	8

Note: a) Ratios of credit extensions to interested parties: Credit to interested parties ÷ Total credit.

• b) Ratios of credit extensions secured by pledged stocks: Credit with stocks pledged ÷ Total credit

• c) Total credits include guarantees, endorsed check and nonperforming loans.

• 44 -

• 2) Accounting policies on allowances for losses on loans, overdue loans, and securities purchased:

E.Sun Bank

• a) Allowances for possible losses and reserve for losses on guarantees:

E.Sun Bank makes provisions for bad debts and losses on guarantees based on the evaluation of loans, overdue loans, bills, discounts, receivables, guarantees and acceptances for their specific risks.

Debts and guarantees with specific risks are evaluated internally for their collaterals, collectibility and customers’ overall credits. Under Ministry of Finance (MOF) guidelines, E.Sun Bank makes full provisions for credits deemed uncollectible and makes at least 50% provisions for credits with high uncollectibility. However, under revised MOF guidelines effective July 1, 2005, E.Sun Bank makes full, 50%, 10% and 2% provisions for credits deemed uncollectible, highly uncollectible, substandard and special mention, respectively, as minimum provisions for possible losses.

Credits deemed uncollectible may be written off if the write-off is approved by board of directors.

• b) Allowances for possible losses on investments

• i. Securities purchased

Securities purchased are carried at cost less allowance for decline in value. The allowance is reversed when the market value recovers, with the reversal recognized as income.

• ii. Long-term equity investments

Investments in stocks with no quoted market price are accounted for at cost. The carrying amount of the investment is reduced to reflect other than temporary decline in the value of the investments, with the related losses charged to current income. Investment in stock with quoted market price is stated at the lower of aggregate cost or market. The reduction of an investment cost to reflect a lower market value and its write-up due to the subsequent recovery in market value are charged and credited, respectively, to stockholders’ equity. Cash dividends received from a year after investment acquisition are recorded as investment income. Foreign-currency investments are recorded in New Taiwan dollars at the rate of exchange in effect when the transactions occur. At year-end, the balances of these investments are restated at year-end exchange rates. If the restated amounts are lower than cost, the differences are recognized as translation adjustments under stockholders’ equity; otherwise, no adjustment is made.

E.Sun Bills

• a) Allowance for doubtful receivables and reserve for losses on guarantees

E.Sun Bills makes provision for bad debts and reserve for losses on guarantees based on the evaluation of related risks. It makes provisions of at least 1% of the amount guaranteed, full provisions for credits deemed uncollectible and 50% provision for credits with high uncollectibility. Under the revised Financial Supervisory Commission’s guidelines effective July 1,2005, E.Sun Bills makes full, 50%, 10% 2% and 1% provisions for credits deemed uncollectible, highly uncollectible, substandard, special mention and credits deemed collectible, respectively, as minimum provisions for possible losses.

• 45 -

• b) Reserves for losses on sale of bonds

Under the regulations of SFB, reserves for losses on the sale of bonds are computed at 10% of net gain on sale of these bonds until the balance of the reserve reaches the required amounts set under relevant regulations. This reserve should only be used to offset actual losses on the sale of bonds.

• c) Allowance for reduction of investments

• i) Bills and bonds

Bills and bonds are stated at aggregate cost less allowance for losses from decline in market value. The allowance is reversed when the market value recovers, with the reversal recognized as income.

• ii) Other short-term investments

Other short-term investments are stated at aggregate cost less allowance for losses from decline in market value. The allowance is reversed when the market value recovers, with reversal recognized as income.

• 3) Concentrations of risk

a) E.Sun Bank

Under normal business operations, E.Sun Bank is a party to transactions involving financial services with off-balance-sheet risks, such as issuing credit cards, extending credit facilities and providing financial guarantee and obligations under letters of credit issued. Generally, the related transactions are for one year.

The interest rates for loans ranged from 1.40% to 18.25% in 2005 and from 1.20% to 18.25% in 2004. The highest interest rate for credit cards was 19.71% in both years.

There was no concentration of maturity dates in one particular period that would potentially result in liquidity problems to E.Sun Bank.

The amounts of financial contracts with off-balance-sheet credit risks as of December 31, 2005 and 2004 were as follows:

Credit card commitments Guarantees and issuance of letter of credit	December 31
	2005 2004 $ 244,392,721 $ 228,563,223 10,438,314 8,359,827

Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The total potential loss (without considering the value of any collateral) in case of default by counter-parties is equal to the above contractual amounts, if completely drawn upon.

• 46 -

E.Sun Bank evaluates the creditworthiness of each credit applications case by case, taking into account the applicant’s credit history, credit rating and financial condition. Collateral, mostly in the form of real estate, cash, inventories and marketable securities, may be required depending on the evaluation result. As of December 31, 2005 and 2004, about 66% and 63% of total loans granted, respectively, and about 13% and 25%, respectively, for both the aggregate guarantees and letters of credit issued, were secured. No collateral is required for credit card facilities but the credit status of each credit cardholder is closely monitored. Depending on the results of credit status monitoring, appropriate measures are adopted, including amending the credit limit and, if necessary, canceling the facility.

The concentration of credit risk exists when counter-parties to financial transactions are individuals or groups engaged in similar activities or activities in the same region, which would cause their abilities to meet contractual obligations to be similarly affected by changes in economic or other conditions. E.Sun Bank has no credit risk concentration arising from any counter-party or groups of counter-parties engaged in similar business activities. The concentrations of credit risks were as follows (10% or more of the outstanding loans):

Natural person Manufacturing	December 31	December 31
	2005 Amount % $ 230,612,281 61 58,534,113 16	2004
		Amount % $ 170,581,201 61 41,453,228 15

b) E.Sun Bills

E.Sun Bills guarantees commercial paper issued by other entities. The guarantee period is normally one year. The rate for guarantee service fees ranged from 0.05% to 1.00% of the amount guaranteed. As of December 31, 2005 and 2004, the total amounts guaranteed were $18,335,200 thousand and $17,567,400 thousand, respectively.

Most of the guarantee contracts are expected to expire without entailing any payment by E.Sun Bills. Thus, the total amount guaranteed does not necessarily represent future cash payments. In addition, the potential total loss on each guarantee is equal to the amount guaranteed, without considering the value of any collateral.

E.Sun Bills approves the guarantee arrangements for commercial paper (including the maximum amount to be guaranteed) after reviewing a customer’s history and credit rating. An appropriate collateral is required, if needed, and the transaction is made within the approved maximum amount. As of December 31, 2005 and 2004, about 37.66% and 31.77%, respectively, of total amounts guaranteed were covered by securities or other properties. If a customer defaults, E.Sun Bills is entitled to sell the related collateral.

• 47 -

Credit risk concentrations exist when the counter-parties to financial-instrument transactions are individuals or groups engaged in similar activities or activities in the same region, which would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. For E.Sun Bills, concentration of credit risk do not involve individuals but industry groups, were as follows:

Guarantee on commercial paper - by industries: Finance and insurance Manufacturing Real estate and leasing Wholesale, retail and catering	December 31
	2005 2004 $ 7,499,000 $ 6,667,000 6,219,000 6,606,000 2,594,000 1,416,000 982,000 1,439,000

E.Sun Bills’ maximum exposure to losses associated with credit guarantees, regardless of collateral involved, equals the total contract amount.

• 4) Matters requiring special notation

E.Sun Bank

December 31, 2005

(In Thousands of New Taiwan Dollars)

Causes	Summary and Amount
Within the past year, a responsible person or professional employee violated the law in the course of business, resulting in an indictment byaprosecutor	None
Within the past year, a fine was levied on E.Sun Bank for violations of the BankingLaw	None
Within the past year, misconduct occurred, resulting in the Ministry of Finance’s imposingstrict corrective measures on E.Sun Bank	None
Within the past year, the individual loss or total loss from employee fraud, accidental and material events, or failure to abide by the “Guidelines for Maintenance of Soundness of Financial Institutions” exceeded$50 million dollars	None
Other	None

Note 1: The term “within the past year” means one year before the balance sheet date.

• Note 2: The term “a fine levied for violations of the Banking Law within the past year” means a fine imposed by the Banking Bureau, Securities and Futures Bureau, Insurance Bureau or Examination Bureau.

• 48 -

E.Sun Bills

December 31, 2005

(In Thousands of New Taiwan Dollars)

Causes	Summary and Amount
Within the past year, a responsible person or professional employee violated the law in the course of business, resulting in an indictment byaprosecutor	None
Within the past year, a fine was levied on E.Sun Bills for violations of related regulations	None
Within the past year, misconduct occurred, resulting in the Ministry of Finance’s imposingstrict corrective measures on E.Sun Bills	None
Within the past year, the individual loss or the total losses from employee corruption, accidental and material events, or failure to abide by the “Guidelines for the Maintenance of Soundness of Financial Institutions” exceeded $50 million dollars	None
Other	None

Note: The term “within the past year” means one year before the balance sheet date.

• 5) Business information of E.Sun Bills

Items	December 31, 2005	December 31, 2004
Guarantees and endorsements	$18,335,200	$17,567,400
Guarantees and endorsements/stockholders’ equity	3.31	3.28
Securities sold under repurchase agreements	46,617,365	42,267,206
Securities sold under repurchase agreements/stockholders’ equity	8.43	7.89

• c. Profitability

E.Sun Bank

Unit: %

Items	Year Ended December 31, 2005	Year Ended December 31, 2004
Return on assets	0.96	2.25
Return on equity	14.46	31.03
Net income ratio	18.29	35.92

Note: 1) Return on assets = Income before income tax/Average total assets

• 2) Return on equity = Income before income tax/Average equity

• 3) Net income ratio = Net income/Total operating revenue

• 4) Income before income tax or net income represents income for the years ended December 31, 2005 and 2004.

• 5) The profitability is expressed annually.

• 49 -

• d. Liquidity as of December 31, 2005

• 1) Liquidity analysis of assets and liabilities for E.Sun Bank

(In Thousands of New Taiwan Dollars)

	Total	Period Remaining until Due Date	Period Remaining until Due Date	Period Remaining until Due Date	Period Remaining until Due Date	Period Remaining until Due Date
		0-30 Days	31-90 Days	91-180 Days	181 Days to 1 Year	Over 1 Year
Assets	$ 514,932,000	$ 75,847,000	$ 32,572,000	$ 12,948,000	$ 24,726,000	$ 368,839,000
Liabilities	489,097,000	88,267,000	73,542,000	94,936,000	168,935,000	63,417,000
Gap	25,835,000	(12,420,000)	(40,970,000)	(81,988,000)	(144,209,000)	305,422,000
Accumulatedgap	25,835,000	(12,420,000)	(53,390,000)	(135,378,000)	(279,587,000)	25,835,000

Note: Listed amounts are in New Taiwan dollars (i.e., excluding foreign-currency amounts) of the head office and domestic branches.

• 2) Liquidity analysis of E.Sun Bills

(In Millions of New Taiwan Dollars)

Items	Period	1-30 Days	31-90 Days	91-180 Days	181 Days to 1 Year	Over 1 Year
Usage of funds	Bills	$ 11,273	$ 14,341	$ 4,161	$ 1,165	$ -
	Bonds	44	-	2	1,128	22,260
	Deposits	516	770	1,176	3,093	10
	Call loans	-	-	-	-	-
	R.S	2,480	-	-	-	-
	Total	14,313	15,111	5,339	5,386	22,270
Source of funds	Borrowings	4,460	-	-	-	5,000
	R.P	39,262	6,884	470	2	-
	Capital	-	-	-	-	6,438
	Total	43,722	6,884	470	2	11,438
Net flows		(29,409)	8,227	4,869	5,384	10,832
Accumulated net flows		(29,409)	(21,182)	(16,313)	(10,929)	(97)

Note: R.S - securities purchased under resell agreement R.P - securities sold under repurchase agreement

• e. Market risk sensitivity

• 1) E.Sun Bank

		Unit: %
Items	December 31, 2005	December 31, 2004
Ratio of interest rate-sensitive assets to liabilities	79.45	82.35
Ratio of interest rate-sensitivity gapto stockholders’ equity	(248.90)	(165.33)

• 50 -

2) E.Sun Bills

Unit: %

Items	December 31, 2005	December 31, 2004
Ratio of interest rate-sensitive assets to liabilities	78.60	71.91
Ratio of interest rate-sensitivity gapto stockholders’ equity	(169.75)	(222.15)

• Note 1: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and interest-bearing liabilities affected by interest rate changes.

• Note 2: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities

• －

• Note 3: Interest rate-sensitivity gap = Interest rate-sensitive assets Interest rate-sensitive liabilities

• f. Average amount and average interest rate of interest-earning assets and interest-bearing liabilities

Average balance is calculated at the daily average balance of interest-earning assets and interest-bearing liabilities.

1) E.Sun Bank

Interest-earning assets Cash and cash equivalents - due from banks Due from the Central Bank of China and other banks Securities purchased Securities purchased under resell agreements Receivables of credit cards Bills, discount and loans Long-term bond investments Other long-term investments Other financial assets Interest-bearing liabilities Securities sold under repurchase agreements Due to the Central Bank of China and other banks Demand Savings - demand Time Savings - time Negotiable certificates of deposit Bonds	2005 Average Average Balance Rate (%) $ 1,340,382 1.58 17,930,462 1.79 66,310,995 2.36 2,505,744 0.99 30,198,636 12.74 319,415,591 3.32 8,853,356 2.02 2,713,248 1.75 753,032 1.27 10,627,246 1.12 28,827,048 2.54 41,432,261 0.38 91,316,207 0.55 100,525,866 1.76 115,253,942 1.64 18,698,537 1.26 33,043,836 2.30	2004
		Average Average Balance Rate (%) $ 3,293,861 1.11 15,272,565 1.55 51,367,824 1.39 2,510,687 0.81 25,418,504 14.31 240,121,560 3.40 6,384,168 2.08 1,823,816 1.69 - - 11,414,941 0.80 26,677,506 1.31 31,711,638 0.18 70,520,794 0.54 81,163,817 1.26 82,407,110 1.45 13,267,152 1.03 23,660,073 1.86

• 51 -

2) E.Sun Bills

Interest-earning assets Due from Banks Call loans to banks Operating securities - bills Operating securities - bonds Bills purchased under resell agreements Bonds purchased under resell agreements Other financial assets - noncurrent Long-term bond investments Interest-bearing liabilities Call loans from banks Commercial paper issued Bills sold under repurchase agreements Bonds sold under repurchase agreements Corporate bonds payable	2005 Average Average Balance Rate (%) $ 5,468,532 1.70 174,997 1.87 31,139,119 1.28 21,077,788 4.11 - - 2,218,626 1.14 284,384 3.46 2,155,342 2.57 5,404,756 1.30 155,616 1.15 22,187,212 1.05 23,552,410 1.19 5,000,000 1.00	2004
		Average Average Balance Rate (%) $ 3,956,786 1.39 225,929 1.90 31,855,360 1.18 21,699,696 4.05 54,768 0.99 1,326,338 0.83 180,328 2.89 1,744,093 4.05 7,357,139 1.01 303,825 0.85 21,749,488 1.04 21,988,975 0.87 4,726,776 3.59

• g. The net position on foreign-currency transactions

The net position on foreign-currency of E.Sun Bank is shown below:

Unit: In Thousands of Dollars

The net position on foreign-currency transaction (market risk)	December 31, 2005	December 31, 2005	December 31, 2004	December 31, 2004
	Currency	NT$	Currency	NT$
	HKD(186,606)	$ (790,874)	USD (21,112)	$ (670,686)
	USD 23,515	772,703	HKD(102,329)	(417,973)
	EUR 4,406	171,450	SGD 9,382	182,325
	JPY 459,993	128,154	JPY 508,226	157,093
	NZD (4,221)	(94,734)	RMB (19,044)	(73,097)

Note: The foreign currencies represent the top five currencies in E.Sun Bank’s basket of international currencies.

23. DISCLOSURE REQUIRED UNDER ARTICLE 46 OF THE FINANCIAL HOLDING COMPANY LAW

Please refer to Table 6.

• 52 -

24. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the Securities and Futures Bureau for the Company and its investees:

• a. Related information of significant transactions and investees:

• 1) Financing provided: E.Sun Bank and E.Sun Bills - not applicable; the Company and investee company - none.

• 2) Endorsement/guarantee provided: E.Sun Bank and E.Sun Bills - not applicable; the Company and investee company - none.

• 3) Marketable securities held: E.Sun Bank, E.Sun Bills and E.Sun Securities - not applicable; the Company and investee company - Table 1 (attached).

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital (for banks and investment companies, amounting to NT$300 million or 10% of the paid-in capital; banks and bills finance corporations disclose accumulated acquired and disposed investments information): E.Sun Securities - not applicable; the Company and investee company - Table 2 (attached).

• 5) Acquisition of individual real estates at costs of at least NT$100 million or 20% of the paid-in capital (for banks and investment companies, amounting to NT$300 million or 10% of the paid-in capital): the Company - none; investee company - Table 3 (attached).

• 6) Disposal of individual real estates at costs of at least NT$100 million or 20% of the paid-in capital (for banks and investment companies, amounting to NT$300 million or 10% of the paid-in capital): None.

• 7) Total purchase from or sale to related parties of at least NT$100 million or 20% of the paid-in capital: None.

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (for banks and investment companies, amounting to NT$300 million or 10% of the paid-in capital): the Company and investee company: Table 4 (attached).

• 9) Name, locations and other information of investees on which the Company exercises significant influence: Table 5 (attached).

• 10) Derivative transactions: Note 18 to the financial statements.

• b. Investment in Mainland China: None.

25. SEGMENT INFORMATION

The Company engages only in investing and managing businesses related to financial institutions and has no overseas segment. The Company also has no customer from whom income of more than 10% of the total income of the Company is generated. Thus, the Company need not disclose industry, geographic and major customer information.

• 53 -

TABLE 1

E.SUN FINANCIAL HOLDING CO., LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2005 (In Thousands of New Taiwan Dollars)

Holding Company Name	Marketable Securities Type and Name	Relationship with the Holding Company	Financial Statement Account		December 31, 2005	December 31, 2005		Note
				Shares (Thousands)	Carrying Value	Percentage of Ownership	Market Value or Net Asset Value
E.Sun Financial Holding Co., Ltd. E.Sun Venture Capital Co., Ltd.	Stocks E.Sun Commercial Bank, Ltd. E.Sun Bills Finance Corp. E.Sun Securities Corp. E.Sun Venture Capital Co., Ltd. E.Sun Securities Investment Trust Corp. E.Sun Insurance Broker Co., Ltd. Taiwan Debt Instruments Depository and Clearing Co., Ltd. Stocks E.Sun Capital Co., Ltd. Ampire Co., Ltd. Star World Technology Co., Ltd. Epitech Technology Corp. Univacco Technology Inc. Bank-Pro E-Service Technology Co., Ltd. Twinhan Technology Co., Ltd. Epoch Chemtronics Corp. Chunghwa Chemical Synthesis Biotech Co., Ltd. Sam Lam Technology Co., Ltd. Etrend Technology Co., Ltd. Progres-sive Optoelectronic Technology Co., Ltd. Beyond Innovation Technology Co., Ltd. Linear Tech Co., Ltd. Super Link Electronics Co., Ltd. Joinsoon Electronics Mfg. Co., Ltd. Globaltop Partner I Venture Capital co., Ltd. Solidlite Co., Ltd. Dynamic Electronics Co., Ltd. E-Ton Solar Tech. Kingroup Automation Industry Corp. Optimer MOSA Industrial Corporation Orgchem Technologies, Inc. Exploit Technology Co., Ltd. Mao Chia Metal Co.,Ltd.	Equity-method investee Equity-method investee Equity-method investee Equity-method investee Equity-method investee Equity-method investee - Equity-method investee - - - - - - - - - - - - - - - Its supervisor - - - - - - - - -	Long-term investments Long-term investments Long-term investments Long-term investments Long-term investments Long-term investments Long-term investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equity investments Long-term equityinvestments	2,231,355 426,500 306,000 100,000 30,000 6,200 4,000 450 978 4 66 1,219 325 744 1,494 2,000 1,700 546 784 832 975 2,000 1,200 10,000 1,000 1,409 560 800 333 650 800 535 600	$ 33,489,685 6,438,531 3,206,033 1,026,131 329,517 139,703 40,000 6,704 13,314 64 1,332 30,000 3,250 33,192 29,660 20,005 23,800 6,825 25,088 25,388 33,750 25,000 25,200 100,000 16,000 29,425 38,403 17,600 36,942 9,750 56,000 10,703 18,000	100.00 100.00 100.00 100.00 100.00 100.00 2.00 45.00 1.92 0.01 0.02 2.63 2.41 1.63 8.61 3.07 6.07 2.02 1.85 3.86 2.88 10.00 2.91 2.97 4.00 1.16 1.21 4.44 4.00 1.86 2.26 1.34 1.90	$ 33,489,685 6,438,531 3,206,033 1,026,131 329,517 139,703 41,333 6,704 9,119 122 2,027 21,287 2,812 3,843 21,825 13,720 19,181 6,007 8,031 13,462 13,044 12,333 14,320 99,336 6,929 30,873 11,258 13,975 18,964 7,720 19,350 6,960 9,844	3 3 3 3 3 3 3 2 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
								(Continued)

• 54 -

Holding Company Name	Marketable Securities Type and Name	Relationship with the Holding Company	Financial Statement Account		December 31, 2005	December 31, 2005		Note
				Shares (Thousands)	Carrying Value	Percentage of Ownership	Market Value or Net Asset Value
E.Sun Securities Investment Trust Corp. E.Sun Insurance Broker Co., Ltd. E.Sun Finance & Leasing Co., Ltd. E.Sun Insurance Agent Co., Ltd. E.Sun Securities Investment Consulting E.Sun Capital Co., Ltd.	Goodway Machine Corp. Hi-Light Tek Co., Ltd. Funds Mega Diamond Bond Fund E.Sun Rising-Sun Fund E.Sun Global Balanced Fund Bonds Fubon Commercial Bank, 2002-1 type I Fubon Commercial Bank, 2004-5 type K Funds E.Sun New Era Bond Fund E.Sun Gin-Ru-E Balanced Fund CITC Safe Income Fund E.Sun Rising-Sun Fund E.Sun Principal Guaranteed Fund Stocks E.Sun Insurance Agent Co., Ltd. Stocks Gapura Incorporated Government bonds A861 A862 Funds E.Sun Gin-Ru-E Balance Fund Funds Upamc Home Run Bond Fund Funds E.Sun Gin-Ru-E-Balance Fund	- - - Common parent company with the same fund management company Common parent company with the same fund management company - - Common parent company with the same fund management company Common parent company with the same fund management company - Common parent company with the same fund management company Common parent company with the same fund management company Equity-method investee - - - The fund management company is in the same group - The fund management company is in the samegroup	Long-term equity investments Long-term equity investments Short-term investments Short-term investments Short-term investments Long-term investments Long-term investments Short-term investments Short-term investments Short-term investments Short-term investments Short-term investments Long-term equity investments Long-term investments Long-term investments Long-term investments Short-term investments Short-term investments Short-term investments	1,000 300 8,710 1,954 2,976 - - 6,657 2,376 558 1,000 1,000 324 462 - - 1,414 225 498	$ 30,000 22,500 98,191 20,000 30,148 195,775 50,000 70,000 23,869 8,039 10,000 10,000 4,632 10,733 5,713 4,169 14,200 3,000 5,000	1.48 3.33 - - - - - - - - - - 20.00 6.21 - - - - -	$ 17,069 4,590 98,869 20,035 30,479 195,775 50,000 71,389 23,332 8,183 10,252 9,944 4,632 11,432 5,707 4,162 13,881 3,116 4,895	2 2 1 1 1 1 1 1 1 1 2 2 $8,500 thousand in government bonds pledged with courts of justice for collection case on overdue loan 1 1 1

(Continued)

• 55 -

Note 1: Market value of the listed stocks was based on the average closing prices in December 2005. The market value of fund was based on the net worth as of December 31, 2005.

Note 2: The amounts are based on the latest unaudited financial statements.

Note 3: The amounts are based on the latest audited financial statements.

• 56 -

TABLE 2

E.SUN FINANCIAL HOLDING CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL (FOR BANKS AND INVESTMENT COMPANIES, AMOUNTING TO NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL) YEAR ENDED DECEMBER 31, 2005

(In Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Nature of Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance
					Shares (Thousand)	Amount	Shares (Thousand)	Amount	Shares (Thousands)	Amount	Carrying Value	Gain (Loss) on Disposal	Shares (Thousand)	Amount
E.Sun Venture Capital Co., Ltd. E.Sun Venture Capital Co., Ltd.	Mega Diamond Bond Fond IIT Wan Hwa Fund	Short-term investments Short-term investments	- -	- -	10,430 7,280	$ 115,873 101,719	12,420 3,528	$ 140,000 50,000	14,140 10,808	$ 158,977 153,248	$ 157,682 151,719	$ 1,295 1,529	8,710 -	$ 98,191 -

• 57 -

TABLE 3

E.SUN FINANCIAL HOLDING CO., LTD.

ACQUISITION OF INDIVIDUAL REAL ESTATES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL (FOR BANKS AND INVESTMENT COMPANIES, AMOUNTING TO NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL) YEAR ENDED DECEMBER 31, 2005

(In Thousands of New Taiwan Dollars)

Company Name	Property	Transaction Date	Transaction Amount	Payment Term	Counter-party	Nature of Relationship	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Price Reference	Purpose of Acquisition	Other Terms
							Owner	Relationship	Transfer Date	Amount
E.Sun Commercial Bank, Ltd.	Land: Lot 41, 2 small Sec., Chungshan Sec., Chungshan District, Taipei City. Nine floors above ground and three floors underground of a building under construction on the above property	2005.02.16	$ 1,350,000	$ 634,500 already paid as of December 31, 2005 The remaining amounts paid on schedule under the contract	Founding Construction & Development Co., Ltd.	-	-	-	-	$ -	Appraisal of China Credit Information Service, Ltd. and Honda Appraisers Firm	Office	-

• 58 -

TABLE 4

E.SUN FINANCIAL HOLDING CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL (FOR BANKS AND INVESTMENT COMPANIES, AMOUNTING TO NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL) DECEMBER 31, 2005

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
					Amount	Action Taken
E.Sun Financial Holding Co., Ltd.	E.Sun Bank	Subsidiaries	$459,146 (Note 1)	-	$ -	-	$ -	$ -

Note 1: The receivable comes from the adoption of the linked tax system for tax filing.

• 59 -

TABLE 5

E.SUN FINANCIAL HOLDING CO., LTD.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE YEAR ENDED DECEMBER 31, 2005

(In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Investmen	t Amount	Balance	as of December	31, 2005	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				December 31, 2005	December 31, 2004	Shares (Thousands)	Percentage of Ownership	Carrying Value
E.Sun Financial Holding Co., Ltd. E.Sun Commercial Bank, Ltd. E.Sun Securities Corp. E.Sun Venture Capital Co., Ltd. E.Sun Insurance Broker Co., Ltd.	E.Sun Commercial Bank, Ltd. E.Sun Bills Finance Corp. E.Sun Securities Corp. E.Sun Venture Capital Co., Ltd. E.Sun Insurance Broker Co., Ltd. E.Sun Securities Investment Trust Co., Ltd. E.Sun Finance & Leasing Co., Ltd. E.Sun Insurance Agent Co., Ltd. E.Sun Securities Investment Consulting Co., Ltd. E.Sun Capital Co., Ltd. E.Sun Insurance Agent Co., Ltd.	Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei	Banking Dealing and brokering short-term negotiable instruments Dealing, underwriting and brokering securities Investment Insurance broker Investing funds under full discretionary authorization from customers Leasing and sale of machinery and equipment Life insurance agent Security consulting Agency of service and human resource Life insurance agent	$ 25,160,117 5,150,581 3,137,819 1,000,000 10,000 366,211 196,000 3,950 10,000 4,500 8,556	$ 25,160,117 5,150,581 3,137,819 1,000,000 10,000 366,211 196,000 3,950 10,000 4,500 8,556	2,231,355 426,500 306,000 100,000 6,200 30,000 19,600 1,280 1,000 450 324	100.00 100.00 100.00 100.00 100.00 100.00 98.99 79.00 100.00 45.00 20.00	$ 33,489,685 6,438,531 3,206,033 1,026,131 139,703 329,517 173,018 18,295 10,293 6,704 4,632	$ 3,829,944 906,337 60,182 27,183 63,001 (15,245) 18,969 465 (283) 7,539 465	$ 3,520,880 893,498 57,419 26,453 62,201 (18,145) 18,777 253 (293) 3,310 64

• 60 -

TABLE 6

E.SUN FINANCIAL HOLDING CO., LTD.

DISCLOSURE REQUIRED UNDER ARTICLE 46 OF THE FINANCIAL HOLDING COMPANY LAW DECEMBER 31, 2005 (In Thousands of New Taiwan Dollars)

Name	Relation Condition	Total Amounts of Credits, Endorsement or Other Transactions	Percentage of ESFHC’s Equity
1. Tai Power Co., Ltd. 2. Mega Financial Holding Co., Ltd. and the related parties 3. China Development Financial Holding Corporation and related parties 4. Continental Engineering Corp. and related parties 5. China Trust Financial Holding Co., Ltd. and related parties 6. Taiwan Acceptance Corp. and the related parties 7 Fubon Financial Holding Co., Ltd. and related parties 8. Nan Ya Plastic Co., Ltd. and the related parties 9. Far Eastern Textile Co., Ltd. and related parties	With same person With same affiliate With same affiliate With same affiliate With same affiliate With same affiliate With same affiliate With same affiliate With same affiliate	$2,800,000 3,709,600 3,650,328 3,646,405 3,631,529 2,549,587 2,446,957 2,230,982 2,223,126	6.61% 8.76% 8.62% 8.61% 8.58% 6.02% 5.78% 5.27% 5.25%

• 61 -

REGISTERED OFFICE OF THE COMPANY

E.Sun Financial Holding Company, Ltd. No. 117 Minsheng East Road, Section 3 Taipei, Taiwan Republic of China

REGISTERED OFFICE OF THE COMPANY

E.Sun Financial Holding Company, Ltd. No. 117 Minsheng East Road, Section 3 Taipei, Taiwan Republic of China