AIDC — Interim / Quarterly Report 2016

Dec 19, 2016

Aerospace Industrial Development Corporation and Subsidiaries

$\bar{z}$

Consolidated Financial Statements for the Nine Months Ended September 30, 2016 and 2015 Independent Auditors' Review Report

Deloitte

勤業眾信聯合會計師事務所 10596 台北市民生東路三段156號12樓

Deloitte & Touche 12th Floor, Hung Tai Financial Plaza 156 Min Sheng East Road, Sec. 3 Tainei 10596. Taiwan

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INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders Aerospace Industrial Development Corporation

We have reviewed the accompanying consolidated balance sheets of Aerospace Industrial Development Corporation and subsidiaries (the "Group") as of September 30, 2016 and 2015 and the related consolidated statements of comprehensive income for the three months ended September 30, 2016 and 2015 and for the nine months ended September 30, 2016 and 2015, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2016 and 2015. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36 "Review of Financial Statements" issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As disclosed in Note 11 to the consolidated financial statements, we did not review the financial statements of associates for the nine months ended September 30, 2016 and 2015 which were used as bases of investments accounted for by the equity method. The carrying amounts of the related investments as of September 30, 2016 and 2015 were NT\$717,930 thousand and NT\$628,088 thousand, respectively. For the three months ended September 30, 2016 and 2015 and for the nine months ended September 30, 2016 and 2015, the amounts of the related share of profit of associates were NT\$30,967 thousand and NT\$69,819 thousand, NT\$120,358 thousand and NT\$212,412 thousand, respectively. The investment amounts as well as the related information were based on unreviewed financial statements of the investees for the same reporting periods.

Based on our reviews, except for the effects of adjustments, if any, as might have been determined to be necessary had the financial statements which were used as bases of the investments accounted for by the equity method and the share of profit and related information as described in the preceding paragraph been reviewed, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the, Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 "Interim Financial Reporting" endorsed by the Financial Supervisory Commission of the Republic of China.

Delaitte & Touche

November 9, 2016

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such financial statements are those generally applied in the Republic of China.

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

CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars, Except Par Value)

	September 30, 2016 (Reviewed)		December 31, 2015 (Audited)		September 30, 2015 (Reviewed)
ASSETS	Amount	%	Amount	%	Amount	%
CURRENT ASSETS Cash and cash equivalents (Note 6)	\$ 3,594,088	11	\$ 1,554,739	5	S 1,736,950	6
Notes receivable	4,200	$\blacksquare$	19,823	÷,	4,343
Trade receivables from unrelated parties (Note 8)	7,784,138	24	6,479,638	23	7,994,521	26
Trade receivables from related parties (Note 29)	218,811	1	202,531	1	165,529	-1
Other receivables (Note 8) Current tax asset (Note 24)	201,282 160,154	1	153,957		102,943
Inventories (Note 9)	8,628,811	$\tilde{\phantom{a}}$ 26	162,372 8,795,613	$\mathbf{1}$ 31	162,978 9,328,472	$\mathbf{1}$ 31
Other financial asset - current (Notes 14 and 30)	1,940,346	6	2,554,657	9	2,544,035	8
Other current assets (Note 15)	816,507	$\overline{2}$	1,262,414	$\overline{4}$	1,330,382	$\overline{4}$
Total current assets	23,348,337	$-71$	21,185,744	$\frac{74}{1}$	23,370,153	77
NON-CURRENT ASSETS
Financial assets measured at cost - non-current (Note 7) Investment accounted for using equity method (Note 11)	79,200 717,930	$\overline{\phantom{a}}$ $\boldsymbol{2}$	46,200		46,200
Property, plant and equipment (Note 12)	7,051,520	22	665,521 5,713,002	$\mathbf{2}$ 20	628,088 5,014,942	2 17
Intangible assets (Note 13)	777,809	$\boldsymbol{2}$	412,054	$\boldsymbol{2}$	387,077	$\mathbf{1}$
Deferred tax assets (Note 24)	338,432	1	298,563	1	301,856	$\mathbf{1}$
Prepayments for equipment	514,647	$\boldsymbol{2}$	327,952	1	399,578	$\boldsymbol{2}$
Other financial asset - non-current (Notes 14 and 30)	24,517	$\ddot{\phantom{0}}$	24,517		4,807
Other non-current assets (Notes 8 and 15)	24,431	÷.	30,629	$\overline{a}$	32,847	$\overline{\phantom{a}}$
Total non-current assets	9,528,486	$\frac{29}{2}$	7,518,438	$\frac{26}{2}$	6,815,395	$\frac{23}{2}$
TOTAL	32,876,823	100	\$28,704,182	100	30,185,548 \$	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 16) Short-term bills payable (Note 16)	\$ 9,570,000	29	\$ 5,650,000	20	\$ 8,460,000	28
Trade payables to unrelated parties	2,496,876 1,566,677	7 5	1,697,592	6	1,993,170	$\tau$
Trade payables to related parties (Note 29)	72,911		1,420,746 25,050	5 $\tilde{\phantom{a}}$	1,460,681 71,887	5 $\blacksquare$
Other payables (Notes 18 and 29)	3,021,026	9	3,400,616	12	2,969,209	10
Current tax liabilities (Note 24)	254,029	1	367,499	1	228,725	$\mathbf{1}$
Unearned receipts	326,205	1	212,217	1	301,976	$\mathbf{1}$
Current portion of long-term loans (Note 16)	1,203,503	4	964,400	3	464,400	1
Finance lease payables-current (Note 17) Accrued pension liabilities	6,804		6,637		6,601
Other current liabilities	8,980 71,295	$\overline{\phantom{a}}$	20,821		34,783
				$\overline{z}$	26,315	$\overline{\phantom{a}}$
Total current liabilities	18,598,306	$-56$	13,765,578	48	16,017,747	53
NON-CURRENT LIABILITIES
Long-term borrowings (Note 16)	1,057,043	3	1,915,846	7	1,585,546	5
Provisions-non-current (Note 19) Deferred tax liabilities (Note 24)	1,118,034 126,081	4	1,108,956	4	1,072,549	3
Finance lease payable - non-current (Note 17)			154,714 5,131		172,850 6,804	1
Guarantee deposits	210,309	$\mathbf{1}$	227,362	-1	190,532	$\perp$
Total non-current liabilities	2,511,467	$\overline{\phantom{0}8}$	3,412,009	12	3,028,281	$_{10}$
Total liabilities	21,109,773	$-64$	17, 177, 587	$-60$	19,046,028	$-63$
EQUITY
Common stock- at par value of \$10 each authorized 1,500,000 thousand shares.
issued 908,262 thousand shares	9,082,615	28	9,082,615	32	9,082,615	30
Retained earnings
Legal reserve	322,880	-1	119,963		119,963
Special reserve Unappropriated earnings	848,678	2	239,927	1	239,927	1
Other equity	1,510,359 2,518	5 $\overline{\phantom{a}}$	2,053,475 30,615	7 $\overline{a}$	1,666,025 30,990	6
Total equity	11,767,050	$-36$	11,526,595	40	11,139,520	$_{37}$
TOTAL	\$32,876,823	100	\$28,704,182	100	30,185,548 \$	100

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

(With Deloitte & Touche auditors' review report dated November 9, 2016)

STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)

			For the Three Months Ended September 30				For the Nine Months Ended September 30
	2016		2015		2016		2015
	Amount	%	Amount	%	Amount	℅	Amount	$\%$
SALES (Notes 22 and 29)	6,640,759 \$	100	\$ 7,243,340	100	20,449,409 \$	100	\$ 20,004,078	100
COST OF GOODS SOLD (Notes 9, 23 and 29)	5,676,563	85	6,516,134	90	17,361,802	85	17,605,083	88
GROSS PROFIT	964,196	$\frac{15}{2}$	727,206	10	3,087,607	$\frac{15}{2}$	2,398,995	12
OPERATING EXPENSES (Notes 23 and 29) Selling and marketing expenses	35,696		39,937	1	95,583		105,124
General and administrative
expenses Research and development	123,990	2	102,580	1	350,168	$\boldsymbol{2}$	310,123	$\overline{2}$
expenses	107,837	$\overline{2}$	97,891	$\mathbf{1}$	394,166	$\overline{2}$	274,697	$\perp$
Total operating expenses	267,523	$\overline{4}$	240,408	$\overline{3}$	839,917	$\overline{4}$	689,944	$\frac{3}{2}$
PROFIT FROM OPERATIONS	696,673	$\boxed{11}$	486,798	7	2,247,690	11	1,709,051	$\overline{2}$
NON-OPERATING INCOME AND EXPENSES Other income (Note 23)	67,368	$\mathbf{1}$	31,501		147,895	$\mathbf{1}$	109,950	1
Other gains and losses (Note
23) Share of profit of associates	(238, 243) 30,967	(4)	402,214 69,819	6 1	(547, 843) 120,358	(3) 1	60,662 212,412	$\overline{a}$ 1
Finance costs	(33, 121)	$\overline{\phantom{a}}$	(37, 101)	(1)	(96, 751)	(1)	(97, 945)	(1)
Total non-operating income and expenses	(173, 029)	(3)	466,433	6	(376, 341)	(2)	285,079	$\overline{1}$
PROFIT BEFORE INCOME TAX	523,644	8	953,231	13	1,871,349	9	1,994,130	10
INCOME TAX EXPENSE (Note 24)	84,819	$\overline{2}$	159,393	$\overline{2}$	367,561	$\overline{2}$	332,247	$\overline{2}$
NET PROFIT FOR THE PERIOD	438,825	6	793,838	$\overline{11}$	1,503,788	7	1,661,883	8
OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations	(17, 326)		30,735		(28,097)	$\frac{1}{2}$	19,736
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD	421,499 \$	6	824,573 \$	$\overline{11}$	1,475,691 \$	7	1,681,619 \$	$\overline{s}$
EARNINGS PER SHARE (Note 25)
Basic Diluted	0.48 \$ \$ 0.48		0.87 0.87 \$		1.66 1.65		1.83 1.82

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

(With Deloitte & Touche review report dated November 9, 2016)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Reviewed, Not Audited)

			Equity Attributable to Owners of the Corporation
			Retained Earnings (Note 21)		Differences on Other Equity Exchange
	Common Stock	Legal reserve	Special reserve	Unappropriated Earnings	Translating Foreign Operations	Total Equity
BALANCE AT JANUARY 1, 2015	9,082,615 ⊷	⊷	မာ	1,199,633 မာ	11.254 ⊶	\$10,293,502
Cash dividends distributed by the Company Appropriation of 2014 earnings Special reserve Legal reserve		119,963	239,927	(119.963) (835, 601) (239.927		(835,601)
Profit for the nine months ended September 30, 2015				1,661,883		1,661,883
ð Other comprehensive income (loss) for the nine months ended September 30, 2015, net income tax					19.736	19,736
Total comprehensive income (loss) for the nine months ended September 30, 2015				1,661,883	19,736	1,681,619
BALANCE AT SEPTEMBER 30, 2015	9.082,615 ⊷	119.963 €A	239,927 69)	1,666,025	30,990 Θ.	11,139,520 બ્વ
BALANCE AT JANUARY 1, 2016	9.082.615 ⊷	119,963 မာ	239.927 پو	2,053,475	30,615 ⊷	11,526,595
Cash dividends distributed by the Company Appropriation of 2015 earnings Special reserve Legal reserve		202,917	608.75	(1.235.236) (202,917 (608.751		(1, 235, 236)
Profit for the nine months ended September 30, 2016				1,503,788		1,503,788
ď Other comprehensive income (loss) for the nine months ended September 30, 2016, net income tax					(28.097)	(28,097)
Total comprehensive income (loss) for the nine months ended September 30, 2016				1,503,788	(28.097)	1,475,691
BALANCE AT SEPTEMBER 30, 2016	9,082,615 બ્લે	322.880 69	848,678	1,510,359	2.518 ام	11,767,050 બ

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

(With Deloitte & Touche auditor's review report dated November 9, 2016)

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

	For the Nine Months Ended	September 30
	2016	2015
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	1,871,349 \$	1,994,130 \$
Adjustments for:
Depreciation expenses	466,506	435,665
Amortization expenses	508,774	569,975
Impairment loss recognized (reversal of impairment loss) on trade
receivables	(956)	278
Finance costs	96,751	97,945
Interest income	(23, 044)	(15, 593)
Dividend received	(614)	(880)
Share of profit of associate	(120, 358)	(212, 412)
Loss on disposal of property, plant and equipment	113	165
Impairment loss on non-financial assets	78,995	55,183
Reversal of impairment loss on non-financial assets	(65, 739)	(38, 855)
Unrealized net (gain) loss on foreign currency exchange	78,754	(324, 568)
Recognition of provisions	99,265	33,251
Other income from liabilities	(13, 139)	(16,758)
Net changes in operating assets and liabilities
Notes receivable	15,625	18,551
Trade receivables	(1,368,013)	(2,188,005)
Other receivables	(47, 828)	26,352
Inventories	142,354	(1,867,880)
Other current assets	446,515	434,079
Trade payables	196,459	107,754
Other payables Unearned receipts	(444, 948)	310,239
Other current liabilities	113,988	55,436
Accrued pension liabilities	63,613 8,980	18,766 34,783
Cash generated from (used in) operations	2,103,402	(472, 399)
Interest received	23,312	15,836
Interest paid	(96, 728)	(101, 112)
Income tax paid	(542, 169)	(1, 562)
Net cash generated from (used in) operating activities	1,487,817	(559, 237)
CASH FLOWS FROM INVESTING ACTIVITIES
Pruchase of financial assets measured at cost	(33,000)
Payments for property, plant and equipment	(1,456,699)	(420, 615)
Increase in refundable deposits	(8,901)	(18, 925)
Decrease in refundable deposits	13,723	24,383
Payments for intangible assets Increase in other financial assets	(899,777)	(631, 622)
		(1,549,302)
		(Continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

		For the Nine Months Ended September 30
	2016	2015
Decrease in other financial assets	\$ 582,695	\$ 2,543
Increase in prepayments for equipment	(528, 516)	(405, 295)
Dividend received	35,604	91,175
Net cash used in investing activities	(2, 294, 871)	(2,907,658)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	38,275,000	36,535,000
Repayments of short-term borrowings	(34,355,000)	(33,975,000)
Proceeds from short-term bills payable	5,889,361
Repayments from short-term bills payable	(5,090,077)	(501,706)
Proceeds from long-term borrowings		1,300,000
Repayments of long-term borrowings	(619,700)	(69,700)
Proceeds of guarantee deposits received	143,486	203,938
Refund of guarantee deposits received	(160, 539)	(174, 419)
Cash dividends distributed	(1,235,236)	(835,601)
Net cash generated from financing activities	2,847,295	2,482,512
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES	(892)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2,039,349	(984, 383)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	1,554,739	2,721,333
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	\$3,594,088	1,736,950 \$

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

(With Deloitte & Touche auditors' review report dated November 9, 2016) (Concluded)

NOTES TO FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

Aerospace Industrial Development Corporation was a state-owned enterprise formed by the Ministry of Economic Affairs on July 1, 1996 from Aero Industry Development Center, Chung-Shan Institute of Science and six other state-owned enterprises. The Group's main business categories are as follows: design, manufacture, assembly, testing and maintenance of aircraft, engines, avionics and related components; consulting services and technology transfers of aerospace technology, logistical support and engineering technology management of large-scale projects; engineering and development of software and sales of aerospace products.

In July 2001, the initial public offering of the Company was approved by the Securities and Futures Bureau of the Financial Supervisory Commission (FSC) of the Republic of China(ROC). On September 13,2013, in accordance with Rule No. 1020055531, the Company started its privatization process. On August 21, 2014, the Ministry of Economic Affairs reduced its shareholding from 99.71% to below 50% (45.73%), and the Company was listed at the Taiwan Stock Exchange four days later.

The consolidated financial statements are presented in the Corporation's functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on November 9, 2016.

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

a. International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC for application starting from 2017.

Rule No. 1050026834 issued by the FSC endorsed the following IFRS, IAS, IFRIC and SIC (collectively, the "IFRSs") for application starting January 1, 2017.

New, Amended or Revised Standards and Interpretations	Effective Date Announced by IASB (Note 1)
Annual Improvements to IFRSs 2010-2012 Cycle	July 1, 2014 (Note 2)
Annual Improvements to IFRSs 2011-2013 Cycle	July 1, 2014
Annual Improvements to IFRSs 2012-2014 Cycle	January 1, 2016 (Note 3)
Amendments to IFRS 10, IFRS 12 and IAS 28" Investment Entities: Applying the Consolidation Exception"	January 1, 2016
Amendment to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations"	January 1, 2016
Amendment to IAS 1 "Disclosure Initiative"	January 1, 2016 (Continued)

New, Amended or Revised Standards and Interpretations	Effective Date Announced by IASB (Note 1)
Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization"	January 1, 2016
Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants"	January 1, 2016
Amendment to IAS 19 "Defined Benefit Plans: Employee Contributions"	July 1, 2014
Amendment to IAS 36 "Impairment of Assets: Recoverable Amount January 1, 2014 Disclosures for Non-financial Assets"
Amendment to IAS 39 "Novation of Derivatives and Continuation of Hedge Accounting"	January 1, 2014
IFRIC 21 "Levies"	January 1, 2014
	(Concluded)

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
• Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
• The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that Note 3: occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

The initial application of the above IFRSs in 2017 would not have any material impact on the Group's accounting policies.

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

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

The FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new IFRSs.

New, Amended or Revised Standards and Interpretations	Effective Date Announced by IASB (Note)
Amendment to IFRS 2 "Classification and Measurement of	January 1, 2018
Share-based Payment Transactions"
Amendment to IFRS 4 "Applying IFRS 9 Financial Instruments with	January 1, 2018
IFRS 4 Insurance Contracts"
IFRS 9 "Financial Instruments"	January 1, 2018
Amendments to IFRS 9 and IFRS 7 "Mandatory Effective Date of	January 1, 2018
IFRS 9 and Transition Disclosures"
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets	To be determined by IASB
between an Investor and its Associate or Joint Venture"
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
Amendment to IFRS 15 "Clarifications to IFRS 15"	January 1, 2018
IFRS 16 "Leases"	January 1, 2019
	(Continued)

New, Amended or Revised Standards and Interpretations	Effective Date Announced by IASB (Note)
Amendment to IAS 7 "Disclosure Initiative" Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Losses"	January 1, 2017 January 1, 2017

(Concluded)

• Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on Note: or after their respective effective dates.
• 1) IFRS 9 "Financial Instruments"
• a) Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 "Financial Instruments: Recognition and Measurement" are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

For the Group's debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

• i. For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method:
• ii. For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

b) The impairment of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the "Expected Credit Losses Model". The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 "Revenue from Contracts with Customers", certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a

financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

2) IFRS 15 "Revenue from Contracts with Customers" and related amendment

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersedes IAS 18 "Revenue" and a number of revenue-related interpretations from January 1, 2017.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

• Identify the contract with the customer;
• Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contracts; and
• Recognize revenue when the entity satisfies a performance obligation.

When IFRS 15 and related amendment are effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

3) IFRS 16 "Leases"

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group's financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 "Interim Financial Reporting" as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

b. Basis of consolidation

See Note 10 and Table 4 for the detailed information of subsidiaries (including the percentage of ownership and main business).

c. Other significant accounting policies

For the summary of other significant accounting policies, please refer to the consolidated financial statements for the three months ended March 31, 2016.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a. Write-down of inventory

Net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and the historical experience from selling products of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

b. Estimated of provision

Provision is measured using estimated cash flows needed to settle present obligation. If future cash flows will exceed the estimated amount, then the amount of provision may require material adjustment.

6. CASH AND CASH EQUIVALENTS

		September 30,		December 31,		September 30, 2015
Cash on hand and petty cash Checking accounts and demand deposits Cash equivalent	\$	1,856	S	57	S	1,657 1,398,332
Time deposits with original maturities less than three months	2016 2015 3,590,126 1,554,682 2,106		336,961
		3.594.088		1.554.739		,736,950

7. FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT

	September 30, 2016	December 31, 2015		September 30, 2015
Unlisted common shares
Aerovision Avionics Inc. (AAI) UHT Unitech Co Ltd (UHT Ltd) Metro Consulting Service Ltd (Metro Ltd)	\$ 43,200 33,000 3,000	\$ 43,200 3,000	S	43,200 3,000
	79.200	46.200		46,200

Management believed that the fair value of the above unlisted equity investments held by the Group cannot be reliably measured due to the very significant range of reasonable fair value estimates; therefore they were measured at cost less impairment at the end of reporting period.

8. TRADE RECEIVABLES AND OTHER RECEIVABLES

	September 30, 2016	December 31, 2015	September 30, 2015
Trade receivables from unrelated parties
Trade receivables Less: Allowance for impairment loss	\$7,785,326 (1, 188)	\$6,481,371 (1,733)	\$7,996,162 (1,641)
	7,784,138 \$	\$6,479,638	\$7,994,521
Other receivables
Tax return receivables Others	\$ 121,003 80,279	\$ 112,932 41,025	\$ 82,610 20,333
	201,282	153,957	102,943

The average credit period of sales on goods is 60 to 90 days. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. Allowance for impairment loss was estimated by reference to the aging schedule, past default experience of the counterparties and an analysis of their current financial position.

The aging of trade receivables was as follows:

	September 30,	December 31,	September 30.
	2016	2015	2015
$0 - 90$ days	\$7,783,400	\$6,480,174	\$7,996,122
91 - 180 days	1,926	1.197	40
	\$7,785,326	\$6,481,371	7,996,162

The above aging schedule was based on the past due date.

The ages of individually impaired trade receivables and overdue receivables (other non-current assets) were as follows:

		September 30, 2016	December 31, 2015	September 30, 2015
$0 - 90$ days 91 - 180 days 181 - 365 days Over 365 days	\$	39,994 ٠ 3,189 8,660	\$ 77,749 2,120 10,698	76,920 7,909 7,921
	Φ	51,843	90,567	92,750

The above aging of trade receivable before deducting the allowance for impairment loss was presented based on the past due date.

The movements of the allowance for doubtful trade receivables were as follows:

		For the Nine Months Ended September 30
		2016		2015
	Trade Receivable	Overdue Receivable	Trade Receivables	Overdue Receivables
Collectively Assessed for Impairment
Balance at January 1 Impairment losses recognized	1,733 $\mathbb{S}$	\$18,197	5,551 $\mathbb{S}$	\$13,582
(reversed)	(545)	(411)	(3,910)	4,188
Balance at September 30	1.188 S	\$17,786	1,641 S	\$17,770
9. INVENTORIES
		September 30, 2016	December 31, 2015	September 30, 2015
Work in progress Raw materials		\$5,268,847 3,359,964	5,032,074 S. 3,763,539	4,964,700 \$ 4,363,772

$$8,628,811$

$$8,795,613$

$$9,328,472$

The cost of inventories recognized as cost of goods was as follows:

	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016	2015	2016		2015
Reversal of inventory write-downs	\$ (33, 566)	(14,745)	(65, 739)	\$.	(38, 855)
Income from sales of scraps	(4,147)	(10, 655)	(15,296)		(36,099)
Indemnity income	(19, 753)	(15, 803)	(29, 429)		(59,687)
Loss on disposal of inventories	7,699	4,895	20,092		10,825

Prevision write-downs were reversed as a result of sold inventories.

10. SUBSIDIARIES

Subsidiary included in consolidated financial statements:

		% of Ownership
Investor	Investee	September 30, 2016	December 31, 2015	September 30, 2015
The Company	AIDC USA LLC (AIDC USA)	100	-	÷

The Company investment AIDC USA for USD500 thousands at March 2016, the main businesses refer to Table 4.

The subsidiary included in consolidated financial statements is immaterial subsidiary, the financial statements have been reviewed.

11. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	September 30, 2016	December 31, 2015	September 30, 2015
Investment in associate
International Turbine Engine Company LLC (ITEC)	717.930	665.521	628,088

As of September 30, 2016 and 2015, the ownership and voting right in associate held by the Group were both 22.05%.

Refer to Table 4 for the nature of activities, principal place of business and country of incorporation of the associates.

The investment accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have not been reviewed.

12. PROPERTY, PLANT AND EQUIPMENT

	For the Nine Months Ended September 30, 2016
	Beginning Balance	Additions	Deductions	Reclassification	Ending Balance
Cost
Land improvements Buildings Machinery and equipment Transportation equipment Leased assets Other equipment Property in construction Accumulated depreciation	\$ 123,706 4,351,512 9,906,369 718,465 42,394 314,052 506,098 15,962,596	\$ 75,181 765,062 2,369 $\frac{1}{2}$ 14,324 660,127 1,517,063	\$ (113, 425) (1, 336) (4, 396) (119, 157) \$	\$ 594,885 313,403 (46) w, 23,335 (589, 756) \$ 341,821	\$ 123,706 5,021,578 10,871,409 719,452 42,394 347,315 576,469 17,702,323
Land improvements Buildings Machinery and equipment Transportation equipment Leased assets Other equipment	113,347 2,332,873 6,801,138 630,692 34,740 215,089 10,127,879	\$ 1,420 107,043 354,209 31,059 5,299 21,223 \$ 520,253	\$ (113,312) (1, 336) (4,396) (119, 044) \$	\$ $\frac{2}{3}$	114,767 2,439,916 7,042,035 660,415 40,039 231,916 10,529,088
Impairment
Buildings Machinery and equipment	26,258 95,457 121,715 5,713,002	\$ \$	\$ \$	\$ \$	26,258 95,457 \$ 121,715 7,051,520
			For the Nine Months Ended September 30, 2015
	Beginning Balance	Additions	Deductions	Reclassification	Ending Balance
Cost
Land improvements Buildings Machinery and equipment Transportation equipment Leased assets Other equipment Property under construction	\$ 123,873 4,298,616 9,275,874 689,303 42,394 305,652 1,907 14,737,619	\$ 14,874 174,739 7,149 1,717 182,635 \$ 381,114	\$ (167) (881) (196, 634) (1, 287) (4, 743) (203, 712) \$	\$ ۰ 310 254,217 2,314 \$ 256,841	\$ 123,706 4,312,919 9,508,196 695,165 42,394 304,940 184,542 15,171,862
Accumulated depreciation
Land improvements Buildings Machinery and equipment Transportation equipment Leased assets Other equipment	111,472 2,202,166 6,633,584 590,619 27,674 196,853 9,762,368	\$ 1,559 98,610 321,509 30,942 5,299 18,465 476,384 \$	\$ (167) (785) (196, 565) (1, 287) (4, 743) (203, 547) \$	\$ \$	112,864 2,299,991 6,758,528 620,274 32,973 210,575 10,035,205 (Continued)

	For the Nine Months Ended September 30, 2015
		Beginning Balance		Additions	Deductions			Reclassification	Ending Balance
Impairment
Buildings Machinery and equipment	S	26,258 95,457 121,715	\$	٠	\$	$\blacksquare$	\$	e.	\$ 26,258 95,457 121,715
		4,853,536							5,014,942 (Concluded)

The above items of property, plant and equipment were depreciated on a straight-line basis over the estimated useful life of the asset:

$\sim 10^{-1}$

$\ddot{\phantom{a}}$

Land improvements	$2-50$ years
Buildings
Main buildings	$20-45$ years
Others	$3-60$ years
Machinery and equipment	2-40 years
Transportation equipment	$2-15$ years
Leased assets	6 years
Other equipment	$2-15$ years

13. INTANGIBLE ASSETS

	September 30, 2016	December 31, 2015	September 30, 2015
Other intangible assets
Trademark	\$ 283	\$ 361	\$ 401
Patent	714	770	736
Computer software	51,148	49,418	44,936
Deferred technical cooperation expenses	16,167	21,200	22,705
	68,312	71,749	68,778
Developing intangible assets
Projects non-recurring costs	709,497	340,305	318,299
	777,809	\$ 412,054	387,077

	Other Intangible Assets	Developing Intangible Assets
Cost
Balance at January 1, 2016 Additions Additions from internal developments Disposals	$\mathcal{L}$ 776,037 25,618 (2,680)	4,451,189 \$ 937,491 (287, 647)
Balance at September 30, 2016	798,975	5,101,033
Accumulated amortization and impairment
Balance at January 1, 2016 Amortization expense Disposals Impairment loss recognized in profit and loss	704,288 29,055 (2,680)	4,110,884 489,304 (287, 647) 78,995
Balance at September 30, 2016	730,663	4,391,536
Carrying amounts at September 30, 2016	68,312 \$	709,497 \$
Cost
Balance at January 1, 2015 Additions Additions from internal developments Disposals Balance at September 30, 2015	\$ 764,700 14,151 (14, 555) 764,296	3,617,746 \$ 668,560 (139, 085) 4,147,221
Accumulated amortization and impairment
Balance at January 1, 2015 Amortization expense Disposals Impairment loss	678,910 31,163 (14, 555)	3,363,642 549,182 (139, 085) 55,183
Balance at September 30, 2015	695,518	3,828,922
Carrying amounts at September 30, 2015	\$ 68,778	\$ 318,299

$\mathcal{A}^{\mathcal{A}}$

Projects non-recurring costs include the costs related to product design, tooling design and fabrication, production planning, specimen and prototype trial fabrication, the costs were allocated by the proportion of actual sales volume divided by expected sales volume. The details were as follows:

	September 30, 2016	December 31, 2015	September 30, 2015
Project name
Airbus SA Aft BF	246,061 S.	\$ 57,960	\$ 29,123
IDF	129,809	25,324	2,286
787 (FTE)	126,965	123,463	69,161
Airbus SA Aft BF M2	88,093	1,855
CT-7 Engine	54,576	22,226	22,226
Others	63,993	109,477	195,503
	709,497	\$340,305	\$318,299

Deferred technical cooperation expenses include the participation fees or royalties for participation in international cooperation and development of new business, the amounts were allocated by the proportion of actual sales volume divided by expected sales volume. The details were as follows:

	September 30, 2016	December 31, 2015	September 30, 2015
Project name
The 11th Maintenance and Supply Company of ROCAF Academy Outsourcing Operation CT-7 Engine	8,700 \$ 4,775	11,600 \$ 5,293	\$ 12,567 5,293
The 2nd ALC Outsourcing Operation (The GOCO Maintenance Program)	2,692	4,307	4,845
	16.167	21.200

The above items of intangible assets are amortized on a straight-line basis over the estimated useful life of the asset:

Trademark	10-15 years
Patent	$10-20$ years
Computer software	$2-3$ years

14. OTHER FINANCIAL ASSETS

Other financial assets are the time deposits with original maturities within three months from the date of acquisition; for pledged assets information, refer to Note 30.

15. OTHER ASSETS

	September 30, 2016	December 31, 2015	September 30, 2015
Current
Prepayment Net defined benefit asset	\$ 581,426	1,158,611 $\mathbb{S}^-$ 24,294	\$ 1,214,183
Others	235,081	79,509	116,199
	816,507 \$	1,262,414 \$_	1,330,382 S.
Non-current
Overdue receivables (Note 8)	\$ 19,891	\$ 21,678	\$ 23,870
Allowance for impairment loss Less:	(17, 786) 2,105	(18, 197) 3,481	(17,770) 6,100
Refundable deposits	22,326	27,148	26,747
	24,431	30,629	32,847

16. BORROWINGS

a. Short-term borrowings

	September 30,	December 31,	September 30,
	2016	2015	2015
Unsecured borrowings	\$7,770,000	\$3,800,000	\$6,260,000
Secured borrowings (Note 30)	1,800,000	1,850,000	2,200,000
	\$9,570,000	\$5,650,000	\$8,460,000
Rates of interest per annum (%)	$0.78 - 0.98$	$0.89 - 1.15$	$0.85 - 1.29$

b. Short-term bills payable

	September 30,	December 31,	September 30,
	2016	2015	2015
Commercial paper	\$2,500,000	\$1,700,000	\$2,000,000
Less: Unamortized discount on bills payable	(3, 124)	(2,408)	(6,830)
	\$2,496,876	\$1,697,592	1,993,170
Rates of interest per annum $(\%)$	$0.86 - 0.9$	$0.65 - 0.99$	1.14-1.16

c. Long-term borrowings

	September 30, 2016	December 31, 2015	September 30, 2015
Credit borrowings Current portion Less:	\$2,260,546 (1,203,503)	2,880,246 S. (964, 400)	\$2,049,946 (464, 400)
Long-term borrowings	\$1,057,043	1,915,846	1,585,546
Rates of interest per annum $(\%)$	1.13-1.22	1.34-1.43	$1.41 - 1.5$

17. FINANCE LEASE PAYABLE

	September 30, 2016	December 31, 2015	September 30, 2015
Minimum lease payments
Not later than one year Later than one year and not later than five years Future finance charges Less:	\$ 6,847 6,847 (43)	\$ 6,825 5,141 11,966 (198)	\$ 6,825 6,847 13,672 (267)
Present value of minimum lease payments	6,804	11,768	13,405
Present value of minimum lease payments
Not later than one year Later than one year and not later than five years	\$ 6,804	\$ 6,637 5,131	\$ 6,601 6,804
	6,804	11,768	13,405

The Company leased 2 sets of Machining Centers (4-Axis Horizontal Machining Center) under finance leases in February, 2011. The lease terms is for 72 months at the rental of \$597 thousand (inclusive of tax) per month. The Company has option to purchase the equipment for \$2,400 thousand each at the end of the lease term. The interest rate of the finance lease was fixed at 2.162%

18. OTHER LIABILITIES

	September 30, 2016	December 31, 2015	September 30, 2015
Payable for salaries and bonus	1,150,370 S	1,411,477 \$	1,139,538 S
Payable for outsourcing	619,102	790,934	730,965
Payable for service fee	374,649	429,193	296,577
Payable for purchase of equipment	313,396	248,068	49,822
Payable for annual leave	293,376	195,357	236,267
Payable for remedy	36,285	46,947	81,290
Others	233,848	278,640	434,750
	3,021,026	3,400,616	2,969,209

19. PROVISIONS - NON-CURRENT

	September 30, 2016	December 31, 2015	September 30, 2015
Warranties Others	\$ 944,141 173,893	905,253 $\mathbb{S}$ 203,703	868,845 S 203,704
	1.118,034	1,108,956	1,072,549

The provision for warranty claims represents the present value of management's best estimate of the future outflow of economic benefits that will be required under the Company's obligations for warranties under local sale of goods legislation. The estimate had been made on the basis of historical warranty trends and may vary as a result of other events affecting product quality.

Others refer to the obligation of the Company to improve its Taichung Complex groundwater pollution remediation site as ordered by the Environmental Protection Administration. The Company has the obligation to improve this site and recognized the discounted value of the best estimate of the remediation expenses as provisions.

20. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Corporation's defined benefit retirement plans were calculated using the actuarially determined pension cost discount rate as of December 31, 2015 and 2014. Employee benefit expenses for the three months ended September 30, 2016 and 2015 were \$99,033 thousand and \$100,170 thousand and for the nine months ended September 30, 2016 and 2015 were \$297,099 thousand and \$300,509 thousand, respectively.

21. EQUITY

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on June 14, 2016 and, in that meeting, had resolved amendments to the Company's Articles of Incorporation (the "Articles"), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees' compensation.

The Company's Articles of Incorporation provide that the annual net income after paying income tax should be used first to make up for prior years' losses, set aside 10% as a legal reserve and appropriate or reverse special reserve. The residual earnings will be allocated by the resolution in the shareholders' meeting. For information about the accrual basis of the employees' compensation and remuneration to directors and supervisors and the actual appropriations, please refer to Note 23.

Profits of the Company may be distributed by way of cash dividend or stock dividend. Since the Company is in a capital-intensive industry with steady growth in its current business, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend provided; however, the ratio of stock dividend shall not exceed 50% of total distribution.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company's capital surplus. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company's capital surplus, the excess may be transferred to capital or distributed in cash.

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled "Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs", the Company should appropriate or reverse special reserve.

Except for non-ROC resident shareholders, all shareholders receiving dividends are allowed a tax credit of the imputed tax credit at the distribution date.

The appropriations of earnings for 2015 and 2014 having been approved in the shareholders' meetings on June 14, 2016, and June 23, 2015, respectively, were as follows:

		Appropriation of Earnings		Dividends Per Share (NT\$)
	2015	2014	2015	2014
Legal reserve	\$202,917	\$119,963
Special reserve	608,751	239,927
Cash dividends	1,235,236	835,601	\$1.36	\$0.92

22. REVENUES

	For the Three Months Ended September 30			For the Nine Months Ended September 30
		2016		2015	2016			2015
Aircraft/Vehicle Maintenance Aero/Industrial Engine Industrial Technology Services	S.	4,015,829 2,552,401 72,529	S	4,053,976 3,082,995 106,369	\$11,889,949	8,330,534 228,926		\$11,186,895 8,525,758 291,425
		6,640,759		7,243,340	\$20,449,409			\$20,004,078

23. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

	For the Three Months Ended September 30			For the Nine Months Ended September 30
	2016		2015		2016		2015
Other income from condoned liabilities	\$ 583	S	44	\$	13,139	\$	16,758
Interest income Remedy income Others	9,484 2,684 54,617		5,391 363 25,703		23,044 3,576 108,136		15,593 5,783 71,816
	67,368		31,501		147,895		109.950

b. Other gains and losses

	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016		2015	2016		2015
Net foreign exchange gains
(losses)	\$ (200, 745)	S	496,738	\$ (304, 204)	S	318,965
Impairment loss			(55, 183)	(78,995)		(55, 183)
Loss on disposal of property,
plant and equipment		$\overline{\phantom{a}}$		(113)		(165)
Others		(37, 498)	(39,341)	(164, 531)		(202, 955)
	238,243		402,214	(547, 843)		60,662

c. Employee benefits, depreciation and amortization

	Operating Cost	Operating Expense	Non-operating Expense	Transfer to Development Intangible Assets	Total
For the Three Months Ended September 30, 2016
Employee benefits expense
Salaries expense Retirement benefit	\$1,140,798	\$ 131,863	\$ 2,317	\$ 46,228	\$1,321,206
Defined contribution plans	10,836	1,673	26	635	13,170
Defined benefit plans	81,595	12,489	196	4,753	99,033
Labor and health insurance	58,607	8,675	13,366	2,998	83,646
Other employee benefits	10,410	1,544	2,354	72	14,380
Depreciation expense	147,302	12,103	4,792	16,488	180,685
Amortization expense	178,078	2,739	10	3,374	184,201
For the Three Months Ended September 30, 2015
Employee benefits expense
Salaries expense Retirement benefit	1,143,550	123,554		49,615	1,316,719
Defined contribution plans Defined benefit plans	6,018	969
Labor and health insurance	81,178	13,128		433	7,420
Other employee benefits	51,438	7,248		5,864	100,170
Depreciation expense	15,443	2,304	11,457	3,127 224	73,270
Amortization expense	132,754	10,786	3,213 902	15,953	21,184
	205,059	2,793		3,558	160,395 211,410
For the Nine Months Ended September 30, 2016
Employee benefits expense
Salaries expense	3,091,507	369,698	6,061	138,308	3,605,574
Retirement benefit
Defined contribution plans	29,598	4,865	67	1,817	36,347
Defined benefit plans	241,929	39,768	546	14,856	297,099
Labor and health insurance	179,426	23,579	38,717	8,777	250,499
Other employee benefits	33,556	4,522	7,161	235	45,474
Depreciation expense	411,353	40,311	14,842	53,747	520,253
Amortization expense	500,640	8,108	26	9,585	518,359

	Operating Cost	Operating Expense	Non-operating Expense	Transfer to Development Intangible Assets	Total
For the Nine Months Ended September 30, 2015
Employee benefits expense
Salaries expense	\$2,888,102	330,798 \$	\$ $\sim$	143,538 \$	\$3,362,438
Retirement benefit
Defined contribution plans	15,832	2,508		1,116	19,456
Defined benefit plans	244,525	38,746		17,238	300,509
Labor and health insurance	156,630	20,825	34,134	9,217	220,806
Other employee benefits	37,990	5.203	8.206	224	51,623
Depreciation expense	401,723	31,237	2,705	40.719	476,384
Amortization expense	562,301	7,674		10,370	580,345

In compliance with the Company Act as amended in May 2016, the shareholders held their meeting and resolved amendments to the Company's Articles; the amendments stipulate distribution of employees' compensation at the rates no less than 0.58% and no higher than 4.65%, and remuneration to directors and supervisors at the rates no higher than 0.58%, respectively, of net profit before income tax. For the three months ended September 30, 2016, and for the nine months ended September 30, 2016, the employees' compensation and the remuneration to directors and supervisors were representing 4.65% and 0.58%, respectively, of the base net profit.

The Articles before the amendment stipulated to distribute bonus to employees and remuneration to directors and supervisors at the rates no less than 1% and no higher than 8%, respectively, of net income. For the three months ended September 30, 2015, and for the nine months ended September 30, 2015, the bonus to employees and the remuneration to directors and supervisors were representing 8% and 0.5%, respectively, of the base net income.

	For the Three Months Ended September 30		For the Nine Months Ended September 30
		2016		2015		2016		2015
Employees' compensation Remuneration of directors and		24,350	\$.	44.454	SS.	87,018		93,065
supervisors		3,037		2,779		10,854		5,817

If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

The appropriations of employees' compensation and remuneration to directors and supervisors for 2015 having been resolved by the board of directors on March 29, 2016, and the appropriations of bonus to employees and remuneration to directors and supervisors for 2014 having been approved in the shareholders' meetings on June 23, 2015, respectively, were stated as below. The employees' compensation and remuneration to directors and supervisors for 2015 are subject to the resolution of the amendments to the Company's Articles of Incorporation for adoption by the shareholders in their meeting to be held on June 14, 2016, and in addition thereto a report of such distribution shall be submitted to the shareholders' meeting.

	For the Year Ended December 31
		2015		2014
Employees' compensation /Bonus to employees		\$ 115,426	- S	67.179
Remuneration of directors and supervisors		14.397		4.199

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the shareholders' meetings and in the financial statements.

Information on the employees' compensation and remuneration to directors and supervisors for 2015 resolved by the Company's board of directors in 2016 and bonus to employees, directors and supervisors for 2014 resolved by the shareholders' meeting in 2015 are available on the Market Observation Post System website of the Taiwan Stock Exchange.

d. Gain or loss on foreign currency exchange

		For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016	2015	2016	2015
Foreign exchange gains Foreign exchange losses	142 (200, 887)	\$520,714 (23,976)	\$127,206 (431, 410)	\$671,350 (352, 385)
Net gains (losses)	\$ (200, 745)	496,738	\$ (304,204)	318,965

24. TAXES

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016	2015	2016	2015
Current tax
In respect of the current period Income tax on unappropriated	118,678 \$.	119,265 S	\$ 369,597	229,900 \$
earnings			59,102
Adjustments for prior periods	1,610		1,610
Deferred tax
In respect of the current period	(35, 469)	40,128	(62, 748)	102,347
Income tax expense recognized in profit or loss	84,819	159,393	367,561	332.

b. Income tax recognized in other comprehensive income

	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016	2015	2016	2015
Deferred tax
Translation of foreign operations	3.549	(6.295)	5.754	(4.042)

c. Integrated income tax

	September 30, 2016	December 31, 2015	September 30, 2015
Unappropriated earnings generated on and after January 1, 1998 Imputation credits account	1,510,359 109,227	\$2,053,475 161,331	1,660,025 159,389
		December 31	For the Year Ended
		$2015$ (Actual)	2014 (Actual)
Creditable ratio for distribution of earnings		20.51%	20.48%

d. Income tax assessments

Income tax returns of the Company through 2013 have been examined and cleared by the tax authorities.

25. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

	For the Three Months Ended	September 30	For the Nine Months Ended September 30
	2016	2015	2016	2015
Profit for the period attributable to owners of the Company
Earnings used in the computation of basic earnings per share (Earnings used in the computation of diluted earnings per share)	438,825	793,838	\$1,503,788	\$1,661,883
Weighted average number of ordinary shares outstanding (in thousand shares)
Weighted average number of ordinary shares in computation of basic earnings per share	908,262	908,262	908,262	908,262
Effect of potentially dilutive ordinary shares: Employees' compensation issue to employees	2,021	2,365	2,935	3,352
Weighted average number of ordinary shares used in the computation of diluted earnings per share	910,283	910,627	911,197	911,614

Since the Group provides to settle compensation paid to employees in cash or shares, the Group assumes the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

26. OPERATING LEASE ARRANGEMENTS

The future minimum lease payments for non-cancellable operating lease commitments were as follows:

	September 30,	December 31,	September 30,
	2016	2015	2015
Not later than 1 year	130,650	129,902	60,814
Later than 1 year and not later than 5 years	319,659	415,688	23,989
	450,309	545,590	84,803

27. CAPITAL MANAGEMENT

The Group must maintain adequate capital necessary for profitable operations and factory expansion, equipment upgrade and participation in international new aircraft developing. Therefore, the Group manages its capital to ensure that the Group will have enough financial resources to respond accordingly to its working capital requirements at least for the next 12 months, capital expenditures, participation in international new aircraft developing and repayments of liabilities.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents and other financial assets) and equity (comprising issued capital, retained earnings and other equity).

28. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments
• 1) Fair value of financial instruments not carried at fair value

The management considers the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values or their fair values cannot be reliably measured.

2) Valuation techniques and assumptions applied for the purpose of measuring fair value

The fair values of financial assets and financial liabilities were determined as follows:

• a) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices.
• b) The fair values of other financial assets and financial liabilities were determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

b. Categories of financial instruments

	September 30, 2016	December 31, 2015	September 30, 2015
Financial assets
Loans and receivables Financial assets measured at cost	\$13,791,813 79,200	\$11,020,491 46,200	\$12,585,975 46,200
Financial liabilities
Financial liabilities at amortized cost	17,761,403	13,706,546	15,833,025

Loans and receivables measured at amortized cost and comprise cash and cash equivalents, notes receivable, trade receivables, other receivables, overdue receivables, other financial assets and refundable deposits.

Financial liabilities at amortized cost comprise short-term loans, short-term bills payable, trade payables, other payables (excluded payable for salaries and bonus and payable for annual leave), finance lease payables (included not later than one year), long-term loans (included not later than one year) and guarantee deposits.

c. Financial risk management objectives

The Group's major financial risk management objectives are to manages the market risk (including currency risk and interest rate risk), credit risk and liquidity risk of operating activities. The Group minimizes the unfavorable effects of these risks by identification and assessment of the risks and by applying aversion methods to the uncertainties.

The Group's financial targets including its investment plan for fixed assets are laid out in its "Five-Year The financial plan includes risk management policies and the division of Business Plan". responsibilities.

The Group's major financial instruments include cash and cash equivalents, trade receivables, short-term borrowings, short-term bills payable, trade payables and long-term borrowings. The financial department coordinates access to domestic financial markets.

The Group's compliance with the operating procedure and responsibilities are reviewed by the internal auditors. The evaluation results are also used for future reference by the authorities.

1) Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

There had been no change to the Group's exposure to market risks or the manner in which these risks were managed and measured.

Foreign currency risk

The Group minimizes its currency exposure by natural hedging. Foreign currency operation performance is reported to the key management personnel every quarter and the expected foreign currency and operation direction are set for the next quarter.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 32.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar. The Group's sensitivity to a 0.5% stronger or weaker New Taiwan dollar against the relevant foreign currencies means profit before income tax would be higher by \$42,847 thousand and \$39,919 thousand for the nine months ended September 30, 2016 and 2015. The sensitivity rate of 0.5% represents the management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items, with the foreign currency rates at the end of the reporting period adjusted for a 0.5% change.

Interest rate risk

The Group's interest risk is evaluated in terms of short-term loans and long-term loans. Borrowing and repayment require budget planning in advance to control the interest risk. Interest rates of short-term loans from different financial organizations are compared and lowest one will be selected.

The interest rate risk of free cash flow is based on the published floating interest rate of similar debt. but part of the interest rate risk is offset by the cash and cash equivalents. Therefore, interest rate risk has no critical effect to the Group.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The possible financial loss would equal to the carrying amount of the recognized financial assets as stated in the balance sheets. However, the Group is executing forward exchange only with the correspondent financial institutions, and they are creditworthy with no credit risks.

The Group's dealing counterparties are national defence organizations and international aerospace corporations, and they are creditworthy with extreme low risk of bankruptcy. The Group's key management checks the accounts receivable every month, and instructs the project team to Collected the past due amounts.

The Group's concentration of credit risk by geographical location was mainly in the U.S., which accounted for 32%, 33% and 30% of the total trade receivable as of September 30, 2016, December 31, 2015 and September 30, 2015, respectively.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group's operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2016, December 31, 2015 and September 30, 2015, the Group had available unutilized short-term loans facilities as set out in (b) below.

a) Liquidity and interest risk rate tables for non-derivative financial liabilities

The following tables details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

$\frac{1}{2}$

	September 30, 2016
	Less than	More than
Non-derivative financial liabilities \$ Non-interest bearing liabilities Finance lease payable		1 Year
	3,216,868	\$ 210,309
	6,804
1 Year 10,773,503 Variable interest rate liabilities		1,057,043
Fixed interest rate liabilities	2,496,876
	\$16,494,051	1,267,352 \$
	December 31, 2015
	Less than	More than
	1 Year	1 Year
Non-derivative financial liabilities
Non-interest bearing liabilities	3,239,578 \$	\$ 227,362
Finance lease payable	6,637	5,131
Variable interest rate liabilities	6,614,400	1,915,846
Fixed interest rate liabilities	1,697,592
	\$11,558,207	\$2,148,339
	September 30, 2015
	Less than	More than
	1 Year	1 Year
Non-derivative financial liabilities
Non-interest bearing liabilities	3,125,972 \$	\$ 190,532
Finance lease payable	6,601	6,804
Variable interest rate liabilities	8,924,400	1,585,546
Fixed interest rate liabilities	1,993,170
	\$14,050,143	1,782,882

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities are subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Financing facilities (reviewed annually)

	September 30,	December 31,	September 30,
	2016	2015	2015
Unsecured bank loan facility:	\$	\$	S.
Amount used	8,368,145	4,562,961	7,376,519
Amount unused	6,161,855	9,068,350	6,449,913
	\$14,530,000	\$13,631,311	\$13,826,432
Secured bank loan facilities:	1,800,000	1,850,000	2,200,000
Amount used	\$	S.	S.
Amount unused	1,000,000	950,000	300,000
	2.800,000	2,800,000	2,500,000

29. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Group and other related parties are disclosed below.

a. Sales of goods

	For the Three Months Ended September 30		For the Nine Months Ended September 30
Related Parties Types	2016	2015	2016	2015
Associates	\$320.056	\$370,022	\$1,029,372	\$958,956

The Group's sales prices are based on the contracts. The collection terms are as follows:

Item	Collection terms
Engine	90 days after the invoice date
Backup parts	Offset account receivables with account payable

There is no unrelated party with similar product item to compare the engine sales price. The backup parts are only directly sold to the ROC air force, and the sales price is according to the purchase contract with related party plus the processing fee agreed by both parties, and collection term is monthly 30-60 days.

b. Purchase of goods

$\mathcal{L}_{\mathcal{A}}$

	For the Three Months Ended September 30		For the Nine Months Ended September 30
Related Parties Types	2016	2015	2016	2015
Associates	\$135,370	.74.640	\$540,169	601,840

The Group's buying prices from related party are based on contract. The payment term in principle is 30-60 days or paying after offset of accounts receivable. There are no unrelated parties with similar product items that can serve as basis of comparison of prices and terms.

c. Manufacturing expenses

	For the Three Months Ended September 30		For the Nine Months Ended September 30
Related Parties Types	2016	2015	2016	2015
Associates Ministry of Economic Affairs	17,505 8,861	28,027 5,858	55,209 S. 31,098	35,566 20,128
	26,366	33.885	86.307	55.694

d. Operation expenses

	For the Three Months Ended September 30		For the Nine Months Ended September 30
Related Parties Types	2016	2015	2016	2015
Ministry of Economic Affairs	10.232	4.967	32.425	13.459

e. The Company leases land from the Ministry of Economic Affairs, rent expense is calculated at 5% of Rent expense recognized in the annually announced land values, payment is once a year. manufacturing expenses, operation expenses and developing intangible assets, for the three months ended September 30, 2016 and 2015 were \$92,103 thousand and \$47,780 thousand, respectively.

f. Receivable from related parties

Related Parties Types	September 30,	December 31,	September 30,
	2016	2015	2015
Associates	218.811	202,531	165,529

The outstanding trade receivables from related parties are unsecured and no impairment loss was recognized on trade receivables from related parties.

g. Payable to related parties

Related Parties Types	September 30,	December 31,	September 30,
	2016	2015	2015
Associates	72.911	25,050	71,887

The outstanding trade payables to related parties are unsecured.

h. Other payables

Related Parties Types	September 30, 2016		December 31, 2015	September 30, 2015
Ministry of Economic Affairs Associates	92,103 1,461	S	$\qquad \qquad \blacksquare$ 18,905	48,203 23,708
	93.564		18.905	71.91

i. Compensation of key management personnel

	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2016	2015	2016	2015
Short-term benefits Post-employment benefits	6,689 388	\$ 4,818 336	23,338 S 1,166	21,216 S 1,010
	7 O 75	5.154	24.504

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings and as deposit for inviting tenders:

	September 30,	December 31,	September 30,
	2016	2015	2015
Time deposits
Other financial assets - current	\$1,892,721	\$2,506,909	\$2,509,701
Other financial assets - non-current	24,517	24,517	4,807
		2,531,426	2.514,508

31. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group were as follows:

• a. As of September 30, 2016, December 31, 2015 and September 30, 2015, unused letters of credit for purchases of raw materials and machinery and equipment amounted to approximately \$286,434 thousand, \$1,480,043 thousand and \$1,928,779 thousand, respectively.
• b. As of September 30, 2016, December 31, 2015 and September 30, 2015, unpaid contract for purchases of raw materials and machinery and equipment amounted to approximately \$8,622,164 thousand, \$13,302,115 thousand and \$11,426,310 thousand, respectively.

32. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

		September 30, 2016			December 31, 2015
	Foreign Currencies	Exchange Rate	New Taiwan Dollars	Foreign Currencies	Exchange Rate	New Taiwan Dollars
Financial assets
Monetary items USD	279,959 \$	31.36	\$8,779,514	229,179 \$	32.825	\$7,522,801
Non-monetary items USD	22,893	31.36	717,930	20,275	32.825	665,521
Financial liabilities
Monetary items USD	6,703	31.36	210,206	4,008	32.825	131,563
		September 30, 2015
	Foreign Currencies	Exchange Rate	New Taiwan Dollars
Financial assets
Monetary items USD	245,169 \$	32.87	\$8,058,705
Non-monetary items USD	19,108	32.87	628,088
Financial liabilities
Monetary items USD	2,279	32.87	74,911

The significant financial assets and liabilities denominated in foreign currencies were as follows:

The significant unrealized foreign exchange gains (losses) were as follows:

	For the Nine Months Ended September 30, 2016		For the Nine Months Ended September 30, 2015
Foreign Currencies	Exchange Rate	Net Foreign Exchange Loss	Exchange Rate	Net Foreign Exchange Gain
USD	31.36	\$100,159	32.87	\$372,167
	For the Three Months Ended September 30, 2016		For the Three Months Ended September 30, 2015
Foreign Currencies	Exchange Rate	Net Foreign Exchange Loss	Exchange Rate	Net Foreign Exchange Gain
USD	31.36	\$154,716	32.87	\$367.289

33. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:
• 1) Financing provided to others. (None)
• 2) Endorsements/guarantees provided. (None)
• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities). (Table 1)
• 4) Marketable securities acquired and disposed at costs or prices at least \$300 million or 20% of the paid-in capital. (None)
• 5) Acquisition of individual real estate at costs of at least \$300 million or 20% of the paid-in capital. (None)
• 6) Disposal of individual real estate at prices of at least \$300 million or 20% of the paid-in capital. (None)
• 7) Total purchases from or sales to related parties amounting to at least \$100 million or 20% of the paid-in capital. (Table 2)
• 8) Receivables from related parties amounting to at least \$100 million or 20% of the paid-in capital. $(Table 3)$
• 9) Trading in derivative instruments. (None)
• 10) Intercompany relationships and significant intercompany transactions. (None)
• 11) Information on investees. (Table 4)
• b. Information on investments in mainland China, (None)

34. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the type of services delivered or provided. The Group has only one operating segment which is the main business, i.e. design, manufacture, assembly, testing and maintenance of aircraft.

Geographical information

	For the Nine Months Ended	September 30
	2016	2015
Asia	\$10,142,360	\$9,060,444
America	2,111,471	9,006,178
Europe	8, 195, 578	1,937,456
	\$20,449,409	\$20,004,078

MARKETABLE SECURITIES HELD
SEPTEMBER 30, 2016
(In Thousands of New Taiwan Dollars or Shares, Unless Stated Otherwise)

	Type and Name of				September 30, 2016
Holding Company Name	Marketable Securities	mpany Relationship with the Holding Co	inancial Statement Account	Shares	Carrying Value	ercentage o. Ownership	Fair Value
The Company	Capital stock Metro Ltd UHT Ltd	The Company is a corporate director The Company is a corporate director The Company is a corporate director	inancial assets measured at cost - noncurrent inancial assets measured at cost - noncurrent inancial assets measured at cost -- noncurrent	as Segna Segna	33,000 3,000 3,000	3.09% 6.00% 4.55%	5383 5343 535

Note: Information about associate is provided in Table 4.

TABLE₂

AEROSPACE INDUSTRIAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST \$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
(In Thousands of New Taiwan Dollars)

Purchaser or Seller	Related Party	Nature of Relationship			Transaction Details			Abnormal Transaction	Notes and Accounts Receivable (Payable)
		with the Purchaser or Seller Purchase or Sale		Amount	$\frac{\%}{\text{Total}}$	Collection Terms	Unit Price	Collection Terms	Ending Balance	$\begin{array}{c} 9/6 \ \hline 10 \text{ Total} \end{array}$	Note
ne Company	TEC	Investments using equity method	(Sale)	\$(1,029,372)	$\widehat{c}$	Note	Note	Note	218,811
			urchase	540,169		Note	Note	Note	(4)

Note: Information is provided in Note 29.

RECEIVABLE FROM RELATED PARTIES AMOUNTING TO AT LEAST NTS100 MILLION OR 20% OF THE PAID-IN CAPITAL
SEPTEMBER 30, 2016
(In Thousands of New Taiwan Dollars)

Tompany Nam.	Related Party	telationship	.ding Balane Ì	urnove	verdue		mount Received in	Howance f
				Rate	Amount	Action Taken	ubsequent Period	Impairment Loss
Munduno, P.	ITEC	y metho is using equit imeni	218,81	651			136,312

INFORMATION ON INVESTEES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
(In Thousands of New Taiwan Dollars or Shares, Unless Stated Otherwise)

					riginal Investment Amount		As of September 30, 2016
Investor Company	Investee Company	Location	Main Businesses and Products	2016	eptember 30, December 31, 2015	Shares	℅	Carrying 1 Amount		Net Income (Loss) of the Share of Profits Investee Closs)	Note
The Company	AIDC USA	State of Delaware USA	rovide program management and relevant services for purchasing and selling raw materials, parts	16,590			$\frac{8}{100}$	$15,164$ \$	$(534)$ \$	$(534)$ Subsidiary
	ITEC	State of Delaware USA	ion and remodel of aircraft and components of aircraft, engines and Jevelopment producti subsystems.	728	728		22.05	717,930	545,841		120,358 Associate

$\hat{\boldsymbol{\beta}}$

$\frac{1}{2}$

$\frac{1}{\sqrt{2}}$