Altek — Interim / Quarterly Report 2013

Nov 13, 2013

ALTEK CORPARATION

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS MARCH 31, 2013 AND 2012

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors‟ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors‟ report and financial statements shall prevail.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR13000003

To the Board of Directors and Stockholders of Altek Corporation

We have reviewed the accompanying consolidated balance sheets of Altek Corporation and subsidiaries as of March 31, 2013 and 2012, December 31, 2012 and January 1, 2012, and the related consolidated statements of income, of changes in stockholders‟ equity and of cash flows for the three-month periods ended March 31, 2013 and 2012. These financial statements are the responsibility of the Company‟s management. Our responsibility is to issue a conclusion on these financial statements based on our reviews.

Except as discussed in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 36 “Review of Financial Statements” in the Republic of China. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, 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 described in Note 4, except for the financial statements of major subsidiaries-Altek International Investment Co., Ltd. and its subsidiary-Altek (Kunshan) Co., Ltd., which were consolidated based on their reviewed financial statements, other subsidiaries were consolidated based on their unreviewed financial statements as of and for the three-month periods ended March 31, 2013 and 2012. Total assets of these unreviewed subsidiaries amounted to $4,364,430 and $2,634,707, representing 26% and 13% of the consolidated total assets, as of March 31, 2013 and 2012, respectively, with total net operating revenues amounted to $1,288,627 for the three-month period ended March 31, 2013, representing 32% of the consolidated net operating revenues for the three-month period then ended ； and total net operating revenues for the three-month period ended March 31, 2012 represented less than 10% of the consolidated net operating revenues for the three-month period then ended. In addition, as described in Note 6(6) to the consolidated financial statements, the financial statements of investments accounted for under the equity method were not reviewed by independent accountants.

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Equity investments in these companies amounted to $353,425 and $389,043 as of March 31, 2013 and 2012, respectively, and the related investment loss amounted to $8,488 and $3,290 for the three-month periods then ended. These amounts were based solely on their unreviewed financial statements.

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain subsidiaries and investee companies been reviewed by independent accountants as described in the third paragraph, we are not aware of any material modifications that should be made to the consolidated financial statements referred to in the first paragraph in order for them to be in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, IAS 34 “Interim Financial Reporting” and IFRS 1 “First-time Adoption of International Financial Reporting Standards” recognized by the Financial Supervisory Commission R.O.C.

PricewaterhouseCoopers, Taiwan Hsinchu, Taiwan Republic of China

May 6, 2013

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

1100 1110 1150 1170 1200 1220 130X 1410 1470 11XX 1543 1550 1600 1780 1840 1900 15XX 1XXX 2100 2150 2170 2180 2200 2230 2250 2300 21XX 2550 2570 2600 25XX 2XXX	Assets	Notes	March 31, 2013 AMOUNT % $ 4,885,724 30 374,670 2 - - 2,627,439 16 31,711 - 30,563 - 1,818,839 11 220,851 1 8,981 - 9,998,778 60 236,118 1 353,425 2 5,488,232 33 84,484 1 324,527 2 80,452 1 6,567,238 40 $ 16,566,016 100 $ 250,000 2 40 - 2,957,272 18 57 - 1,053,415 6 69,453 - 177,129 1 744,879 4 5,252,245 31 128,479 1 771,053 5 27,562 - 927,094 6 6,179,339 37	December 31, 2012 AMOUNT % $ 4,698,800 29 428,282 3 - - 2,883,695 18 25,176 - 27,411 - 1,715,321 10 228,957 1 4,391 - 10,012,033 61 235,953 1 351,419 2 5,297,892 33 73,079 - 367,473 2 79,870 1 6,405,686 39 $ 16,417,719 100 $ - - 40 - 3,144,953 19 97 - 1,230,200 7 81,373 1 152,537 1 702,245 4 5,311,445 32 142,454 1 783,237 5 28,188 - 953,879 6 6,265,324 38	March 31, 2012 AMOUNT % $ 4,850,880 25 447,984 2 10 - 4,960,586 25 75,241 - - - 2,511,885 13 342,957 2 13,824 - 13,203,367 67 236,035 1 389,043 2 5,330,469 27 81,437 - 389,366 2 82,305 1 6,508,655 33 $ 19,712,022 100 $ - - 40 - 5,852,937 30 16,785 - 1,235,640 6 69,382 - 183,233 1 610,061 3 7,968,078 40 151,496 1 889,536 5 38,880 - 1,079,912 6 9,047,990 46	January 1, 2012	January 1, 2012
			AMOUNT $ 4,885,724 374,670 - 2,627,439 31,711 30,563 1,818,839 220,851 8,981 9,998,778 236,118 353,425 5,488,232 84,484 324,527 80,452 6,567,238 $ 16,566,016 $ 250,000 40 2,957,272 57 1,053,415 69,453 177,129 744,879 5,252,245 128,479 771,053 27,562 927,094 6,179,339	AMOUNT $ 4,698,800 428,282 - 2,883,695 25,176 27,411 1,715,321 228,957 4,391 10,012,033 235,953 351,419 5,297,892 73,079 367,473 79,870 6,405,686 $ 16,417,719 $ - 40 3,144,953 97 1,230,200 81,373 152,537 702,245 5,311,445 142,454 783,237 28,188 953,879 6,265,324	AMOUNT $ 4,850,880 447,984 10 4,960,586 75,241 - 2,511,885 342,957 13,824 13,203,367 236,035 389,043 5,330,469 81,437 389,366 82,305 6,508,655 $ 19,712,022 $ - 40 5,852,937 16,785 1,235,640 69,382 183,233 610,061 7,968,078 151,496 889,536 38,880 1,079,912 9,047,990	AMOUNT $ 6,303,846 497,652 9 3,415,357 19,195 - 2,047,877 296,694 15,983 12,596,613 236,174 417,111 5,297,001 84,835 372,867 83,973 6,491,961 $ 19,088,574 $ - 957 5,186,498 14,826 1,155,796 54,630 181,057 614,363 7,208,127 105,751 929,135 38,880 1,073,766 8,281,893	%
	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Current income tax assets Inventories Prepayments Other current assets Current Assets Non-current assets Financial assets carried at cost - noncurrent Investments accounted for under the equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Non-current assets Total assets Liabilities and Equity	6(1) 6(2) 6(4) 6(5) 6(3) 6(6) 6(7) 6(8) 6(9) 6(10) 6(11) 7 6(14) 6(14) 6(12)					33 3 - 18 - - 11 2 -
							67
							1 2 28 - 2 -
							33
							100
							- - 27 - 6 - 1 3
	Current liabilities Short-term borrowings Notes payable Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions for liabilities - current Other current liabilities Current Liabilities Non-current liabilities Provisions for liabilities - noncurrent Deferred income tax liabilities Other non-current liabilities Non-current liabilities Total Liabilities
							37
							1 5 -
							6
							43

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

						(UNAUDITED)
						March 31, 2013				December 31, 2012				March 31, 2012				January 1, 2012
	Liabilities andEquity		Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Equity attributable to owners of parent
	Share capital	6(15)
3110	Common stock				$	3,961,013	24		$	3,961,013	24		$	3,956,554	20		$	3,955,214	21
	Capital surplus	6(16)
3210	Additional paid-in capital					2,267,949	14			2,267,949	14			2,256,528	11			2,253,964	12
3220	Treasury stock transactions					-		-		-		-		6,841		-		6,841	-
3271	Employee stock warrants	6(13)				113,936		1		109,495		1		97,228		1		93,810	-
	Retained earnings	6(17)
3310	Legal reserve					1,291,466		8		1,291,466		8		1,272,282		6		1,272,282	7
3320	Special reserve					142,456		1		-		-		488,347		3		488,347	3
3350	Unappropriated retained earnings					3,399,212	20			3,621,302	22			3,513,557	18			3,450,925	18
	Other equity interest
3410	Currency translation differences of foreign operations	6(18)		(		104,862 ) (		1) (		340,799) (		2) (		212,603) (		1)		-	-
3500	Treasury stocks	6(15)		(		695,083 ) (		4) (		768,094) (		5) (		714,702) (		4) (		714,702) (	4)
31XX	Equity attributable to owners of the parent					10,376,087	63			10,142,332	62			10,664,032	54			10,806,681	57
36XX	Non-controlling interest					10,590		-		10,063		-		-		-		-	-
3XXX	Total equity					10,386,677	63			10,152,395	62			10,664,032	54			10,806,681	57
	Significant contingent liabilities and unrecognised	9
	contract
	Total liabilities and equity				$	16,566,016	100		$	16,417,719	100		$	19,712,022	100		$	19,088,574	100

The accompanying notes are an integral part of these financial statements. See review report of independent accountants dated May 6, 2013.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Expressed in thousands of New Taiwan dollars, except earning per share amount)

(UNAUDITED)

Items

Three months ended March 31 2013 2012 Notes AMOUNT % AMOUNT % 6(19) $ 4,014,304 100 $ 6,328,236 100 6(22)(23) and 7 ( 3,748,254 ) ( 93 ) ( 5,884,489) ( 93 ) 266,050 7 443,747 7 6(23)(24) ( 29,108 ) ( 1 ) ( 33,057) ( 1 ) ( 52,432 ) ( 1 ) ( 69,774) ( 1 ) ( 244,926 ) ( 6 ) ( 319,995) ( 5 ) ( 326,466 ) ( 8 ) ( 422,826) ( 7 ) ( 60,416 ) ( 1 ) 20,921 - 6(20) 22,156 - 41,575 1 6(21) 3,573 - 7,310 - 6(22) ( 2,555 ) - - - ( 8,488 ) -( 3,290) - 14,686 - 45,595 1 ( 45,730 ) ( 1 ) 66,516 1 6(25) - -( 3,884) - ($ 45,730 ) ( 1 ) $ 62,632 1 $ 273,207 7 ( $ 245,237) ( 4 ) 11,054 - ( 10,911) - 6(25) ( 48,324 ) ( 1 ) 43,545 1 $ 235,937 6 ( $ 212,603) ( 3 ) $ 190,207 5 ( $ 149,971) ( 2 ) ($ 46,257 ) ( 1 ) $ 62,632 1 527 - - - ($ 45,730 ) ( 1 ) $ 62,632 1 $ 189,680 5 ( $ 149,971) ( 2 ) 527 - - - $ 190,207 5 ( $ 149,971) ( 2 ) 6(26) ($ 0.12) $ 0.17 ($ 0.12) $ 0.16

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General & administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating (loss) profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating revenue and expenses 7900 (Loss) profit before income tax 7950 Income tax expense 8200 (Loss) profit for the period Other comprehensive income 8310 Currency translation differences of foreign operations 8370 Share of other comprehensive income of associates and joint ventures accounted for under the equity method 8399 Income tax relating to the components of other comprehensive income 8300 Total other comprehensive (loss) income for the period 8500 Total comprehensive income (loss) for the period (Loss) profit, attributable to: 8610 Owners of the parent 8620 Non-controlling interest (Loss) profit for the period Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total comprehensive (loss) income for the period Basic earnings per share 9750 Total basic earnings (loss) per share Diluted earnings (loss) per share 9850 Total diluted earnings (loss) per share

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 6, 2013.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2013 AND 2012

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

Three-month period ended March 31, 2012 Balance at January 1, 2012 Employee stock options exercised Share-based payment transaction Profit for the period Other comprehensive income Balance at March 31, 2012 Three-month period ended March 31, 2013 Balance at January 1, 2013 Share-based payment transaction Special reserve Profit for the period Other comprehensive income Balance at March 31, 2013		Commonstock		Additional paid-incapital				RetainedEarnings	RetainedEarnings		Currency translation differences of foreign operations	Treasury stocks		Non-controlling interest	Total
						Legal reserve		Special reserve		Unappropriated retained earnings
		$ 3,955,214 1,340 - - - $ 3,956,554 $ 3,961,013 - - - - $ 3,961,013		$ 2,354,615 1,688 4,294 - - $ 2,360,597 $ 2,377,444 4,441 - - - $ 2,381,885		$ 1,272,282 - - - - $ 1,272,282 $ 1,291,466 - - - - $ 1,291,466		$ 488,347 - - - - $ 488,347 $ - - 142,456 - - $ 142,456	$ 3,450,925 - - 62,632 - $ 3,513,557 $ 3,621,302 ( 33,377 ) ( 142,456 ) ( 46,257 ) - $ 3,399,212		$ - - - - ( 212,603 ) ($ 212,603 ) ($ 340,799 ) - - - 235,937 ($ 104,862 )	($ 714,702 ) - - - - ($ 714,702 ) ($ 768,094 ) 73,011 - - - ($ 695,083 )		$ - - - - - $ - $ 10,063 - - 527 - $ 10,590	$ 10,806,681 3,028 4,294 62,632 ( 212,603 ) $ 10,664,032 $ 10,152,395 44,075 - ( 45,730 ) 235,937 $ 10,386,677

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 6, 2013.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

		2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) profit before income tax for the period	($		45,730 ) $	66,516
Adjustments to reconcile (loss) profit before income tax to net cash (used
in) provided by operating activities
Income and expenses having no effect on cash flows
Depreciation			73,100	66,414
Amortisation			2,026	3,853
Provision for doubtful accounts			-	17,061
Net gains on financial assets at fair value through profit or loss	(		4,447 ) (	816 )
Interest expense			2,555	-
interest income	(		16,372 ) (	32,191 )
Share-based payment compensation cost			6,241	4,294
Adjustment due to change of investees' equity under the equity method			8,488	3,290
Gain on disposal of property, plant and equipment	(		248 ) (	704 )
Total income and expenses having no effect on cash flows			71,343	61,201
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets at fair value through profit or loss - current			58,059	50,484
Notes receivable, net			- (	1 )
Accounts receivable, net			256,256 (	1,562,290 )
Other receivables	(		1,624 ) (	53,989 )
Inventories	(		103,518 ) (	464,008 )
Prepayments			9,129 (	46,263 )
Other current assets	(		4,590 )	2,159
Total net changes in assets relating to operating activities			213,712 (	2,073,908 )
Net changes in liabilities relating to operating activities
Notes payable			- (	917 )
Accounts payable	(		187,681 )	666,439
Accounts payable - related parties	(		40 )	1,959
Other payables	(		103,027 )	125,871
Provisions for liabilities			10,617	47,921
Other current liabilities			42,634 (	4,302 )
Other non-current liabilities	(		626 )	-
Total net changes in liabilities relating to operating activities	(		238,123 )	836,971
Total net changes in assets and liabilities relating to operating activities	(		24,411 ) (	1,236,937 )
Total adjustments to reconcile net income to net cash (used in) generated
from operating activities			46,932 (	1,175,736 )
Cash used in generated from operations			1,202 (	1,109,220 )
interest received			11,461	30,134
Interest paid	(		2,155 )	-
Income tax paid	(		32,634 ) (	1,685 )
Net cash used in operating activities	(		22,126 ) (	1,080,771 )

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

			2013	2012
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment	($		248,536 ) ($	227,587 )
Proceeds from disposal of property,plant and equipment			281	5,680
Decrease in deposits received			320	438
Increase in intangible assets	(		11,331 ) (	2,021 )
Net cash used in investing activities	(		259,266 ) (	223,490 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings			250,000	-
Employee stock options exercised			-	3,028
Proceeds from employees' purchase of treasury stock			37,834	-
Net cash provided by financing activities			287,834	3,028
Effect of exchange rate			180,482 (	151,733 )
Increase (decrease) in cash and cash equivalents			186,924 (	1,452,966 )
Cash and cash equivalents at beginning of period			4,698,800	6,303,846
Cash and cash equivalents at end of period		$	4,885,724 $	4,850,880
Investing activities partially paid by cash
Acquisition of property and equipment		$	174,379 $	181,560
Add: property and equipment and construction billings payable at
beginning of period			83,597	151,403
Less: property and equipment and construction billings payable at
end of period	(		9,440 ) (	105,376 )
Cash paid		$	248,536 $	227,587

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 6, 2013.

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ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of New Taiwan dollars, unless stated otherwise)

1. HISTORY AND ORGANIZATION

• Altek Corporation (the “Company”) was incorporated as company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (Collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, related export and import trade.

• The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the Tai-Tz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

• These consolidated financial statements were authorised for issuance by the Board of Directors on May 6, 2013.

• APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) Not applicable as it is the first-time adoption of IFRSs by the Group this year.

• (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

  • the Group

  • IFRS 9, „Financial Instruments‟: Classification and measurement of financial instruments

  • A.The International Accounting Standards Board (“IASB”) published IFRS 9, „Financial Instruments‟, in November, 2009, which will take effect on January 1, 2015 with early application permitted. Although the FSC has endorsed IFRS 9, FSC does not permit early application of IFRS 9 when IFRSs are adopted in R.O.C. in 2013. Instead, enterprises should apply International Accounting Standard No. 39 (“IAS 39”), „Financial Instruments: Recognition and Measurement‟ reissued in 2009.

  • B.IFRS 9 was issued as the first step to replace IAS 39. IFRS 9 outlines the new classification and measurement requirements for financial instruments, which might affect the accounting treatments for financial instruments of the Group.

  • C.The Group has not evaluated the overall effect of the IFRS 9 adoption; however, the Group consider there is no significant effect based on preliminary evaluation.

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(3) IFRSs issued by IASB but not yet endorsed by the FSC

A.The following are the new standards and amendments issued by IASB that are effective but not yet endorsed by the FSC and have not been adopted by the Group:

IFRS 1 IFRS 7 IFRS 1 IAS 12 IFRS 10 IFRS 11 IFRS 12 IAS 27 IAS 28 IFRS 13 IAS 19 IAS 1 IFRIC 20 IFRS 7 IFRS 1 IFRS 10, IFRS 11 and IFRS 12

New Standards or Amendments Effective Date

Limited exemption from comparative IFRS 7 disclosures for first-time adopters July 1, 2010 2010 improvements to IFRSs January 1, 2011 Disclosures - transfers of financial assets July 1, 2011 Severe hyperinflation and removal of fixed dates for first-time adopters July 1, 2011 Deferred tax: recovery of underlying assets January 1, 2012 Consolidated financial statements January 1, 2013 Joint arrangements January 1, 2013 Disclosure of interests in other entities January 1, 2013 Separate financial statements January 1, 2013 Investments in associates and joint ventures January 1, 2013 Fair value measurements January 1, 2013 Employee benefits January 1, 2013 Presentation of items of other comprehensive income July 1, 2012 Stripping costs in the production phase of a surface mine January 1, 2013 Disclosures - offsetting financial assets and financial liabilities January 1, 2013 Government loans January 1, 2013 2009-2011 improvements to IFRSs January 1, 2013 Consolidated financial statements, joint arrangements and disclosure of interests in other entities: transition guidance January 1, 2013

• B.The following are the new standards and amendments issued by IASB that are not yet effective and not yet endorsed by the FSC and have not been adopted by the Group:

IFRS 9 IAS 32 IFRS 7 and IFRS 9 IFRS 10, IFRS 12 and IAS 27	New Standards or Amendments Effective Date
	Financial instruments: Classification and measurement of financial instruments January 1, 2015 Offsetting financial assets and financial liabilities January 1, 2014 Mandatory effective date and transition disclosures January 1, 2015 Investment entities January 1, 2014

• C.The Group is assessing the potential impact of the new standards and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

• A.These consolidated financial statements are the first interim consolidated financial statements prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, IAS 34, „Interim Financial Reporting‟, and IFRS 1, „First-time Adoption of International Financial Reporting Standards‟, as endorsed by the FSC.

• B.In the preparation of the balance sheet of January 1, 2012, the Group has adjusted the amounts that were reported in the consolidated financial statements in accordance with previous R.O.C. GAAP. Please refer to Note 15 for the impact of transitioning from R.O.C. GAAP to the International Financial Reporting Standards, International Accounting Standards, and Interpretations/bulletins as endorsed by the FSC (collectively referred herein as the “IFRSs”) on the Group‟s financial position, operating results and cash flows.

• (2) Basis of preparation

• A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:

  • a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • b) Defined benefit liabilities recognised based on the net amount of pension fund assets plus unrecognised prior period‟s service cost and unrecognised actuarial losses, and less unrecognised actuarial gains and present value of defined benefit obligation.

• B.The significant accounting policies as stated below have been consistently applied to all the periods presented in these consolidated financial statements, including the opening IFRS balance sheet on January 1, 2012 (the Group‟s date of transition to IFRSs) that are prepared in transition to IFRSs.

• C.The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group‟s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

• (3) Basis of consolidation

• A.Basis for preparation of consolidated financial statements:

  • a) All subsidiaries are included in the Group‟s consolidated financial statements. Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of

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an entity. The existence and effect of potential voting rights that are currently exercisable or convertible have been considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

• b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• c) Changes in a parent‟s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

• d) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss, on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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B.Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiaries	Main Business Activities	March31,2013 December31,2012 March31,2012 January1,2012 Note Ownership (%)
Altek Corporation " " " Altek International Investment Co., Ltd. " " " " " " " " Leading Tech. Co., Ltd. Toptek Investment Cayman Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. Leading Tech. Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek Imaging Technology (Cayman) Co., Ltd. RICH-ALTEK U.S.A., INC. Altek Optical (Cayman) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd. Altek (Kunshan) Co., ltd. Altek EMS (Kunshan) Co., Ltd.	Investments and general business operations Sales and design of digital camera and its optical instruments Investments Research design, manufacture and sales of car electronic components Design and sales of engineering and optical components Investments and general business operations " " Delivery and storage Investments and general business operations " " " Manufacture and sales of digital still camera and its accessories SMT processing and related engineering services	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 88.75% 88.75% 100% 100% Note 2 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - 100% 100% Note 1 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

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Name of Investor	Name ofSubsidiaries	Main BusinessActivities	March31,2013 December31,2012 March31,2012 January1,2012 Note Ownership (%)
Altek Imaging Technology (Cayman) Co., Ltd. " Altek Trading (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Trading (Shanghai) Limited Altek Optical Technology (Cayman) Co., Ltd.	Altek Imaging Technology (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Altek Semiconductor Corporation Beijing Altek Image Communication Technology Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Manufacture and sales of optical components Design, manufacture and sales of digital camera parts Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Research design and sales of ASIC Sales of digital camera, handheld device and their related accessories Manufacture and sales of digital camera and its accessories and optical components	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Note 1:RICH-ALTEK U.S.A. INC. was merged by the Company for intergroup consolidation on the base date of September 17, 2012. Note 2:The minority interest was acquired through employees‟ subscriptions of Altek Autotronics Corporation, in which new common stocks were issued on the date of December 27, 2012.

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• C.Subsidiaries not included in the consolidated financial statements: None.

• D.Adjustments for subsidiaries with different balance sheet dates: None.

• E.Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group‟s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company‟s functional and the Group‟s presentation currency.

• A.Foreign currency t ransactions and balances

• a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss as part of the fair value gain or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• d) All foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within „other gains and losses‟.

• B.Translation of foreign operations

• a) The operating results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

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• ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

• iii. All resulting exchange differences are recognised in other comprehensive income.

• b) On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings for long-term investment purpose and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income.

• c) When a foreign operation is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale.

• d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items

• A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

• b) Assets held mainly for trading purposes;

• c) Assets that are expected to be realised within twelve months from the balance sheet date;

• d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• a) Liabilities that are expected to be paid off within the normal operating cycle;

• b) Liabilities arising mainly from trading activities;

• c) Liabilities that are to be paid off within twelve months from the balance sheet date;

• d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash and cash equivalents

• A.In the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

• B.Cash equivalents refer to short-term highly liquid investments that meet both the following criteria:

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• a) Readily convertible to known amount of cash; and

• b) Subject to an insignificant risk of changes in value.

(7) Financial assets at fair value through profit or loss

• A.Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

• a) Hybrid contracts; or

• b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

• B.On a regular way purchase or sale basis, financial assets held for trading are recognised and derecognised using settlement date accounting.

• C.Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.

(8) Accounts receivables

• Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

• (9) Impairment of financial assets

• A.The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a „loss event‟) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

• B.The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:

  • a) Significant financial difficulty of the issuer or debtor;

  • b) A breach of contract, such as a default or delinquency in interest or principal payments;

  • c) The Group, for economic or legal reasons relating to the borrower‟s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;

  • d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

  • e) The disappearance of an active market for that financial asset because of financial difficulties;

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or

• f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

• g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;

• h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• C.When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made according to the amount of the impairment loss is measured as the difference between the asset‟s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(10) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

• A. The contractual rights to receive cash flows from the financial asset expire.

• B.The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C.The Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

(11) Lease receivables/ leases (lessor)

An operating lease is a lease other than a finance lease. Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

• (12) Inventories

• Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

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(13) Investments accounted for under the equity method / associates

• A.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost. The Group‟s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.

• B.The Group‟s share of its associates‟ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group‟s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

• C.When changes in an associate‟s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group‟s ownership percentage of the associate, the Group recognises the Group‟s share of change in equity of the associate in „capital surplus‟ in proportion to its ownership.

• D.Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group‟s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E.In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group‟s ownership percentage of the associate but maintains significant influence on the associate, then „capital surplus‟ and „investments accounted for under the equity method‟ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group‟s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F.Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.

• G.When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate,

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then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H.When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

(14) Property, plant and equipment

• A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B.Subsequent costs are included in the asset‟s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The assets‟ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets‟ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets‟ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, „Accounting Policies, Changes in Accounting Estimates and Errors‟, from the date of the change. The estimated economic service lives of property, plant and equipment are 2 ~ 40 years.

(15) Intangible assets

• Intangible assets consist of software costs on a straight-line basis over its estimated useful life of 2 to 3 years.

(16) Impairment of non-financial assets

• A.The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset‟s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset‟s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss.

• B.The recoverable amounts of goodwill, i ntangible assets with an indefinite useful life and i ntangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognised for the amount by which the asset‟s carrying amount exceeds its

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recoverable amount.

Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

• (17) Borrowings

• A.Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

• B.Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(18) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

• (19) Provisions for other liabilities

• Provisions (including warranties and decommissioning.) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(20) Employee benefits

• A.Short-term employee benefits

• Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

• B.Pensions

• a) Defined contribution plans

  • For defined contribution plans, the Group pays fixed contributions to an independent, publicly or privately administered pension fund. The Group has no further legal or constructive obligations once the contributions have been paid. The contributions are

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recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

b) Defined benefit plans

• i. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in such corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

• ii. Actuarial gains and losses arising on defined benefit plans are recognised in other comprehensive income in the period in which the arise.

• iii. Past-service costs are recognised immediately in profit or loss if vested immediately; if not, the past-service costs are amortised on a straight-line basis over the vesting period.

• iv. Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

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C.Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group‟s decision to terminate an employee‟s employment before the normal retirement date, or an employee‟s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises termination benefits when it is demonstrably committed to a termination, when it has a detailed formal plan to terminate the employment of current employees and when it can no longer withdraw the plan. In the case of an offer made by the Group to encourage voluntary termination of employment, the termination benefits are recognised as expenses only when it is probable that the employees are expected to accept the offer and the number of the employees taking the offer can be reliably estimated. Benefits falling due more than 12 months after balance sheet date are discounted to their present value.

• D.Employees‟ bonus and directors‟ and supervisors‟ remuneration

Employees‟ bonus and directors‟ and supervisors‟ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees‟ bonus and directors‟ and supervisors‟ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders‟ meeting subsequently, the differences should be recognised based on the accounting for changes in estimates. The Group calculates the number of shares of employees‟ stock bonus based on the fair value per share at the previous day of the stockholders‟ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

- (21) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(22) Income tax

• A.The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively

~23~

enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C.Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D.Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees‟ training and equity investments is recorded using the income tax credits accounting.

(23) Share capital

• A.Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• B.Where the Company repurchases the Company‟s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company‟s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received,

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net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company‟s equity holders.

(24) Dividends

Dividends are recorded in the Company‟s financial statements in the period in which they are approved by the Company‟s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares and share premium on the effective date of new shares issuance.

(25) Revenue recognition

• A.Sales of goods

• a) The Group manufactures and sells digital image technology application products. Revenue is measured at the fair value of the consideration received or receivable taking into account of value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group‟s activities. Revenue arising from the sales of goods should be recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

• b) The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Provisions for such liabilities are recorded when the sales are recognised. The volume discounts are estimated based on the anticipated annual sales quantities.

• B.Sales of services

• The Group provides technology services. Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable.

• C.A sale agreement comprising of multiple components

• A sale agreement offered by the Group might comprise of multiple components, including sale of goods and subsequent repair services, etc. If a sale agreement comprises of multiple identifiable components, the fair value of the consideration received or receivable in respect of the sale agreement shall be allocated between those components based on the relative fair value of each component. The amount of proceeds allocated to each component is recognised as

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revenue in profit or loss following the revenue recognition criteria applied to each component. T he fair value of each component is determined by its market value when it is sold separately.

(26) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group‟s accounting policies and make critical assumptions and estimates concerning future events. Judgements and estimates are continually evaluated and adjusted based on historical experience and other factors. The above information is addressed below:

• (1) Critical judgments in applying the Group‟s accounting policies: None.

• (2) Critical accounting estimates and assumptions:

• The Group makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

• A.Revenue recognition

  • In principle, sales revenues are recognised when the earning process is completed. The Group estimates discounts and returns based on historical results and other known factors. Provisions for such liabilities are recorded as a deduction item to sales revenues when the sales are recognised. The Group reassesses the reasonableness of estimates of discounts and returns periodically.

• B.Impairment assessment of tangible and intangible assets (excluding goodwill)

  • The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

• C.Impairment assessment of goodwill

  • The impairment assessment of goodwill relies on the Group‟s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units.

• D.Impairment assessment of investments accounted for under the equity method

  • The Group assesses the impairment of an investment accounted for under the equity method as soon as there any indication that it might have been impaired and its carrying amount cannot be

~26~

recoverable. The Group assesses the recoverable amounts of an investment accounted for under the equity method based on the present value of expected cash dividends receivable from the investee and expected future cash flows from the disposal of the investee, and analyzes the reasonableness of related assumptions .

• E.Realisability of deferred income tax assets

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets.

As of March 31, 2013, the Group recognised deferred income tax assets amounting to $324,527.

• F.Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory comsumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of March 31, 2013, the carrying amount of inventories was $1,818,839.

• G.Calculation of accrued pension obligations

When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

As of March 31, 2013, the carrying amount of accrued pension obligations was $19,200.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	March31,2013 1,393 $ 498,681 4,385,650 4,885,724 $	December31,2012
		1,007 $ 302,325 4,395,468
		4,698,800 $

~27~

Cash on hand Checking accounts and demand deposits Time deposits	March31,2012 1,141 $ 764,481 4,085,258 4,850,880 $	January1,2012
		948 $ 400,741 5,902,157
		6,303,846 $

A.The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group‟s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

B.The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or	loss
Items Current items: Financial assets held for trading Beneficiary certificates Valuation adjustment of financial assets held for trading Total Items Current items: Financial assets held for trading Beneficiary certificates Valuation adjustment of financial assets held for trading Total	March 31,2013 365,683 $ 8,987 374,670 $ March 31,2012 444,387 $ 3,597 447,984 $	December 31,2012
		423,073 $ 5,209
		428,282 $
		January1,2012
		497,634 $ 18
		497,652 $

The Group recognised net gain of $4,447 and $816 for the three-month periods ended March 31, 2013 and 2012, respectively.

(3) Financial assets measured at cost

2013 and 2012, respectively. Financial assets measured at cost
Items		March 31,2013		December 31,2012
Non-current items:
Unlisted Stocks	$	300,901	$	300,736
Less:Accumulated impairment loss	(	64,783)	(	64,783)
Total	$	236,118	$	235,953
Items		March 31,2012		January1,2012
Non-current items:
Unlisted Stocks	$	300,818	$	300,957
Less:Accumulated impairment loss	(	64,783)	(	64,783)
Total	$	236,035	$	236,174

~28~

• A.According to the Group‟s intention, its investment in stocks, which are not traded in an active market, and no sufficient industry information of companies similar to these stocks financial information can be obtained, the fair value of the investment in stocks cannot be measured reliably. The Group classified those stocks as „financial assets measured at cost‟.

• B.As of March 31, 2013, December 31, 2012, March 31, 2012 and January 1, 2012, no financial assets measured at cost held by the Group were pledged to others.

(4) Accounts receivable

Accounts receivable
		March 31,2013		December 31,2012
Accounts receivable	$	3,280,114	$	3,536,370
Less:allowance for bad debts	(	652,675)	(	652,675)
	$	2,627,439	$	2,883,695
		March 31,2012		January1,2012
Accounts receivable	$	5,613,261	$	4,050,971
Less:allowance for bad debts	(	652,675)	(	635,614)
	$	4,960,586	$	3,415,357
A.The ageing analysis of accounts receivable that		were past due but not impaired is as follows:
		March31,2013		December31,2012
Up to 30 days	$	4,070	$	10,382
31 to 90 days		1,303		1,052
91 to 180 days		285		289
Over 181 days		558		1,068
	$	6,216	$	12,791
		March31,2012		January1,2012
Up to 30 days	$	50,093	$	126,559
31 to 90 days		-		2,546
91 to 180 days		1,761		3,394
Over 181 days		-		1,897
	$	51,854	$	134,396

~29~

B.Movements on the Group provision for impairment of accounts receivable are as follow:

At January 1 Provision for impairment At March 31 At January 1 Provision for impairment At March 31		2013
	Individualprovision 652,675 $ - 652,675 $	Group provision - $ - - $ 2012	Total
			652,675 $ -
			652,675 $
	Individualprovision 635,614 $ 17,061 652,675 $	Group provision - $ - - $	Total
			635,614 $ 17,061
			652,675 $

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

Group 1 Group 2 Group 1 Group 2		March 31,2013		December 31,2012
		2,570,334 $ 50,889 2,621,223 $ March 31,2012		2,856,464 $ 14,440 2,870,904 $ January1,2012
		4,878,093 $ 30,639 4,908,732 $		2,997,130 $ 283,831 3,280,961 $

Note:

Group 1: Including domestic and foreign listed companies and their affiliated companies. Group 2: Others.

D.The maximum exposure to credit risk at March 31, 2013, December 31, 2012, March 31, 2012 and January 1, 2012 was the carrying amount of each class of accounts receivable.

E.The Group does not hold any collateral as security.

(5) Inventories

Inventories
Raw materials Work in process Finished goods Total			March 31,2013
		Cost 675,232 $ 563,619 764,144 2,002,995 $	Allowance for valuation loss 114,763) ($ 18,014) ( 51,379) ( 184,156) ($	Book value 560,469 $ 545,605 712,765 1,818,839 $

~30~

Raw materials Work in process Finished goods Total Raw materials Work in process Finished goods Total Raw materials Work in process Finished goods Total			December 31,2012
		Cost 753,204 $ 333,103 838,484 1,924,791 $	Allowance for valuation loss 140,392) ($ 26,961) ( 42,117) ( 209,470) ($ March 31,2012	Book value 612,812 $ 306,142 796,367 1,715,321 $
		Cost 1,422,042 $ 640,866 731,744 2,794,652 $		Book value 1,317,593 $ 560,288 634,004 2,511,885 $
		Cost 1,180,729 $ 528,597 660,812 2,370,138 $		Book value 1,005,515 $ 445,046 597,316 2,047,877 $

The cost of inventories recognised as expense for the three-month periods ended March 31, 2013 and 2012 was $3,748,254 and $5,884,489, respectively, including the amount of $22,635 and $17,027, respectively, that the Group wrote down from cost to net realisable value accounted for as „cost of goods sold‟.

(6) Investments accounted for under the equity method

JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd.

Less:Accumulated impairment loss

JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd.

Less:Accumulated impairment loss

od
	March	31,	2013	December 31,2012
$			57,310	$	54,332
			319,702		320,674
$			377,012	$	375,006
(			23,587)	(	23,587)
$			353,425	$	351,419
	March	31,	2012		January1,2012
$			56,058	$	57,295
			356,572		383,403
			412,630		440,698
(			23,587)	(	23,587)
$			389,043	$	417,111

~31~

The financial information of the Group‟s principal associates is summaried below:

March 31, 2013 JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. December 31, 2012 JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. March 31, 2012 JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. January 1, 2012 JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd.	Assets 497,180 $ 938,407 1,435,587 $ Assets 491,871 $ 982,139 1,474,010 $ Assets 527,017 $ 1,183,121 1,710,138 $ Assets 552,793 $ 1,286,476 1,839,269 $	Liabilities 261,372 $ 139,152 400,524 $ Liabilities 271,041 $ 180,455 451,496 $ Liabilities 297,882 $ 270,953 568,835 $ Liabilities 315,671 $ 327,969 643,640 $	Revenue Profit/(Loss) 39,321 $ 7,872 $ 199,312 24,183) ( 238,633 $ 16,311) ($ Revenue Profit/(Loss) 165,918 $ 5,128) ($ 1,422,000 89,307) ( 1,587,918 $ 94,435) ($ Revenue Profit/(Loss) 37,189 $ 36 $ 397,010 11,488) ( 434,199 $ 11,452) ($ Revenue Profit/(Loss) - $ - $ - - - $ - $	% interest held 23.33% 40% % interest held 23.33% 40% % interest held 23.33% 40% % interest held 23.33% 40%

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(7) Property, plant and equipment

At January 1, 2013 Cost Accumulated depreciation and impairment Three-month period ended March 31, 2013 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At March 31, 2013 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,441,708 $ - 280,986) ( 1,042,216 $ 3,160,722 $ 1,042,216 $ 3,160,722 $ - 15,365) ( - - - 13,053 - 22,433) ( - 57,832 1,042,216 $ 3,193,809 $ 1,042,216 $ 3,503,425 $ - 309,616) ( 1,042,216 $ 3,193,809 $	Machinery	Test equipment
		1,727,766 $ 1,053,271) ( 674,495 $ 674,495 $ 508 - - 23,217) ( 19,739 671,525 $ 1,778,348 $ 1,106,823) ( 671,525 $	193,969 $ 118,059) ( 75,910 $ 75,910 $ 1,944 6) ( 676 6,843) ( 1,347 73,028 $ 197,679 $ 124,651) ( 73,028 $

~33~

At January 1, 2012 Cost Accumulated depreciation and impairment Three-month period ended March 31, 2012 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At March 31, 2012 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,487,894 $ - 199,025) ( 1,042,216 $ 3,288,869 $ 1,042,216 $ 3,288,869 $ - - - - - 380) ( - 22,168) ( - 49,411) ( 1,042,216 $ 3,216,910 $ 1,042,216 $ 3,434,138 $ - 217,228) ( 1,042,216 $ 3,216,910 $	Machinery	Test equipment
		1,506,120 $ 1,004,668) ( 501,452 $ 501,452 $ 2,653 764) ( - 16,140) ( 12,089) ( 475,112 $ 1,481,910 $ 1,006,798) ( 475,112 $	172,683 $ 99,925) ( 72,758 $ 72,758 $ 8,197 456) ( 1,303 6,825) ( 867) ( 74,110 $ 174,648 $ 100,538) ( 74,110 $

~34~

(8) Intangible assets

Intangible assets	Intangible assets	Intangible assets
Long-term prepaid rents )Short-term borrowings At January 1 Cost Accumulated amortisation and impairment Three-month period ended March 31 Opening net book amount Additions Reclassification Amortisation charge Net exchange differences Closing net book amount At March 31 Cost Accumulated amortisation and impairment Land-use right Land-use right Type of borrowings Bank borrowings Bank SinoPac unsecured borrwowings Shin Kong bank unsecured borrwings				2013 2012 87,038 $ 146,495 $ 13,959) ( 61,660) ( 73,079 $ 84,835 $ 73,079 $ 84,835 $ 11,331 917 - 1,104 1,788) ( 3,615) ( 1,862 1,804) ( 84,484 $ 81,437 $ 100,491 $ 146,531 $ 16,007) ( 65,094) ( 84,484 $ 81,437 $ March31,2013 December31,2012 39,359 $ 38,457 $ March31,2012 January1,2012 39,737 $ 40,967 $ March 31,2013 Interest rate range Collateral 150,000 $ 1.30% None 100,000 1.30% None 250,000 $
					$
					2013
				$	39,359 2012
				March31,
				$				$
				March 31,2013
		Bank borrowings Bank SinoPac unsecured borrwowings Shin Kong bank unsecured borrwings		150,000 $ 100,000 250,000 $		1.30% 1.30%			None None

- (9) Long term prepaid rents

(10) Short-term borrowings

The Group had no short-term borrowings during the following periods: December 31, 2012, March 31, 2012 and January 1, 2012.

(11) Accounts payable

March 31, 2012 and January 1, 2012. Accounts payable
Accounts payable Estimated accounts payable Accounts payable Estimated accounts payable		March 31,2013		December 31,2012
		1,587,460 $ 1,369,812 2,957,272 $ March 31,2012		1,610,221 $ 1,534,732 3,144,953 $ January1,2012
		2,101,597 $ 3,751,340 5,852,937 $		2,909,808 $ 2,276,690 5,186,498 $

~35~

(12) Pensions

A.

• a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees‟ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees‟ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

• b) The amounts recognised in the balance sheet are determined as follows:

		December	31,2012		January1,2012
Present value of funded obligations	$		65,167	$	61,904
Fair value of plan assets	(		45,967)	(	45,554)
			19,200		16,350
Present value of unfunded obligations			-		-
Unrecognised actuarial losses/(gains)			-		-
Unrecognised past service cost			-		-
Net liability in the balance sheet	$		19,200	$	16,350

• c) The Group had no recognised pension expenses in the statement of comprehensive income for the three-month periods ended March 31, 2013 and 2012.

• d) As of December 31, 2012, cumulative actuarial losses/(gains) recognised in other comprehensive income was $17,202.

~36~

• e) The Bank of Taiwan was commissioned to manage the Fund of the Company‟s and domestic subsidiaries‟ defined benefit pension plan in accordance with the Fund‟s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The constitution of fair value of plan assets as of March 31, 2013 and 2012 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund‟s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

f) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases Expected return on plan assets Turnover rate (Note) Early retirement rate (Note)		2012		2011
		1.50% 3.00% 1.50% 0%~0.24% 0.001%~0.99%		1.75% 3.00% 1.75% 0%~0.24% 0.001%~0.99%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with 2012 Taiwan Standard Ordinary Experience Mortality Table.

Note : Age range as the assessment of segment.

g) Historical information of experience adjustments was as follows:

Note : Age range as the assessment of segment. Historical information of experience adjustments was as follows:
Present value of defined benefit obligation Fair value of plan assets Surplus/(defieit) in the plan Experience adjustments on plan liabilities Experience adjustments on plan assets	2012
	65,167) ($ 45,967 19,200) ( 645) ($ 393) ($

• h) Expected contributions to the defined benefit pension plans of the Group within one year from March 31, 2013 are $12.

~37~

B.

• a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees‟ monthly salaries and wages to the employees‟ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. For the three-month periods ended March 31, 2013 and 2012, the Group had recognized pension costs of $8,723 and $10,426, respectively, under the above pension scheme.

• b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $12,090 and $18,376 for the three-month ended March 31, 2013 and 2012, respectively.

(13) Share-based payment

• A.As of March 31, 2013 and 2012, the Company‟s share-based payment arrangements were as follows:

follows:
Type of arrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Employee stock options " " " " Treasury stock transferred to employees at the fourth time Treasury stock transferred to employees at the fifth time Treasury stock transferred to employees at the sixth time Treasury stock transferred to employees at the seventh time	June 13, 2008 October 31, 2008 March 31, 2009 October 28, 2011 March 21, 2012 March 15, 2011 September 9, 2011 December 28, 2012 March 15, 2013	8,000 1,000 3,000 3,000 3,000 1,334 930 986 2,196	9.6 years 9.2 years 8.8 years 9.2 years 8.9 years - - - -	Note Note Note Note Note Vested immediately Vested immediately Vested immediately Vested immediately

Note: 2 year‟s service vest 40%, 3 years‟ service vest 70%, 4 years‟ service vest 100%.

~38~

B.Details of the share-based payment arrangements are as follows:

Options outstanding at beginning of the period Options granted Distribution of stock dividends / adjustments for number of shares granted for one unit of option Options forfeited Options exercised Options expired Options outstanding at end of the period Options exercisable at end of the period Approved and not yet issued options at the end of the period		For the three-month period ended March 31,2013	For the three-month period ended March 31,2013	For the three-month period ended March 31,2012	For the three-month period ended March 31,2012
		No. of options	Weighted-average exercise price (in dollars)	No. of options	Weighted-average exercise price (in dollars)
		16,008 - - - - - 16,008 10,208 -	24.00 $ - - - - - 24.00 23.20	13,788 3,000 - - 134) ( - 16,654 7,228 -	25.80 $ 27.85 - - 22.60 - 26.20 25.40

C.The weighted-average stock price of stock options at exercise dates for the three-month periods ended March 31, 2013 and 2012 was $17.72 and $26.42 (in dollars), respectively.

• D.The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue date approved	Expirydate	March 31,2013	December 31,2012
June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012	December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2020 December 31, 2020

~39~

Issue date approved	Expirydate	March 31,2012	January1,2012
June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012	December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2020 December 31, 2020

E.The fair value of stock options granted after January 1, 2008 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price	Exercise price (Note 1)	Expected price volatility	Expected option life	Expected dividends	Risk-free interest rate	Fair value per unit
Employee stock options " " " " Treasury stock transferred to employees at the fourth time Treasury stock transferred to employees at the fifth time Treasury stock transferred to employees at the sixth time Treasury stock transferred to employees at the seventh time	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 March 15, 2011 September 9, 2011 December 28, 2012 March 15, 2013	$45.50 32.60 30.90 30.65 27.85 40.40 32.65 17.05 18.05	24.60 $ 20.60 $ 19.40 $ 25.60 $ 25.40 $ 35.60 25.40 17.23 17.23	24.45% 22.11% 22.63% 30.27% 33.54% - - - -	6 years 6 years 6 years 5 years 4.9 years - - - -	1.5% 1.5% 1.5% 1.4% 1.4% - - - -	2.40% 1.88% 0.96% 1.18% 1.08% - - - -	10.56 6.54 5.73 7.42 7.35 Note 2 Note 2 Note 2 Note 2

• Note 1: The exercise price of stock options was adjusted based on the cash dividends and stock dividends per share distributed.

• Note 2: Given that the exercise was close to the grant date, the fair value per unit was estimated using the intrinsic value method.

~40~

F.Expenses incurred on share-based payment transactions are shown below:

Equity-settled Cash-settled Total		period ended March 31, 2013		period ended March 31, 2012 4,294 $ - 4,294 $
		6,241 $ - 6,241 $

(14) Provisions for other liabilities

Provisions for other liabilities Equity-settled $ Cash-settled Total $	6,241 $ - 6,241 $	4,294 - 4,294
		Warranty
At January 1, 2013	$	294,991
Additional provisions		18,924
Used during the period	(	8,371)
Unused amounts reversed	(	418)
Exchange differences		482
At March 31, 2013	$	305,608

Current Non-current Current Non-current	March 31,2013 177,129 $ 128,479 $ March 31,2012 183,233 $ 151,496 $	December 31,2012
		152,537 $
		142,454 $
		January1,2012
		181,057 $
		105,751 $

The Group gives warranties on digital image technology application products sold. Provision for warranty is estimated based on historical warranty data of digital image technology application products. It is expected that $177,129 of provision for warranty will be used during 2014.

(15) Share capital

A.As of March 31, 2013, the Company‟s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 30,000 thousand shares reserved stock options), and the paid-in capital was $3,961,013 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company‟s ordinary shares outstanding are as follows:

~41~

At January 1 Employee stock options exercised At March 31	For the three-month period ended March 31, 2013 (in thousands of shares) 396,101 - 396,101	For the three-month period ended March 31, 2012 (in thousands of shares)
		395,521 134.00 395,655

• B.Treasury shares

• a) Reason for share reacquisition and movements in the number of the Company‟s treasury shares are as follows:

Reason for reacquisition		For the three -month period ended March (in thousands of shares)	For the three -month period ended March (in thousands of shares)	For the three -month period ended March (in thousands of shares)	31, 2013
		At January1 Additions Disposals 23,100 - 2,196) ( For the three -month period ended March (in thousands of shares)			At March 31 20,904 31, 2012
To be reissued to employees Reason for reacquisition
		At January1 19,086	Additions -	Disposals -	At March 31 19,086
To be reissued to employees

• b) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury share should not exceed 10% of the number of the Company‟s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus. As of March 31, 2013, the shares bought back as treasury share amounted to $695,083.

• c) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• d) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company‟s credit rating and the stockholders‟ equity should be retired within six months of acquisition.

(16) Capital surplus

Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

~42~

At January 1, 2013 Employee stock options exercised At March 31, 2013 At January 1, 2012 Employee stock options exercised At March 31, 2012		Sharepremium		Treasury share transactions		Employee restricted shares
		2,267,949 $ - 2,267,949 $ Sharepremium		- $ - - $ Treasury share transactions		109,495 $ 4,441 113,936 $ Employee restricted shares
		2,253,964 $ 2,564 2,256,528 $		6,841 $ - 6,841 $		93,810 $ 3,418 97,228 $

(17) Retained earnings

Retained earnings
2013 At January 1 4,912,768 $ Profit for the period 46,257) ( Share-based payment transactions 33,377) ( At March 31 4,833,134 $	2012
	5,211,554 $ 62,632 -
	5,274,186 $

• A. According to the Company‟s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years‟ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Law, and remaining amount shall be distributed in the following order:

• (a) allocating 10% to 20% as employees‟ bonus;

• (b) allocating 2% as directors‟ and supervisors‟ remuneration; and

• (c)distributing the remaining amount as common stockholders‟ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders‟ meeting.

• B. The amount of dividends appropriated is based on the Company‟s current year‟s net income and prior years‟ retained earnings, taking into account the Company‟s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company‟s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least

~43~

20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders‟ meeting.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve excess of 25% of the Company‟s paid-in capital.

D.

• a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6,2012, shall be reversed proportionately when the relevant assets are used, disposed of orreclassified subsequently. Such amounts are reversed upon disposal or reclassified if theassets are investment property of land, and reversed over the use period if the assets areinvestment property other than land.

• E. The appropriation of 2012 earnings had been resolved at Board of Directors‟ meeting on March 18, 2013 and the appropriation of 2011 earnings had been resolved at the stockholders‟ meeting on June 13, 2012. Details are summarized below:

Legal reserve Special reserve Stock dividends Cash dividends	Dividends per share Dividends per share Amount (in NT dollars) Amount (in NT dollars) 28,010 $ - 19,184 $ - 196,812 - 488,347) ( - - - - - 37,300 Around $0.1 564,809 Around $1.5 262,122 $ 95,646 $ 2012 earnings 2011 earnings	2011 earnings	2011 earnings
	Amount 28,010 $ 196,812 - 37,300 262,122 $		Dividends per share (in NT dollars)
			- - - Around $1.5

On March 18, 2013, the Company‟s Board of Directors also proposed to distribute $1,106 as directors‟ and supervisors‟ remunerations, $8,292 as employees‟ cash bonuses and proposed to appropriate $335,701 (around $0.9 per share) of the additional paid-in capital to stockholders. As of May 6, 2013, the above distribution proposal has not yet been approved by the shareholders.

The 2011 directors‟ and supervisors‟ remuneration and employees‟ cash bonus as appropriated during the stockholders‟ meeting on June 13, 2012 were $13,220 and $99,151, respectively.

~44~

• F. The estimated amounts of employees‟ bonus were $0 and $8,455 and the estimated amounts of directors‟ and supervisors‟ remuneration were $0 and $1,127 for the three-month periods ended March 31, 2013 and 2012, respectively, and were recognized as operating costs or operating expenses. While, if the estimated amounts are different from the amounts approved by the stockholders subsequently, the difference is recognized as gain or loss in the next year. Information on the appropriation of the Company‟s earnings as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(18) Other equity items

Other equity items
Operating revenue Other income At January 1 Currency translation differences: Group Associates At March 31 Sales revenue and other Rental revenue Interest income: Interest income from bank deposits Others Other income - other Total	2013 340,799) ($ 226,762 9,175 104,862) ($ For the three-month period ended March 31, 2013 4,014,304 $ For the three-month period ended March 31, 2013 $ 5,137 16,347 25 647 $22,156	2012 - $ 203,547) ( 9,056) ( 212,603) ($ For the three-month period ended March 31, 2012
		6,328,236 $ For the three-month period ended March 31, 2012
		$ 8,201 32,166 25 1,183 $41,575

(19) Operating revenue

• (20) Other income

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(21) Other gains and losses

For the three-month For the three-month period ended March 31, period ended March 31,

(21)	Other gains and losses	For the three-month period ended March 31,	For the three-month period ended March 31,
(22) (23) (24)	Finance costs Expenses by nature Employee benefit expense Net gains on financial assets at fair value through profit or loss Net currency exchange gains (losses) Gains on disposal of property, plant and equipment Other expense Total Interest expense: Bank borrowings Employee benefit expense Depreciation charges on property, plant and equipment Amortisation charges on intangible assets Total Wages and salaries Employee stock options Labor and health insurance fees Pension costs Other personnel expenses Total	2013 4,447 $ 524) ( 248 598) ( 3,573 $ For the three-month period ended March 31, 2013 2,555 $ For the three-month period ended March 31, 2013 486,802 $ 70,277 1,788 558,867 $ For the three-month period ended March 31, 2013 415,250 $ 6,241 21,587 20,813 22,911 486,802 $	2012
			816 $ 5,804 704 14) ( 7,310 $ For the three-month period ended March 31, 2012
			- $ For the three-month period ended March 31, 2012
			567,796 $ 63,590 3,615 635,001 $ For the three-month period ended March 31, 2012
			483,541 $ 4,294 25,174 28,802 25,985 567,796 $

~46~

(25) Income tax

A.Income tax expense

a) Components of income tax expense:

me tax come tax expense Components of income tax expense:
			For the three-month			For the three-month
		period ended March 31,			period ended March 31,
			2013			2012
Current tax:
Current tax on profits for the period	$		16,214	$		17,581
Adjustments in respect of prior years			-			-
Total current tax			16,214			17,581
Deferred tax:
Origination and reversal of temporary	(		16,214)	(		13,697)
Impact of change in tax rate			-			-
Total deferred tax	(		16,214)	(		13,697)
Income tax expense	$		-	$		3,884
The income tax charged / (credited) to	equity during the period is as follows:
			For the three-month			For the three-month
		period ended March 31,			period ended March 31,
			2013			2012
Convertible bonds-equity component	($		48,324)	$		43,545

b) The income tax charged / (credited) to equity during the period is as follows:

• B.The Company‟s income tax returns through 2010 have been assessed and approved by the Tax Authority.

• C.Unappropriated retained earnings:

Earnings generated in and after 1998 Earnings generated in and after 1998	March 31,2013 3,399,212 $ March 31,2012 3,513,557 $	December 31,2012 3,621,302 $ January1,2012 3,450,925 $

D.As of March 31, 2013, December 31, 2012, March 31, 2012 and January 1, 2012, the balance of the imputation tax credit account was $224,628, $224,628, $192,062 and $192,062, respectively. The creditable tax rate was estimated to be 6.45% for 2012 and was 6.16% for 2011.

(26) Earnings (losses) per share

• A. Basic

Basic earnings (losses) per share is calculated by dividing the profit (loss) attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares in issue during the period.

B.Diluted

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Diluted earnings (losses) per share is calculated by adjusting the profit (loss) attributable to ordinary shareholders of the parent and the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares.

outstanding assuming conversion of all dilutive potential ordinary shares.	n of all dilutive potential ordinary shares.	n of all dilutive potential ordinary shares.	n of all dilutive potential ordinary shares.
Weighted average number of ordinary shares outstanding Losses per share Amount after tax (share in thousands) (in dollars) Basic losses per share Loss attributable to ordinary shareholders of the parent 46,257) ($ 373,513 0.12) ($ Diluted losses per share Loss attributable to ordinary shareholders of the parent 46,257) ($ - Assumed conversion of all dilutive potential ordinary shares Employees‟ bonus - 490 Loss attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 46,257) ($ 374,003 0.12) ($ For the three-monthperiod ended March 31,2013 Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (share in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders of the parent 62,632 $ 376,529 0.17 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 62,632 $ - Assumed conversion of all dilutive potential ordinary shares - Employee stock options - 596 Employees‟ bonus - 3,956 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 62,632 $ 381,081 0.16 $ For the three-monthperiod ended March 31,2012	For the three-monthperiod ended March 31,2013
			Losses per share (in dollars)
	Amount after tax 62,632 $ 62,632 $ - - 62,632 $	Weighted average number of ordinary shares outstanding (share in thousands) 376,529 - - 596 3,956 381,081	Earnings per share (in dollars)
			0.17 $
			0.16 $

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(27) Operating leases

The Group acquired a Taipei building for operating use at the end of 2013. However, since this building is still under a certain unexpired lease agreement, the Company continuously leases the building to the lessee until the lease agreement is expired. These leases have terms expiring between 2011 and 2013, and all these lease agreements are not renewable at the end of the lease period. Contingent rents of $7,964 and $10,731 were recognised for these leases in profit or loss for the three-month periods ended March 31, 2013 and 2012, respectively. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

2013 2012 2013	March31,2013 10,173 $ March 31,2012 12,992 $ 3,622 16,614 $	December31,2012
		18,535 $
		January1,2012 24,260 $ 3,622 27,882 $

(28) Seasonality of operations

Due to seasonal factors, in general, the revenue and profit would be higher in the second half of the year than in the first half of the year.

7. RELATED-PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties:

No significant related-party transactions.

(2) Key management compensation

No significant related-party transactions. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total		For the three-month period ended March 31, 2013		For the three-month period ended March 31, 2012
		5,967 $ 135 1,255 7,357 $		6,900 $ 189 1,792 8,881 $

8. PLEDGED ASSETS

None.

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

Kodak US has filed a civil lawsuit against the Company in the New York District Court on January 12, 2012 (herein referred to as the “Lawsuit”) due to a dispute in the calculation of royalty payment. The Lawsuit is not a patent infringement litigation. The Company is currently trying to negotiate with Kodak US to settle the Lawsuit out-of-court. The court already issued an initial summary judgment of contract interpretation regarding the royalty exemption. The financial effect to the Company cannot be substantially determined as of the release date of the financial statements authorised by the Board of Directors since the court proceeding is still ongoing without any specific damage claim.

(2) Commitments

For details on operating lease agreements, please refer to Note 6(27).

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital risk management

The Group‟s objectives when managing capital are to safeguard the Group‟s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

A.Fair value information of financial instruments

nancial instruments Fair value information of financial instruments
Financial assets: Cash and cash equivalents Financial assets at fair value through profit or loss-held for trading Financial assets measured at cost Accounts receivable Other receivables Refundable depostis Total	March 31,2013
	Book value 4,885,724 $ 374,670 236,118 2,627,439 31,711 41,093 8,196,755 $	Fair value
		4,885,724 $ 374,670 - 2,627,439 31,711 41,093
		7,960,637 $

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Financial assets: Cash and cash equivalents Financial assets at fair value through profit or loss-held for trading Financial assets measured at cost Accounts receivable Other receivables Refundable deposits Total Financial assets: Cash and cash equivalents Financial assets at fair value through profit or loss-held for trading Financial assets measured at cost Notes receivable Accounts receivable Other receivables Refundable deposits Total Financial assets: Cash and cash equivalents Financial assets at fair value through profit or loss-held for trading Financial assets measured at cost Notes receivable Accounts receivable Other receivables Refundable deposits Total	December	31,2012
	Book value Fair value 4,698,800 $ 4,698,800 $ 428,282 428,282 235,953 - 2,883,695 2,883,695 25,176 25,176 41,413 41,413 8,313,319 $ 8,077,366 $ March 31,2012	Fair value
		4,698,800 $ 428,282 - 2,883,695 25,176 41,413
		8,077,366 $
	Book value Fair value 4,850,880 $ 4,850,880 $ 447,984 447,984 236,035 - 10 10 4,960,586 4,960,586 75,241 75,241 42,568 42,568 10,613,304 $ 10,377,269 $ January1,2012	Fair value
		4,850,880 $ 447,984 - 10 4,960,586 75,241 42,568
		10,377,269 $
	Book value 6,303,846 $ 497,652 236,174 9 3,415,357 19,195 43,006 10,515,239 $	Fair value
		6,303,846 $ 497,652 - 9 3,415,357 19,195 43,006
		10,279,065 $

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Financial liabilities: Short-term borrowings Notes payable Accounts payable Accounts payable-related parties Other payables Guarantee deposits received Total	March 31,2013	March 31,2013
	Book value 250,000 $ 40 2,957,272 57 1,053,415 8,362 4,269,146 $	Fair value
		250,000 $ 40 2,957,272 57 1,053,415 8,362
		4,269,146 $

Financial liabilities: Notes payable Accounts payable Accounts payable-related parties Other payables Guarantee deposits received Total	December	31,2012
	Book value 40 $ 3,144,953 97 1,230,200 8,362 4,383,652 $	Fair value
		40 $ 3,144,953 97 1,230,200 8,362
		4,383,652 $

Financial liabilities: Notes payable Accounts payable Accounts payable-related parties Other payables Guarantee deposits received Total	March 31,2012	March 31,2012
	Book value 40 $ 5,852,937 16,785 1,235,640 22,530 7,127,932 $	Fair value
		40 $ 5,852,937 16,785 1,235,640 22,530
		7,127,932 $

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Financial liabilities: Notes payable Accounts payable Accounts payable-related parties Other payables Guarantee deposits received Total	January1,2012	January1,2012
	Book value 957 $ 5,186,498 14,826 1,155,796 22,530 6,380,607 $	Fair value
		957 $ 5,186,498 14,826 1,155,796 22,530
		6,380,607 $

B.Financial risk management policies

• a) The Group‟s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group‟s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group‟s financial position and financial performance.

• b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group‟s operating units, as well as provides written principles for overall risk management and policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C.Significant financial risks and degrees of financial risks

• a) Market risk

Foreign exchange risk

• i.The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

• ii.Management has set up a policy to require that group companies to hedge their entire foreign exchange risk exposure with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity‟s functional currency.

• iii.The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group‟s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

• iv.The Group‟s businesses involve some non-functional currency operations (the Company‟s functional currency: NTD; other certain subsidiaries‟ functional currency: USD and RMB).

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The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB (Note 1) Non-monetary items (Note 2) USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB (Note 1) (Foreign currency: functional Financial assets Monetary items USD:NTD USD:RMB (Note 1) Non-monetary items (Note 2) USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB (Note 1)				March 31,2013	March 31,2013	March 31,2013	March 31,2013	March 31,2013
	Foreign Currency Amount (In Thousands)		Exchange Rate	Book Value		SensitivityAnalysis
					(NTD)	Extent of Variation	Effect on Profit or Loss	Effect on Equity
	USD 88,207 29.825 $ USD 98,529 6.269 USD 11,850 29.825 $ USD 7,412 29.825 $ USD 95,005 6.269 Foreign Currency Amount (In Thousands) USD 142,382 USD 64,252 USD 12,101 USD 4,786 USD 107,633		29.825 6.269 29.825 29.825 6.269	$ $ $	2,630,779 2,938,630 353,425 221,066 2,833,528 December	1% 1% 1% 1% 1% 31,2012	26,308 $ 29,386 3,534 $ 2,211) ($ 28,335) (	- $ - - $ - $ -
		Foreign Currency Amount (In Thousands)			Exchange Rate		Book	Value
							(NTD)
		USD 142,382 USD 64,252 USD 12,101 USD 4,786 USD 107,633			29.040 6.2854 29.040 29.040 6.2854		4,134,773 $ 1,865,878 351,419 $ 138,985 $ 3,125,662

Note 1: If the consolidated entities‟ functional currency is not NTD, the foreign currency denominated assets and liabilities of the consolidated entities should be disclosed. For example, when the functional currency of a subsidiary is RMB, its USD foreign currency positions should also be disclosed.

Note 2: Only those significant influence on non-monetary items should be disclosed.

~54~

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB (Note 1) Non-monetary items (Note 2) USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB (Note 1) (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB (Note 1) Non-monetary items (Note 2) USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB (Note 1)					March 31,2012	March 31,2012	March 31,2012	March 31,2012	March 31,2012
	Foreign Currency Amount (In Thousands)		Exchange Rate		Book Value	SensitivityAnalysis
					(NTD)	Extent of Variation		Effect on Profit or Loss	Effect on Equity
	USD 183,098 29.510 USD 67,705 6.2943 USD 13,183 29.510 USD 7,389 29.510 USD 174,370 6.2943 Foreign Currency Amount (In Thousands) USD 169,555 USD 46,946 USD 13,777 USD 3,784 USD 134,130		29.510 6.2943 29.510 29.510 6.2943		5,403,222 $ 1% 1,997,975 1% 389,043 $ 1% 218,049 $ 1% 5,145,659 1% January1,2012			54,032 $ 19,980 3,890 $ 2,180) ($ 51,457) (
		Foreign Currency Amount (In Thousands)			Exchange Rate
		USD 169,555 USD 46,946 USD 13,777 USD 3,784 USD 134,130			30.275 6.3009 30.275 30.275 6.3009		$ $ $

Note 1: If the consolidated entities‟ functional currency is not NTD, the foreign currency denominated assets and liabilities of the consolidated entities should be disclosed. For example, when the functional currency of a subsidiary is RMB, its USD foreign currency positions should also be disclosed.

• Note 2: Only those significant influence on non-monetary items should be disclosed.

~55~

Interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in at financial instruments‟ fair value or cash received and paid in the future.

The Group is exposed mainly to floating interest rate borrowings; however, the Group raised short-term borrowings at fixed rates in the first quarter of 2013, and thus has no significant cash flow interest rate risk.

Price risk

The Group is exposed to price risk because of investments held by the Group. The Group sets limits to control the transaction volume and stop-loss amount to reduce it‟s market risk.

b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group‟s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings, the utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

• ii No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• iii.The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.

• iv.The credit quality information of financial assets that are neither past due nor impaired is provided in the statement in Note 6(4).

• c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group‟s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group‟s debt financing plans, compliance with internal balance sheet ratio targets.

• ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities,

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choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• iii. The table below analyses the Group‟s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
March 31, 2013 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: December 31, 2012 Notes payable Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: March 31, 2012 Notes payable Accounts payable Other payables Guarantee deposits received		Less than 3 months		Over 3 months
		250,000 $ 40 2,541,494 566,728 - Less than 3 months		- $ - 415,835 486,687 8,362 Over 3 months
		40 $ 2,784,175 746,606 - Less than 3 months 40 $ 4,437,113 821,210 -		- $ 360,875 483,594 8,362 Over 3 months - $ 1,432,609 414,430 22,530

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Non-derivative financial liabilities:

Non-derivative financial liabilities:
January 1, 2012 Notes payable Accounts payable Other payables Guarantee deposits received	Less than 3 months	Over 3 months
	957 $ 3,557,712 616,025 -	- $ 1,643,612 539,771 22,530

iv. The Group has the following undrawn borrowing facilities:

Fixed rate: Expiring within one year Expiring beyond one year Fixed rate: Expiring within one year Expiring beyond one year		March 31,2013 2,483,266 $ 1,500,000 3,983,266 $ March 31,2012		December 31,2012 1,953,051 $ 1,500,000 3,453,051 $ January1,2012
		1,994,494 $ - 1,994,494 $		2,013,096 $ - 2,013,096 $

The facilities expiring within one year are annual facilities subject to review at various dates during 2014. The other facilities have been arranged to assist new businesses for business growth of the Group. The information about the Group‟s liquidity risk is provided in Note 12(2) C. c).

(3) Fair value estimation

• A.The fair values of financial assets and financial liabilities is equal to the current transaction amounts on an arm‟s length basis.

The methods and assumptions used to estimate the fair values of the Group‟s financial assets and liabilities are summarized below:

• a) For short-term instruments, the fair values were determined based on their carrying values because of the short maturities of the instruments. This method was applied to cash and cash equivalents, notes receivable, accounts receivable, other receivable, notes payable, accounts payable, accrued expenses and other payables.

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• b) For deposits out and guarantee deposits received, the fair values were determined based on their carrying values because of cash received and paid in the future will almost equal today‟s carrying values.

• B. The fair values of financial instruments measured at amortized cost.

• The Group using the method of amortized acquisition cost to determine the carrying amount of financial assets and liabilities.

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

The details are as follows:

A. Loans to others: None.

B. Provision of endorsements and guarantees to others: None.

C. Holding of marketable securities at the end of the period:

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of March	31,2013
				Number of shares 94,333,839 1,000 5,000,000 17,750,000 317,865 15,488,000 30 10,000,000	Bookvalue $ 10,323,162 7,590 23,135 259,775 10,311 102,693 23,954 93,450	Ownership (%) 100% 100% 100% 88.75% 14.98% 7.06% 4.84% 2%	Marketvalue
Altek Corporation " " " " " " "	Altek International Investment Co., Ltd. - Common stock Altek Japan Corporation - Common stock Altek Investment Co., Ltd. - Common stock Altek Autotronics Corporation - Common stock Gianta Co., Ltd. - Common stock Pac-line Opportunity Fund - Common stock Yung Li Investments Inc. - Common stock Hua-chuang Automobile Information Technical Center Co., Ltd. - Common stock	Subsidiary accounted for under the equity method " " " Director Supervisor None "	Long-term equity investments accounted for under the equity method " " " Financial assets carried at cost-non-current " " "				$ 10,323,162 7,590 23,135 259,775 10,311 102,693 23,954 93,450

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Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of March	31,2013
				Number of shares 3,124 11,311,875 (Note) 3,500,000 N/A " " " " " 20,000,000 N/A " " 508,390	Bookvalue US$ 3,251 US$ 1,714 US$ 1,131 US$ 131,509 US$ 27,137 US$ 1,694 US$ 7,949 US$ 9,935 US$ 10,719 US$ 5,343 US$ 9,704 US$ 191 (US$ 110) $ 7,976	Ownership (%) N/A 100% 23.33% 100% 100% 100% 100% 100% 40% 100% 100% N/A 100% N/A	Marketvalue
Altek International Investment Co., Ltd. " " Leading Tech Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek Imaging Technology (Cayman) Co., Ltd. " Altek Trading (Cayman) Co., Ltd. Altek Optical (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd. Altek (Kunshan) Co., Ltd. Altek Trading (Shanghai) Co., Ltd. Altek Investment Co., Ltd.	Money Market Fund Altek Lab Inc. - Common stock and preferred stock JinJing Optical Technology Co., Ltd. - common stock Altek (Kunshan) Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Imaging Technology (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. Altek Semiconductor Corporation Altek Optical Technology (Kunshan) Co., Ltd. Guangdong Kingding Optical Machine Co., Ltd. Beijing Altek Image Communication Technology Co., Ltd. Money Market Fund	None Subsidiary accounted for under the equity method " " " " " " " " " None Subsidiary accounted for under the equity method None	Financial assets at fair value through profit or loss-current Long-term equity investments accounted for under the equity method " " " " " " " " " Financial assets carried at cost-non-current Long-term equity investments accounted for under the equity method Financial assets at fair value through profit or loss-current				US$ 3,251 US$ 1,714 US$ 1,131 US$ 131,509 US$ 27,137 US$ 1,694 US$ 7,949 US$ 9,935 US$ 10,719 US$ 5,343 US$ 9,704 US$ 191 (US$ 110) $ 7,976

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Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account Financial assets carried at cost-non-current Financial assets at fair value through profit or loss-current "		As of March	31,2013
				Number of shares 1,508,000 15,958,364 3,050,668	Bookvalue $ 15,080 200,666 69,080	Ownership (%) 7.54% N/A N/A	Marketvalue
Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Semiconductor Corporation	Altek Autotronics Corporation Money Market Fund Money Market Fund	Affiliated company None "					$ 15,080 200,666 69,080

Note : Including common stock of 9,311,875 shares and preferred stock of 2,000,000 shares.

D. Aggregate purchases or sales of the same securities reaching NT$100 million or 20% of paid-in capital or more: None.

E. Acquisition of real estate reaching NT$100 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$100 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more:

Purchase/seller	Counterparty	Relationship with the counterparty		Transactions	Transactions	Percentage of total Credit Credit notes / accounts Term Unitprice Term Balance receivable(payable) Net 75 days Approximately the same price with third parties Note ($ 3,273,649) 96% " " " 3,273,649 78% " " " ( 75,872) 18% " " " 75,872 97% compared to thirdpartytransactions receivable(payable) Difference in transaction terms Notes / accounts	receivable(payable) Notes / accounts	receivable(payable) Notes / accounts
			Purchases (sales) Amount Purchases $ 2,411,722 Sales ( 2,411,722) Purchases 2,503,254 Sales ( 2,503,254)		Percentages of total purchases(sales) 100% 97% 100% 100%			Percentage of total notes / accounts receivable(payable)
Altek Corporation Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	Altek International Investment Co., Ltd. Altek Corporation Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	Affiliated enterprise Parent company Affiliated enterprise Parent company						96% 78% 18% 97%

Note: The payment term with third parties was net 30~120 days, the collection term with third parties was net 30~90 days.

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H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Creditor	Counterparty	Relationship with the counterparty	Balance as at March31,2013	Turnover rate 3.83%	Amount Action taken $ - N/A Overdue receivables	Amount collected subsequent to the balance sheet date $ 1,310,811	Allowance for doubtful accounts
					Amount $ -
Altek International Investment Co., Ltd.	Altek Corporation	Parent company	$ 3,273,649				$ -

I. Derivative financial instruments undertaken during the three-month period ended March 31, 2013: None.

J. Significant inter-company transactions during the three-month period ended March 31, 2013:

The first quarter of 2013

Companyname Altek Corporation " Altek International Investment Co., Ltd. " " Altek (Kunshan) Co., Ltd.	Counterparty	Relationship			Transaction
			General ledger account Purchases Accounts payable Sales Accounts receivable Purchases Sales	Amount 2,411,722 $ 3,273,649 2,411,722 3,273,649 2,503,254 2,503,254	Transaction terms Net 75 days " " " " "	Percentage of consolidated total operatingrevenues or total assets(Note 2)
	Altek International Investment Co., Ltd. " Altek Corporation " Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	1 1 2 2 3 3				60% 20% 60% 20% 62% 62%

The first quarter of 2012

Companyname Altek Corporation " Altek International Investment Co., Ltd. " " " Altek (Kunshan) Co., Ltd. "	Counterparty	Relationship			Transaction
			General ledger account Purchases Accounts payable Sales Accounts receivable Purchases Accounts payable Sales Accounts receivable	Amount 5,280,161 $ 6,331,999 5,280,161 6,331,999 5,526,224 2,247,334 5,526,224 2,247,334	Transaction terms Net 75 days " " " " " " "	Percentage of consolidated total operatingrevenues or total assets(Note 2)
	Altek International Investment Co., Ltd. " Altek Corporation " Altek (Kunshan) Co., Ltd. " Altek International Investment Co., Ltd. "	1 1 2 2 3 3 3 3				83% 32% 83% 32% 87% 11% 87% 11%

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Note 1: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to:

• (1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

• Note 2: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

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(2) Information of investees

Investor	Investee	Location	Main business activities	Balance as at Balance as at March31,2013 January1,2013 $ 3,086,363 $ 3,086,363 2,869 2,869 50,000 50,000 177,500 177,500 3,680 3,680 3,500 3,500 45,000 45,000 8,983 8,983 Initial investment amount	Shares held as at March	Shares held as at March	Net profit (loss) of Investment income (loss) the investee for the recognised by the company three-month period for the three-month period Bookvalue ended March31,2013 ended March31,2013 $10,323,162 $ 139,125 ($ 128,005) 7,590 1,470 1,470 23,125 ( 10) ( 10) 259,775 14,208 13,681 1,714 15 15 1,131 267 64 131,509 482 482 27,137 ( 805) ( 805) 31,2013	Footnote
				Balance as at March31,2013 $ 3,086,363 2,869 50,000 177,500 3,680 3,500 45,000 8,983	Number of Shares 94,333,839 1,000 5,000,000 17,750,000 11,311,875 3,500,000 N/A "	Ownership (%) 100% 100% 100% 88.75% 100% 23.33% 100% 100%
Altek Corporation " " " Altek International Investment Co., Ltd. " Leading Tech Co., Ltd. Toptek Investment Cayman Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. JinJing Optical Technology Co., ltd. Altek (Kunshan) Co., Ltd. Altek EMS (Kunshan) Co., ltd.	British Virgin Islands Japan Republic of China Republic of China U.S.A. Samoa Mainland China Mainland China	Investment and general business operations Sale and design of digital cameras and its optical instruments Investment Research design, manufacture and sales of car electronic components Design and sale of engineering and optical components Investment and general business operations Manufacture and sale of digital cameras and its accessories SMT processing and related engineering services					Note 1 Note 2 Note 3 Note 3 Note 3 Note 3

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Investor	Investee	Location	Main business activities	Balance as at Balance as at March31,2013 January1,2013 $ 2,900 $ 2,900 13,800 13,800 8,500 8,500 8,864 8,864 15,000 15,000 6,147 6,147 1,025 1,025 12,000 12,000 Initial investment amount	Shares held as at March	Shares held as at March	Net profit (loss) of Investment income (loss) the investee for the recognised by the company three-month period for the three-month period Bookvalue ended March31,2013 ended March31,2013 $ 1,694 $ 9 9 7,949 ( 699) ( 699) 9,935 ( 153) ( 153) 10,719 ( 821) ( 352) 10,257 ( 199) ( 199) 5,343 ( 790) ( 790) ( 110) ( 10) ( 10) 9,704 ( 834) ( 834) 31,2013	Footnote
				Balance as at March31,2013 $ 2,900 13,800 8,500 8,864 15,000 6,147 1,025 12,000	Number of Shares NA " " " " 20,000,000 N/A "	Ownership (%) 100% 100% 100% 40% 100% 100% 100% 100%
Altek Imaging Technology (Cayman) Co., Ltd. Altek Imaging Technology (Cayman) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Optical (Cayman) Co., Ltd. JinJing Optical Technology Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Trading (Shanghai) Limited Altek Optical Technology (Cayman) Co., Ltd.	Altek Imaging Technology (Shanghai) Limited Altek Precision (kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Phoenix Optical (Shanghai) Co., Ltd. Kinko Optical (Suzhou) Co., Ltd. Altek Semiconductor Corporation Beijing Altek Image Communication Technology Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Mainland China Mainland China Mainland China Mainland China Mainland China Republic of China Mainland China Mainland China	Manufacture and sale of digital still cameras or related optical components Design, manufacture and sales of digital camera parts Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Manufacturing and marketing of digital cameras and its key components photo sensor and optoelectronic equipment Manufacture and sale of optical components Research design and sales of ASIC Sales of digital camera, cell phone and related accessories and suporting products Manufacturing and sales of digital camera and its accessories and optical components					Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3

Note 1: The difference is the adjustment of unrealized gain or loss from the upstream inter-commpany transactions between subsidiaries. Note 2: Common stock of 9,311,875 shares and preferred stock of 2,000,000 shares. Note 3: In addition to number of shares in thousands of U.S.D.

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(3) Information on investments in Mainland China

A.The related information of investments in Mainland China are as follow:

Investee in MainlandChina	Main business activities	Paid-in Capital	Investment Method(Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2013	Remitted to Remitted back MainlandChina to Taiwan $ - $ - - - - - - - - - - - - - the three-monthperiod ended March31,2013 China / Amount remitted back to taiwan for Amount remitted from Taiwan to Mainland	Accumulated amount of remittance from Taiwan to Mainland China as of March31,2013 $ 1,342,125 270,900 86,493 253,513 104,388 264,369 -	Ownership Investment income Book value of held by (loss) for the recognised investments the Company by the Company in Mainland (direct or three-month period ended China as of indirect) March31,2013 March31,2013 100% $ 14,204 $ 3,922,256 100% ( 23,725) 809,361 100% 265 50,524 100% ( 4,509) 296,311 23.33% ( 1,368) 50,075 40% ( 10,364) 319,702 100% ( 295) ( 3,281)	Book value of investments in Mainland China as of March31,2013
					Remitted to MainlandChina $ - - - - - - -
Altek (Kunshan) Co., Ltd. (Note 2) Altek EMS (Kunshan) Co., Ltd. (Note 3) Altek Imaging Technology (Shanghai) Limited Altek Trading (Shanghai) Limited Kinko Optical (Suzhou) Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. Beijing Altek Image Communication Technology Co., Ltd.	Manufacture and sale of digital still cameras and its accessories SMT processing and related engineering services Manufacture and sale of optical components Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Manufacture and sale of optical components Manufacturing and marketing of digital cameras and its key components, photo sensor and optoelectronic equipment Sales of digital camera, cell phone and related accessories and supporting products	$ 1,479,320 149,125 86,493 253,513 447,375 471,921 30,571	1 1 1 1 1 1 1	$ 1,342,125 270,900 86,493 253,513 104,388 264,369 -

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Investee in MainlandChina	Main business activities	Paid-in Capital	Investment Method(Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2013	Remitted to Remitted back MainlandChina to Taiwan $ - $ - - - China / Amount remitted back to taiwan for the three-monthperiod ended March31,2013 Amount remitted from Taiwan to Mainland	Accumulated amount of remittance from Taiwan to Mainland China as of March31,2013 $ 411,585 357,900	Ownership Investment income held by (loss) for the recognised the Company by the Company (direct or three-month period ended indirect) March31,2013 100% ($ 20,598) 100% ( 24,576)	Book value of investments in Mainland China as of March31,2013
					Remitted to MainlandChina $ - -
Altek Precision (Kunshan) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Design, manufacture and sales of digital camera parts Manufacture and sales of digital camera and its accessories and optical components	$ 411,585 357,900	1 1	$ 411,585 357,900				$ 237,079 289,422

Note 1: Indirect investment in PRC through existing companies located in the third area.

Note 2: Including retained earnings capitalized of US$4,600.

Note 3: Including retained earnings capitalized of US$3,600.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of March31,2013	Investment amount approved by the Investment CommissionoftheMinistry of EconomicAffairs (MOEA)	Ceiling on investments in Mainland China imposed by theInvestment Commissionof MOEA
Altek Corporation	$ 3,091,272	$ 4,263,603	Note

Note: According to “REGULATIONS GOVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL COOPERATION IN MAINLAND CHINA” on August 29, 2008, Altek Corporation obtained the approval from the Industrial Development Bureau of Ministry of Economics Affairs issued to Headquarters, so there is no need to compute the ceiling amount of the Company.

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• B. Significant transactions with the direct and indirect investments in Mainland China (the amount are the figures prior to eliminating the purchase and sales transactions between the Company and the investee companies in China through its subsidiaries (the middlemen) in other countries).

• (a) Purchases:

  • i. The Company‟s net purchases from Altek International Investment Co., Ltd. (“AII”), which indirectly invested in a Mainland China company, are as follows.

Altek International Investment Co., Ltd.	For three-month period ended March 31,2013	For three-month period ended March 31,2013
	Amount	Perceentage of netpurchases
	$2,480,223	100%

• ii. AII‟s net purchases from Altek (Kunshan) Co., Ltd., which was AII‟s indirect investee in Mainland China.

Altek (Kunshan) Co., Ltd.	For three-month period ended March 31,2013	For three-month period ended March 31,2013
	Amount	Perceentage of netpurchases
	$2,513,293	95%

• (b) Accounts payable:

• i. The Company‟s accounts payable to AII (Note)

ii. AII‟s accounts payable to Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	March 31,2013	March 31,2013
	Amount	Perceentage of accountspayable
		96%
	Amount	Perceentage of netpurchases
	$15,928	19%

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(c) Sales:

• i. The Company‟s net sales to the consolidated subsidiaries in third countries

• For three-month period ended March 31, 2013, the net sales to the consolidated subsidiaries in third countries was $8,949, which was less than 10% of the total amount of net sales.

• ii. The consolidated subsidiaries in third countries‟ net sales to investee in Mainland China For three-month period ended March 31, 2013, the consolidated subsidiaries in third countries‟ net sales to investee in Mainland China was $129,585, which were was less than 10% of the total amount of net sales.

• (d) Accounts receivable (Note) :

• As of March 31, 2013, the consolidated subsidiaries in third countries‟ accounts receivable from investee in Mainland China was both $0, which was less than 10% of the total amount of accounts receivable.

Note: The balance was offset by accounts receivable or accounts payable.

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The chief operating decision-maker reviews the Group‟s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

The chief operating decision-maker assesses the segment performance through the consolidated financial statements. The Group‟s accounting policies are the same with those summarised in Note 2.

(3) Reconciliation of adjusted income (loss)

For three-month periods ended March 31,

Revenue from external customers Inter-segment revenue Total segment operating (loss) profit Total segment assets	2013 4,014,304 $ - $ 45,730) ($ 16,566,016 $	2012
		6,328,236 $
		- $
		66,516 $
		19,712,022 $

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15. INITIAL APPLICATION OF IFRSs

These consolidated financial statements are the first interim consolidated financial statements prepared by the Group in accordance with the IFRSs. The Group has adjusted the amounts as appropriate that are reported in the previous R.O.C. GAAP consolidated financial statements to those amounts that should be presented under IFRSs in the preparation of the opening IFRS balance sheet. Information about exemptions elected by the Group, exceptions to the retrospective application of IFRSs in relation to initial application of IFRSs, and how it affects the Group‟s financial position, operating results and cash flows in transition from R.O.C. GAAP to the IFRSs is set out below:

• (1) Exemptions elected by the Group

• Business Combinations

For business combinations before the date of transition to IFRSs (transition date), the Group elects not to apply IFRS 3 “Business Combinations” retrospectively.

1. Share-based payment transactions

For the vested equity instruments of share-based payment transactions before the transition date, the Group elects not to apply IFRS 2 “Share-base Payment” retrospectively.

1. Employee benefits

The Group elects to recognize all actuarial gains or losses up to the transition date into retained earnings.

1. Cumulative translation differences

The Group elects to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”.

1. Compound financial instruments

For compound financial instruments which were not outstanding at the transition date, the Group elects the exemptions and does not have to split the financial instruments into separate liability and equity components.

Some of the above differences may not have a material effect on the Group in transition to IFRSs due to the exemption rules in IFRS 1, “First-time Adoption of International Financial Reporting Standards”, adopted by the Group.

• (2) Except for accounting estimates, derecognition of financial assets and financial liabilities and non-controlling interest to which exceptions to the retrospective application of IFRSs specified in IFRS 1 are not applied as they have no relation with the Group, other exceptions to the retrospective application are set out below:

• A.Accounting estimates

  • Accounting estimates made under IFRSs on January 1, 2012 are consistent with those made under R.O.C. GAAP on that day.

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• B.Derecognition of financial assets and financial liabilities

  • The derecognition requirements in IAS 39, „Financial Instruments: Recognition and Measurement‟ shall be applied prospectively to transactions occurring on or after January 1, 2004.

• C.Non-controlling interest

  • Requirements of IAS 27 (amended in 2008) that shall be applied prospectively are as follows: Requirements that change in interest ownership of the parent in a subsidiary while control is retained is accounted for as an equity transaction with the parent.

• (3) Requirement to reconcile from R.O.C. GAAP to IFRSs at the time of initial application IFRS 1 requires that an entity should make reconciliation for equity, comprehensive income and cash flows for the comparative periods. The Group‟s initial application of IFRSs has no significant effect on cash flows from operating activities, investing activities and financing activities. Reconciliation for equity and comprehensive income for the comparative periods as to transition from R.O.C. GAAP to IFRSs is shown below:

• A.Reconciliation for equity on January 1, 2012:

Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Deferred income tax assets- current Inventoies Prepayments Other current assets Total current assets Financial assets measured at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total non-current assets Total assets Current assets Non-current assets	R.O.C. GAAP 6,303,846 $ 497,652 9 3,415,357 19,195 235,716 2,047,877 296,694 15,983 12,832,329 236,174 417,111 5,297,001 84,835 47,125 83,973 6,166,219 18,998,548 $	Effect of transition from R.O.C. GAAP to IFRSs - $ - - - - 235,716) ( - - - 235,716) ( - - - - 325,742 - 325,742 90,026 $	IFRSs 6,303,846 $ 497,652 9 3,415,357 19,195 - 2,047,877 296,694 15,983 12,596,613 236,174 417,111 5,297,001 84,835 372,867 83,973 6,491,961 19,088,574 $	Remark
				(1) (1)

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					Effect of transition	Effect of transition
					from	R.O.C. GAAP
		R.O.C. GAAP				to IFRSs		IFRSs	Remark
Current liabilities
Notes payable	$		957	$		-	$	957
Accounts payable			5,186,498			-		5,186,498
Accounts payable-related parties			14,826			-		14,826
Other payables			1,155,796			-		1,155,796
Current income tax liabilities			54,630			-		54,630
Provisions for liabilities - current			181,057			-		181,057
Other current liabilities			614,363			-		614,363
Total current liabilities			7,208,127			-		7,208,127
Non-current liabilities
Accrued pension liabilities			1,632			14,718		16,350	(2)
Provisions for liabilities - noncurrent			105,751			-		105,751
Deferred income tax liabilities			839,109			90,026		929,135
Other non-current liabilities			22,530			-		22,530
Total non-current liabilities			969,022			104,744		1,073,766
Total Liabilities			8,177,149			104,744		8,281,893
Equity attributable to owners of
the parent
Share capital
Common share			3,955,214			-		3,955,214
Capital surplus			2,367,802	(		13,187)		2,354,615	(3)
Retained earnings
Legal reserve			1,272,282			-		1,272,282
Special reserve			488,347			-		488,347
Unappropriated retained earnings			3,308,469			142,456		3,450,925	(2)(3)(4)
Other equity-cumulative
translation adjustments			143,987	(		143,987)		-	(4)
Treasury shares	(		714,702)			-	(	714,702)
Non-controlling interest			-			-		-
Total equity			10,821,399	(		14,718)		10,806,681
Total liabilities and equity	$		18,998,548	$		90,026	$	19,088,574

• a. Explanation for adjustments:

• (i) In accordance with current accounting standards in the R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or noncurrent according to the expected time period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements”, an entity should not classify a deferred tax asset or liability as current. Accordingly, the Company should reclassify the account “deferred income tax assets” from current to non-current on transition date.

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• (ii) The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan; when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds (at the end day of the reporting period) instead. Besides, in accordance with current accounting standards in the R.O.C., the unrecognised transitional net benefit obligation should be amortised on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognised transitional net benefit obligation should be recognised as an expense immediately at the date of adoption. Due to the above differences and in order to eliminate the difference in employee benefits upon adoption of IFRS, the Company increased the accrued pension liabilities by $14,718 and simultaneously reduced retained earnings by $14,718 on transition date.

• (iii) In accordance with current accounting standards in the R.O.C., if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, but the investor company does not lose its significant influence over the investee company, the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the „Additional paid-in capital‟ and the „Long-term equity investments‟ accounts. However, in accordance with IAS 28, “Investments in Associates”, increases in investment percentage is accounted for as an acquisition of investment; conversely, decreases in investment percentage is accounted for as a disposal of investment and any related disposal gain or loss is recognised. Accordingly, the Company reduced the additional paid-in capital from investee under the equity method by $13,187 and simultaneously increased the retained earnings by $13,187 on transition date.

• (iv) The Group elected to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”. Therefore, the Group decreased the cumulative translation differences and increased retained earnings by $143,987, respectively.

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B.Reconciliation for equity on December 31, 2012:

Cash and cash equivalents Financial assets at fair value through profit or loss - current Accounts receivable Other receivables assets Current income tax assets Deferred income tax assets-current Inventories Prepayments Other current assets Total current assets Financial assets measured at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total non-current assets Total assets Current assets Non-current assets	R.O.C. GAAP 4,698,800 $ 428,282 2,883,695 25,176 27,411 277,898 1,715,321 228,957 4,391 10,289,931 235,953 351,419 5,297,892 73,079 45,314 79,870 6,083,527 16,373,458 $	Effect of transition from R.O.C. GAAP to IFRSs - $ - - - - 277,898) ( - - - 277,898) ( - - - - 322,159 - 322,159 44,261 $	IFRSs 4,698,800 $ 428,282 2,883,695 25,176 27,411 - 1,715,321 228,957 4,391 10,012,033 235,953 351,419 5,297,892 73,079 367,473 79,870 6,405,686 16,417,719 $	Remark
				(1) (1)

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					Effect of transition	Effect of transition
					from	R.O.C. GAAP
		R.O.C. GAAP				to IFRSs		IFRSs	Remark
Current liabilities
Notes payable	$		40	$		-	$	40
Accounts payable			3,144,953			-		3,144,953
Accounts payable-related parties			97			-		97
Other payables			1,230,200			-		1,230,200
Current income tax liabilities			81,373			-		81,373
Provisions for liabilities - current			152,537			-		152,537
Other current liabilities			702,245			-		702,245
Total current liabilities			5,311,445			-		5,311,445
Non-current liabilities
Accrued pension liabilities			2,624			17,202		19,826	(2)
Provisions for liabilities
- noncurrent			142,454			-		142,454
Deferred income tax liabilities			738,976			44,261		783,237	(1)
Other non-current liabilities			8,362			-		8,362
Total non-current liabilities			892,416			61,463		953,879
Total Liabilities			6,203,861			61,463		6,265,324
Equity attributable to owners of
the parent
Share capital
Common shares			3,961,013			-		3,961,013
Capital surplus			2,387,988	(		10,544)		2,377,444
Retained earnings
Legal reserve			1,291,466			-		1,291,466
Special reserve			-			-		-
Unappropriated retained earnings			3,483,973			137,329		3,621,302	(2)(3)(4)
Other equity-cumulative
translation adjustments	(		196,812)	(		143,987)	(	340,799)	(4)
Treasury share	(		768,094)			-	(	768,094)
Non-controlling interest			10,063			-		10,063
Total equity			10,169,597	(		17,202)		10,152,395
Total liabilities and equity	$		16,373,458	$		44,261	$	16,417,719

Explanation for adjustments:

• (i) In accordance with current accounting standards in the R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or noncurrent according to the expected time period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements”, an entity should not classify a deferred tax asset or liability as current. Accordingly, the Company should reclassify the account “deferred income tax assets” from current to non-current on transition date.

• (ii) The discount rate used to calculate pensions shall be determined with reference to the

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factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan; when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds (at the end day of the reporting period) instead. Besides, in accordance with current accounting standards in the R.O.C., the unrecognised transitional net benefit obligation should be amortised on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognised transitional net benefit obligation should be recognised as an expense immediately at the date of adoption. Due to the above differences and in order to eliminate the difference in employee benefits upon adoption of IFRS, the Company increased the accrued pension liabilities by $14,718 and simultaneously reduced retained earnings by $14,718 on transition date. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Group is recognised in net pension cost of current period using the „corridor‟ method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognised immediately in other comprehensive income. Accordingly, the actuarial pension gain or loss of the Group was recognised in other comprehensive income. Also, the Group reduced the retained earnings by $2,484 and simultaneously increased the accrued pension liabilities by $2,484.

• (iii) In accordance with current accounting standards in the R.O.C., if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, but the investor company does not lose its significant influence over the investee company, the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the „Additional paid-in capital‟ and the „Long-term equity investments‟ accounts. However, in accordance with IAS 28, “Investments in Associates”, increases in investment percentage is accounted for as an acquisition of investment; conversely, decreases in investment percentage is accounted for as a disposal of investment and any related disposal gain or loss is recognised. Accordingly, the Company reduced the additional paid-in capital from investee under the equity method by $13,187 and simultaneously increased the retained earnings by $13,187 on transition date. In accordance with IAS 27, “Consolidated and Separate Financial Statements”, if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, in which an investor company does not lose control over the subsidiary, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the

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„Additional paid-in capital‟ and the „Long-term equity investments‟ accounts. The Company‟s subsidiary issued new shares this period and therefore the equity in net assets for the investment that an investor company has invested decreased. Accordingly, the Company reduced the retained earnings by $2,643, and simultaneously increased the additional paid-in capital from investee under equity method by $2,643.

(iv) The Group elected to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”. Therefore, the Group decreased the cumulative translation differences and increased retained earnings both by $143,987.

C.Reconciliation for equity on March 31, 2012:

Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Deferred income tax assets-current Inventories Prepayments Other current assets Total current assets Financial assets measured at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total non-current assets Total assets Current assets Non-current assets	R.O.C. GAAP 4,850,880 $ 447,984 10 4,960,586 75,241 240,099 2,511,885 342,957 13,824 13,443,466 236,035 389,043 5,330,469 81,437 45,982 82,305 6,165,271 19,608,737 $	Effect of transition from R.O.C. GAAP to IFRSs - $ - - - - 240,099) ( - - - 240,099) ( - - - - 343,384 - 343,384 103,285 $	IFRSs 4,850,880 $ 447,984 10 4,960,586 75,241 - 2,511,885 342,957 13,824 13,203,367 236,035 389,043 5,330,469 81,437 389,366 82,305 6,508,655 19,712,022 $	Remark
				(1) (1)

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					Effect of transition	Effect of transition
					from	R.O.C. GAAP
		R.O.C. GAAP				to IFRSs		IFRSs	Remark
Current liabilities
Notes payable	$		40	$		-	$	40
Accounts payable			5,852,937			-		5,852,937
Accounts payable-related parties			16,785			-		16,785
Other payables			1,235,640			-		1,235,640
Current income tax liabilities			69,382			-		69,382
Provisions for liabilities - current			183,233			-		183,233
Other current liabilities			610,061			-		610,061
Total current liabilities			7,968,078			-		7,968,078
Non-current liabilities
Accrued pension liabilities			1,632			14,718		16,350	(2)
Provisions for liabilities - noncurrent			151,496			-		151,496
Deferred income tax liabilities			786,251			103,285		889,536	(1)
Other non-current liabilities			22,530			-		22,530
Total non-current liabilities			961,909			118,003		1,079,912
Total Liabilities			8,929,987			118,003		9,047,990
Equity attributable to owners of
the parent
Share capital
Common share			3,956,554			-		3,956,554
Capital surplus			2,373,784	(		13,187)		2,360,597	(3)
Retained earnings
Legal reserve			1,272,282			-		1,272,282
Special reserve			488,347			-		488,347
Unappropriated retained earnings			3,371,101			142,456		3,513,557	(2)(3)(4)
Other equity-cumulative
translation adjustments	(		68,616)	(		143,987)	(	212,603)	(4)
Treasury shares	(		714,702)			-	(	714,702)
Non-controlling interest			-			-		-
Total equity			10,678,750	(		14,718)		10,664,032
Total liabilities and equity	$		19,608,737	$		103,285	$	19,712,022

Explanation for adjustments:

• (i) In accordance with current accounting standards in the R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or noncurrent according to the expected time period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements”, an entity should not classify a deferred tax asset or liability as current. Accordingly, the Company is going to reclassify the account “deferred income tax assets” from current to non-current on transition date.

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• (ii) The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan; when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds (at the end day of the reporting period) instead. Besides, in accordance with current accounting standards in the R.O.C., the unrecognised transitional net benefit obligation should be amortised on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognised transitional net benefit obligation should be recognised as an expense immediately at the date of adoption. Due to the above difference and in order to eliminate the difference in employee benefits upon adoption of IFRS, the Company increased the accrued pension liabilities by $14,718, and simultaneously reduced retained earnings by $14,718 on transition date.

• (iii) In accordance with current accounting standards in the R.O.C., if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, but the investor company does not lose its significant influence over the investee company, the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the „Additional paid-in capital‟ and the „Long-term equity investments‟ accounts. However, in accordance with IAS 28, “Investments in Associates”, increase in investment percentage is accounted for as an acquisition of investment; while, decrease in investment percentage is accounted for as a disposal of investment and any related disposal gain or loss is recognised. Accordingly, the Company reduced the additional paid-in capital from investee under the equity method by $13,187 and simultaneously increased the retained earnings by $13,187 on transition date.

• (iv) The Group elected to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”. Therefore, the Group decreased the cumulative translation differences and increased retained earnings both by $143,987.

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D.Reconciliation for comprehensive income for the year ended December 31, 2012:

Operating revenue Operating costs Gross profit Operating expenses Selling expenses General & administrative expenses Research and development expense Operating profit Non-operating revenue and expenses Other income Other gains and losses Finance costs Share of (loss)/profit of associates and joint ventures accounted for under equity method Profit before income tax Income tax expense Profit for the period Other comprehensive income Currency translation differences Actuarial gain (loss) on defined benefit plan Share of other comprehersive income of associates and joint ventures accounted for under equity method Income tax relating to the components of other comprehensive income Other comprehensive income for the period, net of tax Total comprehensive income for the period	R.O.C. GAAP 24,575,459 $ 22,808,808) ( 1,766,651 115,194) ( 270,693) ( 1,197,213) ( 1,583,100) ( 183,551 64,422 118,857 1,762) ( 35,708) ( 329,360 49,257) ( 280,103 393,952) ( - 16,648) ( 69,802 340,798) ( 60,695) ($		Effect of transition from R.O.C. GAAP to IFRSs	IFRSs 24,575,459 $ 22,808,808) ( 1,766,651 115,194) ( 270,693) ( 1,197,213) ( 1,583,100) ( 183,551 64,422 118,857 1,762) ( 35,708) ( 329,360 49,257) ( 280,103 393,952) ( 2,484) ( 16,648) ( 69,802 343,282) ( 63,179) ($	Remark
		- $ - - - - - - - - - - - - - - - 2,484) ( - - 2,484) ( 2,484) ($

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			Effect of transition	Effect of transition
			from	R.O.C. GAAP
	R.O.C.	GAAP		to IFRSs		IFRSs	Remark
Profit attributable to:
Owners of the parent	$	280,103	$	-	$	280,103
Non-controlling interest		-		-		-
	$	280,103	$	-	$	280,103
Total comprehensive income attributable
Owners of the parent	($	60,695)	($	2,484)	($	63,179)
Non-controlling interest		-		-		-
	($	60,695)	($	2,484)	($	63,179)
Earnings per share
Basic (in dollars)	$	0.75	$	-	$	0.75
Diluted (in dollars)	$	0.74	$	-	$	0.74

Explanation for adjustments: No significant differences.

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E.Reconciliation for comprehensive income for the three-month period ended March 31, 2012:

R.O.C. GAAP Operating revenue 6,328,236 $ Operating costs 5,884,489) ( Gross profit 443,747 Operating expenses Selling expenses 33,057) ( General & administrative expenses 69,774) ( Research and development expense 319,995) ( 422,826) ( Operating profit 20,921 Non-operating revenue and expenses Other income 26,752) ( Other gains and losses 75,637 Finance costs - Share of (loss)/profit of associates and joint ventures accounted for under equity method 3,290) ( Total non-operating revenue and 45,595 Profit before income tax 66,516 Income tax expense 3,884) ( Profit for the period 62,632 Other comprehensive income Currency translation differences 245,237) ( Share of other comprehensive income of associates and joint ventures accounted for under equity method 10,911) ( Income tax relating to the components of other comprehensive income 43,545 Other comprehensive income for the period, net of tax 212,603) ( Total comprehensive income for the period 149,971) ($		Effect of transition from R.O.C. GAAP to IFRSs IFRSs - 6,328,236 $ - 5,884,489) ( - 443,747 - 33,057) ( - 69,774) ( - 319,995) ( - 422,826) ( - 20,921 - 26,752) ( - 75,637 - - - 3,290) ( - 45,595 - 66,516 - 3,884) ( - 62,632 - 245,237) ( - 10,911) ( - 43,545 - 212,603) ( - 149,971) ($	Remark

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R.O.C. GAAP Profit attributable to: Owners of the parent 62,632 $ Non-controlling interest - 62,632 $ Total comprehensive income attributable to: Owners of the parent 149,971) ($ Non-controlling interest - 149,971) ($ Earnings per share Basic (in dollars) 0.17 $ Diluted (in dollars) 0.16 $		Effect of transition from R.O.C. GAAP to IFRSs IFRSs - 62,632 $ - - - 62,632 $ - 149,971) ($ - - - 149,971) ( - 0.17 $ - 0.16 $	Remark

Explanation for adjustments: No significant differences.

• F.Major adjustments for the consolidated statement of cash flows for the year ended December 31, 2012:

• a) Under R.O.C. GAAP, payment of interest and receipt of interest and dividend are both included in cash flows from operating activities. However, under IFRSs, payment of interest and receipt of interest and dividend are classified as cash flows from financing activities and from investing activities, respectively, when they are the cost for acquisitions of financial resources or the return on investments.

• b) Under R.O.C. GAAP, payment of dividend is included in cash flows from financing activities. However, under IFRSs, when payment of dividend is to help users of financial statements to assess the ability of an entity to pay dividend by using operating cash flows, it is classified as cash flows from operating activities.

• c) The transition of R.O.C. GAAP to IFRSs has no effect on the Group‟s cash flows reported.

• d) The reconciliation between R.O.C. GAAP and IFRSs has no net effect on the Group‟s cash flows reported.

• G.Major adjustments for the consolidated statement of cash flows for the three-month period ended March 31, 2012:

• a) Under R.O.C. GAAP, payment of interest and receipt of interest and dividend are both included in cash flows from operating activities. However, under IFRSs, payment of interest and receipt of interest and dividend are classified as cash flows from financing activities and from investing activities, respectively, when they are the cost for acquisitions of financial resources or the return on investments.

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• b) Under R.O.C. GAAP, payment of dividend is included in cash flows from financing activities. However, under IFRSs, when payment of dividend is to help users of financial statements to assess the ability of an entity to pay dividend by using operating cash flows, it is classified as cash flows from operating activities.

• c) The transition of R.O.C. GAAP to IFRSs had no effect on the Group‟s cash flows reported.

• d) The reconciliation between R.O.C. GAAP and IFRSs had no net effect on the Group‟s cash flows reported.

• H.The accounting policies and selection of exemptions applied in these interim consolidated financial statements may be different from those applied in the first year-end IFRSs consolidated financial statements due to the issuance of related regulations by regulatory authorities, changes in economic environment, or changes in the evaluation of the impact of application of accounting policies and exemptions by the Group.

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