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Altek Interim / Quarterly Report 2016

Nov 15, 2016

52290_rns_2016-11-15_322f0f9e-a88d-4472-b7bb-bc2341e61cd0.pdf

Interim / Quarterly Report

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

June 30, 2016 AND 2015

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR16000038 (In Thousands of New Taiwan Dollars)

To Altek Corporation

We have reviewed the accompanying consolidated balance sheets of Altek Corporation and subsidiaries as of June 30, 2016 and 2015, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express 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 “ Engagements to Review Financial Statements” in the Republic of China. A review consists primarily of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As explained in Note 4(3), we did not review the financial statements of certain insignificant consolidated subsidiaries, which statements reflect total assets of $3,728,862 and $2,892,892, constituting 25% and 19% of the consolidated total assets, and total liabilities of $691,675 and $528,719, constituting 12% and 9% of the consolidated total liabilities as of June 30, 2016 and 2015, respectively, and total comprehensive income of $27,967, $78,713, $13,645 and $50,410, constituting 38%, 39%, 18% and 32% of the absolute values of the consolidated total comprehensive income for the three-month and six-month periods ended June 30, 2016 and 2015, respectively. 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. Using the book value of Equity method investments in these investee companies amounted to $132,947 and $169,943 as of June 30, 2016 and 2015, respectively, and the related investment loss amounted to $0, $3,550, $0 and

~1~

$5,084 for the three-month and six-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 preceding 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” and International Accounting Standard 34 “Interim Financial Reporting”, as endorsed by the Financial Supervisory Commission.

PricewaterhouseCoopers, Taiwan Hsinchu, Taiwan Republic of China

August 12, 2016

------------------------------------------------------------------------------------------------------------------------------------------------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.

~2~

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2016 and 2015 are reviewed, not audited)

Assets Notes June 30,2016
AMOUNT
%
$ 5,135,704
35
811,789
5
3,056
-
1,917,943
13
12,348
-
1,353
-
1,238,316
8
230,798
2
30,695
-
9,382,002
63
143,018
1
132,947
1
4,924,372
33
100,313
1
62,283
-
84,021
1
5,446,954
37
$ 14,828,956
100
(Continued)		 December31,2015
AMOUNT
%
$ 5,741,973 37
427,531
3
17,264
-
2,251,748 15
21,199
-
2,061
-
1,061,419
7
115,452
1
10,869
-
9,649,516 63
143,995
1
138,206
1
5,211,143 34
93,713
1
71,834
-
91,771
-
5,750,662 37
$ 15,400,178 100		 June 30,2015 June 30,2015
AMOUNT
$ 5,741,973
427,531
17,264
2,251,748
21,199
2,061
1,061,419
115,452
10,869
9,649,516
143,995
138,206
5,211,143
93,713
71,834
91,771
5,750,662
$ 15,400,178		 AMOUNT
$ 4,346,740
402,846
63,637
2,412,804
14,157
2,763
1,796,743
193,754
20,867
9,254,311
171,410
169,943
5,355,465
94,473
71,793
83,067
5,946,151
$ 15,200,462		 %
Current assets
1100
Cash and cash equivalents

1110
Current financial assets at fair
value through profit or loss

1150
Notes receivable, net
1170
Accounts receivable, net

1200
Other receivables
1220
Current income tax assets
130X
Inventories, net

1410
Prepayments
1470
Other current assets
11XX
Current Assets
Non-current assets
1543
Non-current financial assets at
cost

1550
Investments accounted for
using equity method

1600
Property, plant and equipment,
net

1780
Intangible assets, net

1840
Deferred income tax assets
1900
Other non-current assets

15XX
Non-current assets
1XXX
Total assets		 6(1)
6(2)
6(3)
6(4)
6(5)
6(6)
6(7)
6(8)
6(9)		 29
3
-
16
-
-
12
1
-
61
1
1
35
1
-
1
39
100

~3~

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2016 and 2015 are reviewed, not audited)

June 30,2016 December31,2015 December31,2015 June 30,2015
Liabilities andEquity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings
 6(10) $ 2,205,000 16 $ 1,730,000 11 $ 1,542,000 10
2170 Accounts payable 1,904,322 13 2,422,069 16 2,346,376 15
2200 Other payables 720,927 5 510,923 3 741,052 5
2230 Current income tax liabilities 43,915 - 62,273 1 38,294 -
2250 Provisions for liabilities -
 6(13)
current 34,578 - 36,998 - 51,731 -
2300 Other current liabilities 207,311 1 355,698 2 525,923 4
21XX Current Liabilities 5,116,053 35 5,117,961 33 5,245,376 34
Non-current liabilities
2550 Provisions for liabilities -
 6(13)
noncurrent 112,301 1 98,880 1 135,637 1
2570 Deferred income tax liabilities 461,988 3 528,141 3 527,540 4
2600 Other non-current liabilities 26,979 - 26,344 - 27,574 -
25XX Non-current liabilities 601,268 4 653,365 4 690,751 5
2XXX Total Liabilities 5,717,321 39 5,771,326 37 5,936,127 39
Equity attributable to owners of
parent
Share capital
 6(14)
3110 Common stock 2,742,538 18 2,726,938 18 2,702,538 18
Capital surplus
 6(15)
3200 Capital surplus 1,867,534 13 1,975,772 13 1,933,054 12
Retained earnings
 6(16)
3310 Legal reserve 1,374,374 9 1,347,010 9 1,347,010 9
3320 Special reserve 142,456 1 142,456 1 142,456 1
3350 Unappropriated retained
earnings 2,839,278 19 3,047,283 20 2,845,407 19
Other equity interest
 6(17)
3400 Other equity interest 166,021 1 414,647 2 287,012 2
3500 Treasury stocks
 6(14) ( 129,393)( 1)( 129,393)( 1) - -
31XX Equity attributable to
owners of the parent 9,002,808 60 9,524,713 62 9,257,477 61
36XX Non-controlling interest 108,827 1 104,139 1 6,858 -
3XXX Total equity 9,111,635 61 9,628,852 63 9,264,335 61
Significant contingent liabilities
 9
and unrecognised contract
commitments
3X2X Total liabilities and equity $ 14,828,956 100 $ 15,400,178 100 $ 15,200,462 100

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 12, 2016.

~4~

ALTEK CORPORATION AND SUBSIDIARIESS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except (loss) earnings per share amounts)

(UNAUDITED)

Forthe three-monthperiods ended June 30 Forthe three-monthperiods ended June 30 Forthe three-monthperiods ended June 30 Forthe three-monthperiods ended June 30 Forthe three-monthperiods ended June 30 Forthe three-monthperiods ended June 30 Forthe six-monthperiods ended June 30 Forthe six-monthperiods ended June 30 Forthe six-monthperiods ended June 30 Forthe six-monthperiods ended June 30 Forthe six-monthperiods ended June 30
2016 2015 2016 2015
Items Notes AMOUNT % AMOUNT % AMOUNT % AMOUNT %
4000 Sales revenue $ 2,789,236 100 $ 3,024,205 100 $ 5,214,076 100 $ 5,603,383 100
5000 Operating costs 6(21)(22) ( 2,460,414)( 88)( 2,657,544)( 88)( 4,633,871)( 89) ( 4,954,956) ( 88)
5900 Net operating margin 328,822 12 366,661 12 580,205 11 648,427 12
Operating expenses 6(21)(22)
6100 Selling expenses (
15,029) (		 1) ( 16,951) ( 1) ( 33,151) ( 1) ( 29,949) ( 1)
6200 General & administrative
expenses (
57,568) (		 2) ( 53,136) ( 2) ( 117,868) ( 2) ( 101,487) ( 2)
6300 Research and development
expenses (
257,745)(		 9) ( 252,614)( 8)( 507,991)( 10) ( 496,117) ( 9)
6000 Total operating expenses (
330,342)(		 12) ( 322,701)( 11)( 659,010)( 13) ( 627,553) ( 12)
6900 Operating profit (loss) (
1,520)		 - 43,960 1 ( 78,805)( 2) 20,874 -
Non-operating income and
expenses
7010 Other income 6(18) 18,087 1 27,017 1 36,951 1 55,846 1
7020 Other gains and losses 6(19) 14,561 - ( 12,798) ( 1) 20,085 - ( 8,845) -
7050 Finance costs 6(20) (
6,440)		 - ( 4,627) - ( 12,880) - ( 9,585) -
7060 Share of loss of associates and 6(6)
joint ventures accounted for
under equity method - - ( 3,550) - - - ( 5,084) -
7000 Total non-operating
income and expenses 26,208 1 6,042 - 44,156 1 32,332 1
7900 Profit before income tax 24,688 1 50,002 1 ( 34,649) ( 1) 53,206 1
7950 Income tax expense 6(23) (
10,466)		 - ( 9,113) - ( 5,337) - ( 9,699) -
8200 Profit for the period $ 14,222 1 $ 40,889 1 ($ 39,986)( 1) $ 43,507 1
Other comprehensive income
8361 Currency translation
differences of foreign
operations ( $
114,606) (		 5) ($ 101,703) ( 3) ($ 266,044) ( 5) ($ 229,453) ( 4)
8370 Share of other comprehensive
loss of associates and joint
ventures accounted for uner
equity method (
3,272)		 - ( 4,236) - ( 5,363) - ( 5,313) -
8399 Income tax relating to the 6(23)
components of other
comprehensive income 20,050 1 18,009 - 46,073 1 39,910 -
8360 Components of other
comprehensive income that
will be reclassified to profit
or loss (
97,828)(		 4) ( 87,930) ( 3)( 225,334)( 4)( 194,856)( 4)
8300 Total other comprehensive loss
for the period ($ 97,828)( 4)($ 87,930)( 3)($ 225,334)( 4)($ 194,856)( 4)
8500 Total comprehensive loss for the
period ($ 83,606)( 3)($ 47,041)( 2)($ 265,320)( 5)($ 151,349)( 3)
Profit, attributable to:
8610 Owners of the parent $
1,081		 - $ 40,617 1 ($ 46,501) ( 1) $ 43,098 1
8620 Non-controlling interest 13,141 1 272 - 6,515 - 409 -
Profit for the period $ 14,222 1 $ 40,889 1 ($ 39,986)( 1) $ 43,507 1
Comprehensive (loss) income
attributable to:
8710 Owners of the parent ( $
96,811) (		 3) ($ 47,313) ( 2) ($ 271,444) ( 5) ($ 151,758) ( 3)
8720 Non-controlling interest 13,205 - 272 - 6,124 - 409 -
Total comprehensive loss for the
period ($ 83,606)( 3)($ 47,041)( 2)($ 265,320)( 5)($ 151,349)( 3)
6(24)
9750 Basic (loss) earnings per
share $ 0.01 $ 0.15 ($ 0.17) $ 0.16
6(24)
9850 Diluted (loss) earnings per
share $ 0.01 $ 0.15 ($ 0.17) $ 0.16

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 12, 2016.

~5~

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

F or the Six-month period
ended June 30, 2015
Balance at January 1, 2015
Appropriation of 2014
earnings
Legal reserve

Cash dividends and capital
surplus used to issue
cash to shareholders

Share-based payment
transactions

Profit for the period

Other comprehensive loss
for the period

Balance at June 30, 2015
or the Six-month period
ended June 30, 2016
Balance at January 1, 2016
Appropriation of 2015
earnings
Legal reserve

Cash dividends and capital
surplus used to issue
cash to shareholders

Share-based payment
transactions

Restricted stock

Difference between
consideration and
carrying amount of
subsidiaries acquired

Profit (loss) for the period
Other comprehensive loss
for the period

Non-controlling interest
Balance at June 30, 2016		 Notes Equity attr ibutable to owners of the parent the parent the parent Non-controlling
interest		 Total equity
Common stock Capital surplus Retained Earnings Other equityinterest Treasurystocks Total
Legal reserve Special reserve Unappropriated
retained earnings		 Currency
translation
differences of
foreign
operations		 Other equity -
others
6(16)
6(15)(16)
6(12)(15)(17
)
6(16)
6(17)
6(16)
6(15)(16)
6(12)(15)(17
)
6(12)(15)(17
)
6(27)
6(16)
6(17)		 $ 2,701,358
-
-
1,180
-
-
$ 2,702,538
$ 2,726,938
-
-
-
15,600
-
-
-
-
$ 2,742,538		 $ 2,063,551
-
(
135,127 )
4,630
-
-
$ 1,933,054
$ 1,975,772
-
(
134,140 )
236
25,713
(
47 )
-
-
-
$1,867,534		 $ 1,319,477
27,533
-
-
-
-
$ 1,347,010
$ 1,347,010
27,364
-
-
-
-
-
-
-
$ 1,374,374		 $ 142,456
-
-
-
-
-
$ 142,456
$ 142,456
-
-
-
-
-
-
-
-
$ 142,456		 $ 2,964,969
(
27,533 )
(
135,127 )
-
43,098
-
$ 2,845,407
$ 3,047,283
(
27,364 )
(
134,140 )
-
-
-
(
46,501 )
-
-
$ 2,839,278		 $ 481,868
-
-
-
-
(
194,856 )
$ 287,012
$ 477,768
-
-
-
-
-
-
(
224,943 )
-
$ 252,825		 $ -
-
-
-
-
-
$ -
($ 63,121 )
-
-
17,630
(
41,313 )
-
-
-
-
($ 86,804 )		 $ -
-
-
-
-
-
$ -
($ 129,393 )
-
-
-
-
-
-
-
-
($ 129,393 )		 $ 9,673,679
-
(
270,254 )
5,810
43,098
(
194,856 )
$ 9,257,477
$ 9,524,713
-
(
268,280 )
17,866
-
(
47 )
(
46,501 )
(
224,943 )
-
$ 9,002,808		 $ 6,449
-
-
-
409
-
$ 6,858
$ 104,139
-
-
-
-
47
6,515
(
391 )
(
1,483 )
$ 108,827		 $ 9,680,128
-
(
270,254 )
5,810
43,507
(
194,856 )
$ 9,264,335
$ 9,628,852
-
(
268,280 )
17,866
-
-
(
39,986 )
(
225,334 )
(
1,483 )
$ 9,111,635








F










The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 12, 2016.

~6~

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Amortisation
Provision for doubtful accounts
Net (gain) loss on financial assets at fair value through profit or
loss
Interest expense
Interest income
Share-based payment compensation cost
Share of loss of associates and joint ventures accounted for
under equity method
Gain on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss - current
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Other payables
Provisions for liabilities
Other current liabilities
Other non-current liabilities
Cash outflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at cost
Acquisition of property, plant and equipment
Increase in intangible assets
Decrease in deposits received
Proceeds from disposal of property, plant and equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Employee stock options exercised
Increase in guarantee deposits received
Changes in non-controlling interest
Net cash flows from financing activities
Effect of exchange rate
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 For the six-monthperiods ended June 30
Notes
2016
2015
($ 34,649 ) $ 53,206
6(7)(21)
179,470
199,386
6(8)(21)
7,632
7,633
6(3)
1,980
-
6(2)(19)
(
914 )
4,232
6(20)
12,880
9,585
6(18)
(
29,069 ) (
25,511 )
6(12)
17,866
1,739
-
5,084
6(19)
(
3,245 )
-
(
383,344 ) (
47,215 )
14,773
7,709
307,975 (
60,046 )
4,815
5,564
(
220,841 ) (
653,326 )
(
118,395 ) (
3,282 )
(
20,050 ) (
17,266 )
(
456,643 ) (
525,640 )
(
4,209 ) (
56,147 )
11,001
3,033
(
148,860 )
96,341
392
-
(
861,435 ) (
994,921 )
32,663
25,824
(
12,930 ) (
9,737 )
(
33,350 ) (
45,768 )
(
875,052 ) (
1,024,602 )
- (
20,355 )
6(26)
(
74,945 ) (
21,275 )
6(26)
(
6,366 ) (
6,591 )
6,517
1,348
20,679
-
(
54,115 ) (
46,873 )
6(10)
475,000
132,000
-
4,071
502
20
6(27)
(
1,483 )
-
474,019
136,091
(
151,121 ) (
159,726 )
(
606,269 ) (
1,095,110 )
6(1)
5,741,973
5,441,850
6(1)
$ 5,135,704 $ 4,346,740

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 12, 2016.

~7~

ALTEK CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2016 AND 2015

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(Unaudited)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as a 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, and 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 AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on August 12, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

  • (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

None. 

~8~

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2017:

New Standards,Interpretations andAmendments Effective date by
International Accounting
StandardsBoard
Investment entities: applying the consolidation exception (amendments
to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)
IFRS 14, 'Regulatory deferral accounts'
Disclosure initiative (amendments to IAS 1)
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Defined benefit plans: employee contributions (amendments to IAS
19R)
Equity method in separate financial statements (amendments to IAS 27)
Recoverable amount disclosures for non-financial assets (amendments
to IAS 36)
Novation of derivatives and continuation of hedge accounting
(amendments to IAS 39)
IFRIC 21, ‘Levies’
Improvements to IFRSs 2010-2012
Improvements to IFRSs 2011-2013
Improvements to IFRSs 2012-2014		 January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
July 1, 2014
July 1, 2014
January 1, 2016

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating result based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

Amendments to IAS 36, ‘Recoverable amount disclosures for non-financial assets’

The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill but there has been no impairment. When a material impairment loss has been recognised or reversed for an individual asset, including goodwill, or a CGU, it is required to disclose the recoverable amount of the asset or CGU. If the recoverable amount is fair value less costs of disposal, it is required to disclose the level of the fair value hierarchy, the valuation techniques(s) used and key assumptions. 

~9~

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

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC effective from 2017:

endorsed by the FSC effective from 2017:
New Standards,Interpretations andAmendments Effective date by
International Accounting
StandardsBoard
Classification and measurement of share-based payment transactions
(amendments to IFRS 2)
IFRS 9, ‘Financial instruments'
Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)
IFRS 15, ‘Revenue from contracts with customers'
Clarifications to IFRS 15, ‘Revenue from contracts with customers'
(amendments to IFRS 15)
IFRS 16, 'Leases'
Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealised losses (amendments to
IAS 12)		 January 1, 2018
January 1, 2018
To be determined by
International Accounting
Standards Board
January 1, 2018
January 1, 2018
January 1, 2019
January 1, 2017
January 1, 2017

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating result based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

A. Amendments to IFRS 2, ‘Classification and measurement of share-based payment transactions’ The amendment clarifies that the fair value of a cash-settled award is determined on a basis consistent with that used for equity-settled awards. The amendment also clarifies the accounting for modifications that change an award from cash-settled to equity-settled. Besides, the amendment introduces an exception that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay that amount to the tax authority.

  • B. IFRS 9, ‘Financial instruments’

  • (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading. 

~10~

  • (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance).

  • C. IFRS 15 "Revenue from contracts with customers"

  • IFRS 15 "Revenue from contracts with customers" replaces IAS 11 "Construction contracts", IAS 18 "Revenue" and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

  • The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:

  • Step1: Identify contracts with customer

Step 2: Identify separate performance obligations in the contract(s)

Step 3: Determine the transaction price

Step 4: Allocate the transaction price.

Step 5: Recognise revenue when the performance obligation is satisfied.

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Under IFRS 15, depending on the nature of licences, they are either (1) a promise to provide a right to access to an entity’s intellectual property as it exists throughout the licence period, or (2) a promise to provide a right to use an entity’s intellectual property as it exists at the point in time when the licence is granted.

Licences that meet all of the following criteria provide access to an entity’s intellectual property, and revenue is recognised based on the performance obligation's progress towards completion:

  1. the contract requires, or the customer reasonably expects, that the entity will undertake activities that significantly affect the intellectual property to which the customer has rights;

  2. the rights granted by the licence directly expose the customer to any positive or negative effects of the entity’s activities identified above; and

  3. those activities do not result in the transfer of a good or service to the customer as those activities occur.

If licences cannot meet all criteria listed above, the entity provides a right to use the entity's 

~11~

intellectual property. Revenue shall be recognised at the point in time at which the licence is granted to the customer.

  • D. Amendments to IFRS 15, ' Clarifications to Revenue from Contracts with Customers'

The amendments clarify how to identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and determine whether the revenue from granting a licence should be recognised at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard.

  • E. IFRS 16, 'Leases'

IFRS 16, 'Leases', replaces IAS 17, 'Leases' and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. 

~12~

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. The consolidated financial statements of the Group have been prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and IAS 34, ‘Interim Financial Reporting’ as endorsed by the FSC.

  • B. The consolidated financial statements should be read along with the consolidated financial statements for the year ended December 31, 2015.

(2) Basis of preparation

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

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

  • b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

  • B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accountung Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “ IFRSs ” ) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement 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:

  • Basis for preparation of consolidated financial statements is consistent with the consolidated financial statements for the year ended December 31, 2015.

  • B. Subsidiaries included in the consolidated financial statements: 

~13~
Name of Investor Name of Subsidiaries Main Business Activities Ownership (%) Ownership (%) Note
June 30,2016 December 31,2015
June 30,2015
Altek Corporation
"
"
"
"
"
Altek International Investment Co., Ltd.
"
"
Note 3
Note 3
Note 3
Note 3
Note 3
Note 4		 Altek International Investment Co., Ltd.
Altek Japan Corporation
Altek Investment Co., Ltd.
Altek Autotronics Corporation
Altek Biotechnology Corporation
Altek International Holding (BVI) Co.,Ltd.
Altek Lab Inc.
Altek Optical (Cayman) Co., Ltd.
Altek Semiconductor (Cayman) Co., Ltd.
Altek (Kunshan) Co., Ltd.
Altek EMS (Kunshan) Co., Ltd.
Altek Imaging Technology (Shanghai) Limited
Altek Precision (Kunshan) Co., Ltd.
Altek Trading (Shanghai) Limited
Altek Biotechnology Corporation		 Investments and general business operations
Sales and design of optical instruments
Investments
Research design, manufacture and sales of car
electronic components
Research and development, manufacture and sales
of biotechnology
Investments and general business operations
Design service
Investments and general business operations
Investments and general business operations
Manufacture and sales of digital still camera and its
accessories
Manufacture and sales of related engineering
services
Manufacture and sales of optical components
Manufacture and sales of digital camera parts
Wholesale, import and export of related electronic
and their associated accessories
Research and development, manufacture and sales
of biotechnology		 100%
100%
100%
100%
-
100%
100%
100%
71.43%
100%
100%
-
100%
100%
100%		 100%
100%
100%
99.59%
100%
-
100%
100%
71.43%
100%
100%
-
100%
100%
-		 100%
100%
100%
98.02%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
-		 Note 7
Note 7
Note 1
Note 7
Note 6
Note 7
Note 6
Note 7
Note 7
Note 7
Note 2
Note 7
Note 7
Note 5
Note 7
Note 7
Note 7
Note 6
Note 7		 
~14~
Name of Investor Name of Subsidiaries Main Business Activities Ownership (%) Ownership (%) Note
June 30,2016 December 31,2015
June 30,2015
Altek Semiconductor (Cayman) Co., Ltd.
Altek Trading (Shanghai) Limited
Note 3		 Altek Semiconductor Corporation
Beijing Altek Image Communication Technology
Co., Ltd.
Altek Optical Technology (Kunshan) Co., Ltd.		 Research design and sales of ASIC
Sales of electronic and their related accessories
Manufacture and sales of related electronic services
and its accessories and optical components		 100%
-
100%		 100%
-
100%		 100%
100%
100%		 Note 7
Note 5
Note 7
Note 7

Note 1: Ownership increased due to subsidiary’s continuing repurchase of shares of Altek Autotronics Corporation.

Note 2: The Group did not participate in the subsidiary’s capital increase, thus, the share ownership decreased.

Note 3: Invested by Leading Tech. Co., Ltd. 、 Toptek Investment Cayman Co., Ltd. 、 Altek Imaging Technology (Cayman) Co., Ltd. 、 Altek Trading (Cayman) Co., Ltd. 、 Altek Optical Technology (Cayman) Co., Ltd. , which are wholly owned by Altek International Investment Co., Ltd.

Note 4: Invested by Altek Biotechnology Holding (Cayman) Co., Ltd. , which are wholly owned by Altek International Holding (BVI) Co., Ltd.

Note 5: Altek Imaging Technology (Shanghai) Limited and Beijing Altek Image Communication Technology Co., Ltd. have completed the liquidation in the fourth quarter of 2015. Note 6: In June 2016, the Group’s investment structure transfer the share holding of Altek Biotechnology Corporation to be owned by Altek Biotechnology Holding (Cayman) Co., Ltd. , which is a subsidiary of Altek International Holding (BVI) Co., Ltd.

Note 7: As the subsidiaries do not meet the definition of significant subsidiaries, their financial statements as of June 30, 2016 and 2015 were not reviewed by independent accountants. 

~15~

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

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

  • E. Significant restrictions: None.

  • F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Employee benefits

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation 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. Also, the related information is disclosed accordingly.

(5) Income tax

The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

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. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies: None.

(2) Critical accounting estimates and assumptions:

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 obsolete inventories 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 June 30, 2016, the carrying amount of inventories was $1,238,316. 

~16~

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand
Checking accounts and demand
deposits
Time deposits
Total		 June30,2016
1,436
$ 293,793
4,840,475
5,135,704
$		 December31,2015
1,139
$ 282,049
5,458,785
5,741,973
$		 June30,2015
1,198
$ 102,606
4,242,936
4,346,740
$

  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

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

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

Items
Current items:
Financial assets held for
trading
Valuation adjustment
Total		 June30,2016
808,376
$ 3,413
811,789
$		 December31,2015
June30,2015
425,032
$ 406,504
$ 2,499
3,658)
(
427,531
$ 402,846
$		 December31,2015
June30,2015
425,032
$ 406,504
$ 2,499
3,658)
(
427,531
$ 402,846
$
402,846
$

The Group recognized net gain (loss) of $588 and ($10,808) for the three-month periods ended June 30, 2016 and 2015, respectively, and net gain(loss) of $1,286 and ($11,995) for the six-month periods ended June 30, 2016 and 2015, respectively.

(3) Accounts receivable

Accounts receivable
June 30,2016 December31,2015 June 30,2015
Accounts receivable $ 1,920,389
 $ 2,252,282
 $ 2,412,841
Less: allowance for bad debts ( 2,446)
 ( 534)
 ( 37)
$ 1,917,943 $ 2,251,748 $ 2,412,804
  • A. 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		 June 30,2016
1,888,100
$ 16,604
1,904,704
$		 December31,2015
2,156,195
$ 91,433
2,247,628
$		 June 30,2015
2,376,252
$ 30,568
2,406,820
$

Note:

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

~17~

B.The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days
31 to 90 days
91 to 180 days		 June30,2016
6,813
$ 6,094
332
13,239
$		 December31,2015
565
$ 3,312
243
4,120
$		 June30,2015
3,568
$ 2,416
-
5,984
$

The above ageing analysis was based on past due date.

C.Movements on the Group’s provision for impairment of accounts receivable are as follows:

D.The Group does not hold any collateral as security.
Individualprovision
At January 1
534
$ Provision for impairment
1,980
Effects of foreign exchange
68)
(
At June 30
2,446
$ Individualprovision
At January 1 / June 30
37
$		 2016
Group provision
Total
-
$ 534
$ -
1,980
-
68)
(
-
$ 2,446
$ 2015		 Total
2,446
$
Group provision
-
$		 Total
37
$

(4) Inventories

nventories
Raw materials
Work-in-process
Finished goods
Total
Raw materials
Work-in-process
Finished goods
Total		 June 30,2016 Bookvalue
572,198
$ 184,721
481,397
1,238,316
$
Allowance for
Cost
valuation loss
660,522
$ 88,324)
($ 207,709
22,988)
(
541,734
60,337)
(
1,409,965
$ 171,649)
($ Allowance for
Cost
valuation loss
586,514
$ 125,289)
($ 145,078
25,569)
(
591,776
111,091)
(
1,323,368
$ 261,949)
($ December31,2015
Allowance for
valuation loss
125,289)
($ 25,569)
(
111,091)
(
261,949)
($		 Bookvalue
461,225
$ 119,509
480,685
1,061,419
$		 
~18~

June 30, 2015

June 30,2015 June 30,2015
Allowance for
Cost valuation loss Bookvalue
Raw materials $ 727,697
 ($ 67,545)
 $ 660,152
Work-in-process 236,951 ( 21,831)
 215,120
Finished goods 946,188 ( 24,717)
 921,471
Total $ 1,910,836 ($ 114,093) $ 1,796,743
The cost of inventories recognised as expense for the periods:
Three-month period Three-month period
endedJune 30,2016 ended June30,2015
Cost of goods sold $ 2,417,031

$		 2,657,411
Loss on decline in market value 43,383 133
Total $ 2,460,414
$		 2,657,544
Six-month period Six-month period
endedJune30,2016 ended June30,2015
Cost of goods sold $ 4,496,166

$		 4,950,957
Loss on decline in market value 137,705 3,999
Total $ 4,633,871
$		 4,954,956
Financial assets measured at cost
Items June30,2016 December 31,2015 June30,2015
Non-current items:
Unlisted stocks $ 155,614
 $ 156,591
 $ 261,443
Less: Accumulated impairment ( 12,596)
 ( 12,596)
 ( 90,033)
Total $ 143,018 $ 143,995 $ 171,410

(5) Financial assets measured at cost

  • A. As the Group’s investment in unlisted stocks 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 unlisted stocks cannot be measured reliably. The Group classified those stocks as ‘financial assets measured at cost’.

  • B. Financial assets measured at cost – Pac-line Opportunity Fund has completed the liquidation on December 23, 2015. The Company recognised disposal of financial assets at Pac-line Opportunity Fund’s carrying amount of $21,647. The actual amount recovered was $32,480 and gain on disposal of investments of $10,833 was recognised.

  • C. No impairment loss was recognized for the financial assets measured at cost for the three-month and six-month periods ended June 30, 2016 and 2015.

  • D. As of June 30, 2016, December 31, 2015 and June 30, 2015, no financial assets measured at cost held by the Group were pledged to others. 

~19~

(6) Investments accounted for under the equity method

June 30,2016 December 31,2015 June 30,2015
JinJing Optical Technology Co., $ 44,028
 $ 44,028
 $ 55,065
Ltd.
Phoenix Optical (Shanghai) Co.,
Ltd. 146,161 151,420 151,679
190,189 195,448 206,744
Less: accumulated impairment
loss ( 57,242) ( 57,242) ( 36,801)
$ 132,947 $ 138,206 $ 169,943

The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

As of June 30, 2016, December 31, 2015 and June 30, 2015, the carrying amount of the Group’s individually immaterial associates amounted to $132,947, $138,206 and $169,943, respectively.

Six-month period ended Six-month period ended
June 30,2016 June 30,2015
Loss for the period from ($ 53,722)
 ($ 42,048)
continuing operations
Other comprehensive (loss)
income-net of tax ( 298)
 398
Total comprehensive loss ($ 54,020) ($ 41,650) 
~20~

(7) Property, plant and equipment

At January 1, 2016
Cost
Accumulated depreciation
For the six-month period
ended June 30, 2016
Opening net book amount
Additions
Disposals
Reclassifications
Depreciation charge
Net exchange differences
Closing net book amount
At June 30, 2016
Cost
Accumulated depreciation		 Land
Buildings
Machinery
Test equipment
1,042,216
$ 3,717,659
$ 1,868,136
$ 201,217
$ -
584,318)
(
1,063,689)
(
177,229)
(
1,042,216
$ 3,133,341
$ 804,447
$ 23,988
$ 1,042,216
$ 3,133,341
$ 804,447
$ 23,988
$ -
131
308
8,633
-
-
16,453)
(
-
-
-
-
3,006
-
47,086)
(
69,441)
(
7,949)
(
-
75,186)
(
27,311)
(
704)
(
1,042,216
$ 3,011,200
$ 691,550
$ 26,974
$ 1,042,216
$ 3,627,486
$ 1,500,762
$ 206,885
$ -
616,286)
(
809,212)
(
179,911)
(
1,042,216
$ 3,011,200
$ 691,550
$ 26,974
$		 
~21~
At January 1, 2015
Cost
Accumulated depreciation
For the six-month period
ended June 30, 2015
Opening net book amount
Additions
Reclassifications
Depreciation charge
Net exchange differences
Closing net book amount
At June 30, 2015
Cost
Accumulated depreciation		 Land
Buildings
Machinery
Test equipment
1,042,216
$ 3,774,021
$ 1,914,467
$ 221,421
$ -
496,859)
(
920,394)
(
178,466)
(
1,042,216
$ 3,277,162
$ 994,073
$ 42,955
$ 1,042,216
$ 3,277,162
$ 994,073
$ 42,955
$ -
-
127
1,395
-
-
240
-
-
47,772)
(
87,237)
(
12,329)
(
-
51,574)
(
23,251)
(
821)
(
1,042,216
$ 3,177,816
$ 883,952
$ 31,200
$ 1,042,216
$ 3,714,093
$ 1,868,456
$ 219,321
$ -
536,277)
(
984,504)
(
188,121)
(
1,042,216
$ 3,177,816
$ 883,952
$ 31,200
$

For the six-month periods ended June 30, 2016 and 2015, there was no capitalisation of borrowing interests attributable to the property, plant and equipment and the Group did not pledge any fixed asset as collateral. 

~22~

(8) Intangible assets

(9) A. Details of amortisation on intangible assets are as follows:
B.The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as‘Other non-current assets’)
2016
2015
At January 1
Cost
130,369
$ 138,662
$ Accumulated amortisation and impairment
36,656)
(
35,215)
(
93,713
$ 103,447
$ For the six-month period ended June 30
Opening net book amount
93,713
$ 103,447
$ Additions
15,433
428
Amortisation charge
7,124)
(
7,118)
(
Net exchange differences
1,709)
(
2,284)
(
Closing net book amount
100,313
$ 94,473
$ At June 30
Cost
130,723
$ 124,155
$ Accumulated amortisation and impairment
30,410)
(
29,682)
(
100,313
$ 94,473
$ For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
Operating costs
1,653
$ 1,902
$ Operating expense
1,867
1,636
3,520
$ 3,538
$ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
Operating costs
3,537
$ 3,841
$ Operating expense
3,587
3,277
7,124
$ 7,118
$ June 30,2016
December31,2015
June 30,2015
Land-use right
37,061
$ 39,003
$ 39,459
$		 A. Details of amortisation on intangible assets are as follows:
B.The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as‘Other non-current assets’)
2016
2015
At January 1
Cost
130,369
$ 138,662
$ Accumulated amortisation and impairment
36,656)
(
35,215)
(
93,713
$ 103,447
$ For the six-month period ended June 30
Opening net book amount
93,713
$ 103,447
$ Additions
15,433
428
Amortisation charge
7,124)
(
7,118)
(
Net exchange differences
1,709)
(
2,284)
(
Closing net book amount
100,313
$ 94,473
$ At June 30
Cost
130,723
$ 124,155
$ Accumulated amortisation and impairment
30,410)
(
29,682)
(
100,313
$ 94,473
$ For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
Operating costs
1,653
$ 1,902
$ Operating expense
1,867
1,636
3,520
$ 3,538
$ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
Operating costs
3,537
$ 3,841
$ Operating expense
3,587
3,277
7,124
$ 7,118
$ June 30,2016
December31,2015
June 30,2015
Land-use right
37,061
$ 39,003
$ 39,459
$		 A. Details of amortisation on intangible assets are as follows:
B.The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as‘Other non-current assets’)
2016
2015
At January 1
Cost
130,369
$ 138,662
$ Accumulated amortisation and impairment
36,656)
(
35,215)
(
93,713
$ 103,447
$ For the six-month period ended June 30
Opening net book amount
93,713
$ 103,447
$ Additions
15,433
428
Amortisation charge
7,124)
(
7,118)
(
Net exchange differences
1,709)
(
2,284)
(
Closing net book amount
100,313
$ 94,473
$ At June 30
Cost
130,723
$ 124,155
$ Accumulated amortisation and impairment
30,410)
(
29,682)
(
100,313
$ 94,473
$ For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
Operating costs
1,653
$ 1,902
$ Operating expense
1,867
1,636
3,520
$ 3,538
$ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
Operating costs
3,537
$ 3,841
$ Operating expense
3,587
3,277
7,124
$ 7,118
$ June 30,2016
December31,2015
June 30,2015
Land-use right
37,061
$ 39,003
$ 39,459
$		 A. Details of amortisation on intangible assets are as follows:
B.The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as‘Other non-current assets’)
2016
2015
At January 1
Cost
130,369
$ 138,662
$ Accumulated amortisation and impairment
36,656)
(
35,215)
(
93,713
$ 103,447
$ For the six-month period ended June 30
Opening net book amount
93,713
$ 103,447
$ Additions
15,433
428
Amortisation charge
7,124)
(
7,118)
(
Net exchange differences
1,709)
(
2,284)
(
Closing net book amount
100,313
$ 94,473
$ At June 30
Cost
130,723
$ 124,155
$ Accumulated amortisation and impairment
30,410)
(
29,682)
(
100,313
$ 94,473
$ For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
Operating costs
1,653
$ 1,902
$ Operating expense
1,867
1,636
3,520
$ 3,538
$ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
Operating costs
3,537
$ 3,841
$ Operating expense
3,587
3,277
7,124
$ 7,118
$ June 30,2016
December31,2015
June 30,2015
Land-use right
37,061
$ 39,003
$ 39,459
$		 A. Details of amortisation on intangible assets are as follows:
B.The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as‘Other non-current assets’)
2016
2015
At January 1
Cost
130,369
$ 138,662
$ Accumulated amortisation and impairment
36,656)
(
35,215)
(
93,713
$ 103,447
$ For the six-month period ended June 30
Opening net book amount
93,713
$ 103,447
$ Additions
15,433
428
Amortisation charge
7,124)
(
7,118)
(
Net exchange differences
1,709)
(
2,284)
(
Closing net book amount
100,313
$ 94,473
$ At June 30
Cost
130,723
$ 124,155
$ Accumulated amortisation and impairment
30,410)
(
29,682)
(
100,313
$ 94,473
$ For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
Operating costs
1,653
$ 1,902
$ Operating expense
1,867
1,636
3,520
$ 3,538
$ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
Operating costs
3,537
$ 3,841
$ Operating expense
3,587
3,277
7,124
$ 7,118
$ June 30,2016
December31,2015
June 30,2015
Land-use right
37,061
$ 39,003
$ 39,459
$
$
$
31,2015
39,003

Land-use right
June 30,2016
37,061
$
$ 39,459
$

The Group recognized amortisation expenses for the three-month periods ended June 30, 2016 and 2015 amounting to $250 and $255, and for the six-month periods ended June 30, 2016 and 2015 amounting to $508 and $515, respectively. 

~23~

(10) Short-term borrowings

Short-term borrowings
Type ofborrowings
Bank borrowings
Unsecured borrowings
Type ofborrowings
Bank borrowings
Unsecured borrowings
Type ofborrowings
Bank borrowings
Unsecured borrowings		 June 30,2016
2,205,000
$ December31,2015
1,730,000
$ June 30,2015
1,542,000
$		 Interestraterange
1.04%~1.25%
Interestraterange
1.14%~1.3%
Interestraterange
1.21%~1.32%		 Collateral
None
Collateral
None
Collateral
None

(11) 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) For the aforementioned pension plan, the Group recognized pension costs of $3 and $3 for the three-month periods ended June 30, 2016 and 2015, and of $398 and $6 for the six-month periods ended June 30, 2016 and 2015, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2017 amounts to $12.

  • 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 and 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 June 30, 2016 and 2015, the Group had recognized pension costs of $9,349 and $8,835, and for the six-month periods ended June 30, 2016 and 2015, the Group had recognized pension costs of $18,802 and $17,669, respectively, under the above pension scheme.

  • (b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local 

~24~

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 recognized pension costs of $9,175 and $15,313 for the three-month periods ended June 30, 2016 and 2015, respectively, and of $20,645 and $24,343 and for the six-month periods ended June 30, 2016 and 2015, respectively.

(12) Share-based payment

  • A.As of June 30, 2016 and 2015, the Company’s share-based payment arrangements were as follows:
follows:
Type ofarrangement Grant date Quantity
granted		 Contract
period		 Vesting
conditions
Employee stock options
"
"
"
First time issuance of restricted
shares to employees
"
"		 June 13, 2008
October 31, 2008
October 28, 2011
March 21, 2012
November 13,
2015
March 18, 2016
May 5, 2016		 8,000
1,000
3,000
3,000
2,440
1,190
370		 9.6 years
9.2 years
9.2 years
8.9 yesrs
3 years
3 years
3 years		 Note 1
Note 1
Note 1
Note 1
Note 2、Note 3
Note 2、Note 3
Note 2、Note 3

Note 1: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.

Note 2: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 2 years and 3 years and who achieved the performance requirement. The vested ratio is 50% and 50%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.

  • Note 3: The stocks and dividends distributed to employees during the vesting period shall be given by the Company at no consideration. Employees are not required to return the stocks and dividends if they resign during the vesting period. 
~25~

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

  • a) For the six-month periods ended June 30, 2016 and 2015, the information on the share options and the weighted number of average exercise price of compensation plan employee stock options are as follows:

Options outstanding at
beginning of the period
Optical expired
Options exercised
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 six-month period
June 30,2016		 For the six-month period
June 30,2016		 For the six-month period
June 30,2015		 For the six-month period
June 30,2015
No. of options Weighted-average
exercise price
(in dollars)(Note)		 No. of options Weighted-average
exercise price
(in dollars)(Note)
5,155
-
-
5,155
5,155
-		 32.80
$ -
-
32.80
32.80		 6,561
1,288)
(
118)
(
5,155
3,637
-		 33.60
$ -
34.50
34.50
34.10

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

  • b) No stock options were exercised during the three-month periods ended June 30, 2016 and 2015 and six-month period ended June 30, 2016. The weighted-average stock price of stock options at exercise dates for the six-month period ended June 30, 2015 amounted to $37.48 (in dollars).

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

follows:
Issue date
approved		 Expirydate June 30,2016 December Exercise price
(in dollars)
(Note)
$ 32.00
26.80
33.20
33.00
31,2015		 June 30,2015
No. of shares
(in thousands)
1,400
30
2,320
1,405		 Exercise price
(in dollars)
(Note)
$ 32.00
26.80
33.20
33.00		 No. of shares
(in thousands)
1,400
30
2,320
1,405		 No. of shares
(in thousands)
1,400
30
2,320
1,405		 Exercise price
(in dollars)
(Note)
June 13,
2008
October 31,
2008
October 28,
2011
March 21,
2012		 December 31,
2017
December 31,
2017
December 31,
2020
December 31,
2020		 $ 33.40
28.00
34.70
34.50
  • Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed. 
~26~
  • d) The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:
Type of
arrangement		 Grant date Stock
price
(in dollars)		 Exercise
price
(Note)
(in dollars)		 Expected
price
volatility		 Expected
option
life		 Expected
dividends		 Risk-
free
interest
rate		 Fair value
per unit
(in
dollars)
Employee
stock options
"
"
"		 June 13, 2008
October 31, 2008
October 28, 2011
March 21, 2012		 $ 45.50
32.60
30.65
27.85		 $ 32.00
26.80
33.20
33.00		 24.45%
22.11%
30.27%
33.54%		 6 years
6 years
5 years
4.9 years		 1.5%
1.5%
1.4%
1.4%		 2.40%
1.88%
1.18%
1.08%		 10.56
6.54
7.42
7.35

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

  • C.Restricted shares to employees:

  • (1)The information on restricted shares to employees is as follows:

Outstanding beginning balance
Shares granted
Outstanding ending balance		 For the six-month
period ended June 30, 2016
(share in thousands)
2,440
1,560
4,000

  • (2)As of June 30, 2016, the Company collected 190,000 shares of restricted shares because certain employees did not the vesting condition.The capital reduction is effective on August 12, 2016 as resolved by the Board of Directors.

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

For the three-month period For the three-month period For the three-month period For the three-month period
endedJune30,2016 endedJune30,2015
Equity-settled $ 10,819 $ 713
For the six-month period For the six-month period
endedJune30,2016 endedJune30,2015
Equity-settled $ 17,866 $ 1,739

(13) Provisions

Provisions
At January 1, 2016
Additional provisions
At June 30, 2016		 Warranty
135,878
$ 11,001
146,879
$		 
~27~
Current
Non-current		 June30,2016
34,578
$ 112,301
$		 December31,2015
36,998
$ 98,880
$		 June30,2015
51,731
$
135,637
$

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.

(14) Share capital

  • A. As of June 30, 2016, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,742,538 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:

(Expressed in thousands of shares)

At January 1
Employee stock options exercised
Issuance of restricted stocks
At June 30		 2016
268,280
-
1,560
269,840		 2015
270,136
118
-
270,254

  • B. Treasury shares

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

Sharesheld by Reason for reacquisition
Repurchase shares under the
R.O.C. Company Law section
186 and the Enterprises
Mergers and Acquisitions
Act section 12
To be reissued to employees		 (in thousands of shares)
June 30, 2016		 (in thousands of shares)
June 30, 2016
Number
ofshares
981
3,433
4,414		 Bookvalue
Altek Corporation
Altek Corporation		 33,255
$ 96,138
129,393
$		 
~28~
Sharesheld by Reason for reacquisition
Repurchase shares under the
R.O.C. Company Law section
186 and the Enterprises
Mergers and Acquisitions
Act section 12
To be reissued to employees		 (in thousands of shares)
December 31, 2015		 (in thousands of shares)
December 31, 2015
Number
ofshares
981
3,433
4,414		 Bookvalue
Altek Corporation
Altek Corporation		 33,255
$ 96,138
129,393
$

June 30, 2015 ： None.

  • 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.

  • 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.

  • C. For the six-month period ended June 30, 2015, the Company issued 118 thousand shares for employee stock options exercised and the registration for issuance had been completed.

  • D. Under the Enterprise Merger and Acquisition Act, in consideration of business strategies and division of services to increase competitiveness and operational performance, the Company decided to spin-off its medical electronics segment amounting to $400,000 to swap for common shares of Altek Biotechnology Corporation at $10 per share and obtained 40 million shares. The split was resolved by the shareholders on June 2, 2015. On September 8, 2015, the Board of Directors resloved to set the spin-off date as January 4, 2016. Below are assets of the segment spun off.

segment spun off.
Asset
Bank savings
Other prepaid expenses
Property, plant and equipment		 January4,2016
399,272
$ 501
227
400,000
$		 
~29~

  • E. The Board of Directors’ meeting on April 20, 2015 and the stockholders’ meeting on June 2, 2015 adopted a resolution to issue employee restricted ordinary shares amounting to 4,000 thousands shares to be issued once or by installments within one year from the receiving date of the effectiveness notification from the authorities. The shares are subscribed at no cost to employees. The employee restricted ordinary shares issued are subject to certain transfer restrictions before their vesting conditions are met. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.

  • (15) 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.

At January 1, 2016
Employee stock options expense
Cash dividends from capital
Issuance of restricted shares
to employees
Acquisition of ownership interests
in subsidiaries
At June 30, 2016
At January 1, 2015
Employee stock options expense
Employee stock options exercised
Cash dividends from capital

At June 30, 2015		 Share
premium		 Employee
stock
options		 Difference
between
proceeds from
disposal of
subsidiary and
bookvalue		 Difference
between
proceeds from
disposal of
subsidiary and
bookvalue		 Restricted
shares to
employees
Total
40,992
$ 1,975,772
$ -
236
-
134,140)
(
25,713
25,713
-
47)
(
66,705
$ 1,867,534
$ Restricted
shares to
employees
Total
-
$ 2,063,551
$ -
1,739
-
2,891
-
135,127)
(
-
$ 1,933,054
$
1,880,706
$ -
134,140)
(
-
-
1,746,566
$ Share
premium		 52,493
$ 236
-
-
-
52,729
$ Employee
stock
options		 1,581
$ -
-
-
47)
(
1,534
$ Difference
between
proceeds from
disposal of
subsidiary and
bookvalue
2,012,075
$ -
3,758
135,127)
(
1,880,706
$		 50,518
$ 1,739
867)
(
-
51,390
$		 958
$ -
-
-
958
$		 
~30~

(16) Retained earnings

  • 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 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 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 exceeds 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 or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. 

~31~
  • E. The appropriation of 2015 and 2014 earnings had been resolved at the stockholders’ meeting on June 17, 2016 and June 2, 2015, respectively. Details are summarized below:
Legal reserve
Cash dividends		 Dividends per share
Amount
(in NT dollars)
27,364
$ -
134,140
0.5
161,504
$ 2015		 2014 2014
Amount
27,364
$ 134,140
161,504
$		 Amount
27,533
$ 135,127
162,660
$		 Dividends per share
(in NT dollars)
-
0.5

The additional paid-in capital was returned to stockholders as resolved at the stockholders’ meeting on June 17, 2016 and on June 2, 2015, the shareholders resolved to return capital surplus amounting to $134,140 (approximately $0.5 per share) and $135,127 (approximately $0.5 per share) to shareholders in the nature of a capital contribution. The appropriation of 2015 and 2014 earnings were the same as that approved by the Board of Directors on March 18, 2016 and April 20, 2015 respectively.

  • F. For information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(22).

(17) Other equity items

Other equity items
Foreign currency Unearned
translationadjustment compensation Total
At January 1, 2016 $ 477,768
 ($ 63,121)
 $ 414,647
Currency translation differences:
Group ( 220,491)
 - ( 220,491)
Associates ( 4,452)
 - ( 4,452)
Issuance of restricted shares - ( 41,313)
 ( 41,313)
to employees
Share-based payment transactions - 17,630 17,630
At June 30, 2016 $ 252,825 ($ 86,804) $ 166,021
Foreign currency Unearned
translation adjustment compensation Total
At January 1, 2015 $ 481,868
 $ -
 $ 481,868
Currency translation differences:
Group ( 190,446)
 - ( 190,446)
Associates ( 4,410)
 - ( 4,410)
At June 30, 2015 $ 287,012 $ - $ 287,012 
~32~

(18) Other income

Other income
Rental revenue
Interest income:
Interest income from bank deposits
Others
Other income - others
Total
Rental revenue
Interest income:
Interest income from bank deposits
Others
Other income - others (Note)
Total		 For the three-month period
ended June 30,2016
-
$ 15,932
14
2,141
18,087
$ For the six-month period
ended June 30,2016
-
$ 29,040
29
7,882
36,951
$		 For the three-month period
ended June 30,2015
2,912
$ 11,484
16
12,605
27,017
$
For the six-month period
ended June 30,2015
5,822
$ 25,478
33
24,513
55,846
$

Note: The Company was allotted shares and warrants of Kodak US, due to the property distribution plan of Kodak US. The Company recognized this transaction as other income for the six-month period ended June 30, 2015.

(19) Other gains and losses

Net gain (losses) on financial assets at
fair value through profit or loss
Net currency exchange gains (losses)
Gain on disposal of property, plant and
equipment
Total
Net gain (losses) on financial assets at
fair value through profit or loss
Net currency exchange gains
Gain on disposal of property, plant and
equipment
Other expenses
Total		 For the three-month period
For the three-month period
ended June 30,2016
ended June 30,2015
588
$ 10,808)
($ 10,728
1,990)
(
3,245
-
14,561
$ 12,798)
($ For the six-month period
For the six-month period
ended June 30,2016
ended June 30,2015
1,286
$ 11,995)
($ 15,554
3,231
3,245
-
-
81)
(
20,085
$ 8,845)
($		 For the three-month period
ended June 30,2015		 
~33~

(20) Finance costs

(21)
(22)		 Expenses by nature
Employee benefit expenses
Interest expense:
Bank borrowings
Interest expense:
Bank borrowings
Employee benefit expenses
Depreciation charges on property,
plant and equipment
Amortisation charges on intangible
assets
Total
Employee benefit expenses
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		 For the three-month period
ended June 30,2016
6,440
$ For the six-month period
ended June 30,2016
12,880
$ For the three-month period
ended June 30,2016
372,427
$ 88,186
3,520
464,133
$ For the six-month period
ended June 30,2016
757,403
$ 179,470
7,124
943,997
$ For the three-month period
ended June 30,2016
311,850
$ 10,819
18,113
18,527
13,118
372,427
$		 For the three-month period
ended June 30,2015
4,627
$ For the six-month period
ended June 30,2015
9,585
$ For the three-month period
ended June 30,2015
409,447
$ 97,961
3,538
510,946
$ For the six-month period
ended June 30,2015
787,742
$ 199,386
7,118
994,246
$ For the three-month period
ended June 30,2015
350,014
$ 713
20,276
24,151
14,293
409,447
$		 
~34~
Wages and salaries
Employee stock options
Labor and health insurance fees
Pension costs
Other personnel expenses
Total		 For the six-month period
ended June 30,2016
635,362
$ 17,866
37,728
39,845
26,602
757,403
$		 For the six-month period
ended June 30,2015
676,263
$ 1,739
39,589
42,018
28,133
787,742
$

  • A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute compensation to the employees and pay remuneration to the directors and supervisors that account for 10% to 20% and no higher than 2%, respectively, of profit of the current period distributable. If a company has accumulated deficit, earnings should be channeled to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Employees of subsidiaries that the Company holds more than 50% shareholding are entitled to receive aforementioned stock or cash.

  • Abovementioned profit of the current period distributable refers to the pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration. A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation and directors’ and supervisors’ remuneration; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

  • B. For the three-month and six-month periods ended June 30, 2016 and 2015, employees’ compensation was accrued at $0, $5,504, $0 and $5,839, respectively; directors’ and supervisors’ remuneration was accrued at $0, $734, $0 and $779, respectively. The aforementioned amounts were recognized in salary expenses.

  • Employees ’ compensation and directors ’ and supervisors ’ remuneration of 2015 as resolved by the meeting of board of directors were in agreement with those amounts recognised in the 2015 financial statements.

  • Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “ Market Observation Post System ” at the website of the Taiwan Stock Exchange. 

~35~

(23) Income tax

A. Income tax expense

  • a) Components of income tax expense:
For the three-month period For the three-month period For the three-month period For the three-month period
endedJune30,2016 endedJune30,2015
Current tax:
Current tax on profits for the period $ 18,296
 $ 21,395
Adjustments in respect of prior
years ( 16,180)
 ( 8,195)
Total current tax 2,116 13,200
Deferred tax:
Origination and reversal of
temporary differences 8,350 ( 4,087)
Total deferred tax 8,350 ( 4,087)
Income tax expense $ 10,466 $ 9,113
For the six-month period For the six-month period
endedJune30,2016 endedJune30,2015
Current tax:
Current tax on profits for the period $ 31,889
 $ 23,594
Adjustments in respect of prior
years ( 16,022)
 ( 7,344)
Total current tax 15,867 16,250
Deferred tax:
Origination and reversal of
temporary differences ( 10,530)
 ( 6,551)
Total deferred tax ( 10,530)
 ( 6,551)
Income tax expense $ 5,337 $ 9,699

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

For the three-month period For the three-month period For the three-month period For the three-month period
ended June 30,2016 ended June 30,2015
Translation differences of foreign
operations ($ 20,050) ($ 18,009)
For the six-month period For the six-month period
ended June 30,2016 ended June 30,2015
Translation differences of foreign
operations ($ 46,073) ($ 39,910)
  • B. As of June 30, 2016, the Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority. 
~36~

C. Unappropriated retained earnings:

Earnings generated in and
after 1998		 June30,2016
2,839,278
$		 December31,2015
3,047,283
$		 June30,2015
2,845,407
$

D. As of June 30, 2016, December 31, 2015 and June 30, 2015, the balance of the imputation tax credit account was $275,445, $260,906 and $273,873, respectively. The creditable tax rate is estimated to be 9.04% for the year ended December 31, 2015 and was 9.24% for the year ended December 31, 2014.

(24) Earnings per share

ended December 31, 2014.
Earnings per share
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Restricted stock
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares		 For the three-monthperiod endedJune30,2016
Amount after tax
1,081
$ 1,081
$ -
1,081
$		 Weighted average number of
ordinary shares outstanding
(share in thousands)
265,840
264
266,104		 Earnings per share
(in dollars)
0.01
$
0.01
$		 
~37~
For the three-monthperiod endedJune For the three-monthperiod endedJune For the three-monthperiod endedJune 30, 2015
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 $ 40,617 270,254 $ 0.15
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent $ 40,617
Assumed conversion of all
dilutive potential ordinary
shares
Employees stock options - 4
Employees’ bonus - 1,314
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares $ 40,617 271,572 $ 0.15
For the six-monthperiod endedJune30,2016
Weighted average number of
ordinary shares outstanding Loss per share
Amount after tax (share in thousands) (in dollars)
Basic losses per share
Loss attributable to ordinary
shareholders of the parent ($ 46,501) 265,840 ($ 0.17)

For the six-month period ended June 30, 2016, the Group’s employee stock options, restricted shares and employees’ reward have anti-dilution effect. 

~38~
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees stock options
Employees’ bonus
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares		 For the six-monthperiod endedJune30,2015 For the six-monthperiod endedJune30,2015 For the six-monthperiod endedJune30,2015
Amount after tax
43,098
$ 43,098
$ -
-
43,098
$		 Weighted average number of
ordinary shares outstanding
(share in thousands)
270,197
46
1,314
271,557		 Earnings per share
(in dollars)
0.16
$
0.16
$

(25) Operating leases

The Group leases office buildings for operational needs under non-cancellable operating lease agreements. These lease terms are between 2016 and 2027. Most of the lease agreements are renewable at the market price at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

Not more than 1 year
More than 1 year but
not more than 5
Over 5 years		 June30,2016
12,850
$ 20,436
24,026
57,312
$		 December31,2015
16,963
$ 22,285
25,874
65,122
$		 June30,2015
19,149
$ 19,683
27,722
66,554
$		 
~39~

(26) Supplemental cash flow information

A. Investing activities with partial cash payments

For the six-month period For the six-month period For the six-month period For the six-month period
ended June 30,2016 ended June 30,2015
Acquisitions of property, plant, and
equipment $ 17,084
 $ 30,989
Add:property and equipment and
construction billings payable at
beginning of period 61,027 8,332
Less: property and equipment and
construction billings payable at end
of period ( 3,166)
 ( 18,046)
Cash paid $ 74,945 $ 21,275
For the six-month period For the six-month period
ended June 30,2016 ended June 30,2015
Acquisitions of intangible assets $ 15,433
 $ 428
Add: Payable at beginning of period - 6,163
Less: Payable at end of period ( 9,067)
 -
Cash paid $ 6,366 $ 6,591
Financing activities with no cash flow effects
For the six-month period For the six-month period
ended June 30,2016 ended June 30,2015
Cash dividend declared $ 134,140
 $ 135,127
Additional paid-in capital returned
to stockholders 134,140 135,127
$ 268,280 $ 270,254

B. Financing activities with no cash flow effects

(27) Transactions with non-controlling interest

For the six-month period ended June 30, 2016, the Group acquired an additional 0.41% shares of its subsidiary –Altek Autotronics Corporation for a total cash consideration of $1,483. This transaction resulted in a decrease in the non-controlling interest by $1,436 and a decrease in the equity attributable to owners of the parent by $47. The effect of the change in ownership interests in Altek Autotronics Corporation on the equity attributable to owners of the parent for the six-month period ended June 30, 2016 is shown below: 

~40~
June30,2016
Carrying amount of non-controlling interest acquired $ 1,436
Consideration paid to non-controlling interest ( 1,483)
Capital surplus
-difference between proceeds on acquisition of or disposal
of equity interest in a subsidiary and its carrying amount ($ 47)

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties:

No significant related party transactions.

(2) Key management compensation

Salaries and other short-term employee
benefits
Post-employment benefits
Share-based payments
Total
Salaries and other short-term employee
benefits
Post-employment benefits
Share-based payments
Total		 For the three-month period
endedJune30,2016
7,520
$ 162
3,040
10,722
$ For the six-month period
endedJune30,2016
18,829
$ 350
3,040
22,219
$		 For the three-month period
endedJune30,2015
6,391
$ 216
255
6,862
$ For the six-month period
endedJune30,2015
17,399
$ 432
546
18,377
$

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

Contingencies

a) The GUC (General Unsecured Creditor Trustee) of Eastman Kodak Company (hereunder ‘Kodak’) filed a lawsuit against the Company in the United States Bankruptcy Court for the Southern District of New York, asserting certain payments in 49.2 million transactions prior to Kodak’s bankruptcy were out of ordinary course of business. The Company vigorously disputed GUC’s claim, and insists that the transactions had always been made in the ordinary course of business with Kodak. According to the press release, GUC has sued over 700 of Kodak’s suppliers, trying to require marginal settlement fees from the suppliers, as it is a regular ploy of US bankruptcy lawyers in bankruptcy cases. For the protection of shareholders’ interests, the Company did not accept GUC’s 

~41~

settlement proposal. The GUC’s assertion has now been heard by the court, and this incident did not have a significantly impact on the Company’s business and financial performance.

  • b) On December 22, 2015, the Company filed a civil complaint against HTC Corporation with the Taiwan Taipei District Court, alleging HTC Corporation’s default in relation to the agreed upon Manufacturing and Supply Agreement and claiming damage of USD 11,126 thousand against HTC Corporation. As of August 12, 2016, the case is still under trial.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT 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

The carrying amounts of financial instruments (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits (shown as non-current assets), short-term borrowings, notes payable, accounts payable, other payables, and guarantee deposits received (shown as non-current liabilities)) are approximate to their fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

  • B. Financial risk management policies

  • a) The Group’s 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. 

~42~

  • 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 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 transactions denominated in the relevant foreign currencies.

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

June 30, 2016

June30, 2016 2016 2016
Foreign Currency
Amount
(In thousands)
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
USD 86,462
USD:RMB
USD 53,767
Non-monetary items
USD:NTD
USD 4,119
Financial liabilities
Monetary items
USD:NTD
USD 82,444
USD:RMB
USD 46,567		 Foreign Currency
Amount
(In thousands)		 Exchange
Rate		 Book Value
(NTD)		 SensitivityAnalysis
Extent of
Variation		 Effect on
Profit or
(Loss)		 Effect on
Other
Comprehensive
Income(Loss)
32.275
6.6312
32.275
32.275
6.6312		 2,790,561
$ 1,735,330
132,947
$ 2,660,880
$ 1,502,950		 1%
1%
1%
1%
1%		 27,906
$ 17,353
-
$ 26,609)
($ 15,030)
(		 -
$ -
1,329
$ -
$ -		 


~43~

December 31, 2015

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
USD:RMB
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:RMB		 Foreign Currency
Amount
(In thousands)
Exchange
Rate
32.825
6.4936

32.825
32.825
6.4936		 Book Value
(NTD)
3,308,136
$ 2,656,330
138,206
$ 3,045,438
$ 2,226,946		 Effect on
Effect on
Other
Extent of
Profit or
Comprehensive
Variation
(Loss)
Income(Loss)
1%
33,081
$ -
$ 1%
26,563
-
1%
-
$ 1,382
$ 1%
30,454)
($ -
$ 1%
22,269)
(
-
SensitivityAnalysis		 Effect on
Effect on
Other
Extent of
Profit or
Comprehensive
Variation
(Loss)
Income(Loss)
1%
33,081
$ -
$ 1%
26,563
-
1%
-
$ 1,382
$ 1%
30,454)
($ -
$ 1%
22,269)
(
-
SensitivityAnalysis		 Effect on
Effect on
Other
Extent of
Profit or
Comprehensive
Variation
(Loss)
Income(Loss)
1%
33,081
$ -
$ 1%
26,563
-
1%
-
$ 1,382
$ 1%
30,454)
($ -
$ 1%
22,269)
(
-
SensitivityAnalysis
Effect on
Profit or
(Loss)
33,081
$ 26,563
-
$ 30,454)
($ 22,269)
(		 Effect on
Other
Comprehensive
Income(Loss)
-
$ -
1,382
$ -
$ -
USD 100,781
USD 80,924
USD 4,210
USD 92,778
USD 67,843


June 30, 2015

June30, 2015 2015 2015
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
USD:RMB
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:RMB		 Foreign Currency
Amount
Exchange
(In thousands)
Rate
USD 103,804
30.860
USD 60,075
6.1136
USD 5,507
30.860
USD 101,032
30.860
USD 69,141
6.1136		 Book Value
(NTD)		 SensitivityAnalysis
Extent of
Variation		 Effect on
Profit or
(Loss)		 Effect on
Other
Comprehensive
Income(Loss)
3,203,391
$ 1,853,915
169,943
$ 3,117,848
$ 2,133,691		 1%
1%
1%
1%
1%		 32,034
$ 18,539
-
$ 31,178)
($ 21,337)
(		 -
$ -
1,699
$ -
$ -


v.Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and six-month periods ended June 30, 2016 and 2015 amounted to $10,728, ($1,990), $15,554 and $3,231, respectively. 

~44~

~45~

Interest rate risk

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

The Group raised short-term borrowings at fixed rates during the six-month periods ended June 30, 2016 and 2015, and thus had 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 analyzing 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 utilization 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 for the six-month periods ended June 30, 2016 and 2015.

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

  • iv. The credit quality information of financial assets that are neither past due nor impaired or past due and not impaired is provided in the statement in Note 6(3).

  • 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, and compliance with internal balance sheet ratio targets.

  • ii. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group treasury. Group treasury 

~46~

invests surplus cash in interest bearing current accounts, time deposits and marketable securities, 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:
June 30, 2016
Short-term borrowings
Accounts payable
Other payables
Guarantee deposits recevied
Non-derivative financial liabilities:
December 31, 2015
Short-term borrowings
Accounts payable
Other payables
Guarantee deposits recevied
Non-derivative financial liabilities:
June 30, 2015
Short-term borrowings
Accounts payable
Other payables
Guarantee deposits received		 Less than 1year
2,205,000
$ 1,904,322
720,927
-
Less than 1year
1,730,000
$ 2,422,069
510,923
-
Less than 1year
1,542,000
$ 2,346,376
741,052
-		 Over 1year
-
$ -
-
6,818
Over 1year
-
$ -
-
6,576
Over 1year
-
$ -
-
12,539

(3) Fair value estimation

  • A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed beneficiary certificates, on-the-run derivative instruments with quoted market prices is included in Level 1. 

~47~

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

  • Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

  • B. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at June 30, 2016 , December 31, 2015 and June 30, 2015 is as follows:

June 30, 2016
Assets
Recurring fair value
measurements
Financial assets at fair
value through profit or loss
Beneficiary certificate
December 31, 2015
Assets
Recurring fair value
measurements
Financial assets at fair
value though profit or loss
Beneficiary certificate
June 30, 2015
Assets
Recurring fair value
measurements
Financial assets at fair
value though profit or loss
Beneficiary certificate		 Level 1
811,789
$ Level 1
427,531
$ Level 1
402,846
$		 Level 2
-
$ Level 2
-
$ Level 2
-
$		 Level3
-
$ Level3
-
$ Level3
-
$		 Total
811,789
$
Total
427,531
$
Total
402,846
$
  • C. The methods and assumptions the Group used to measure fair value are as follows:

The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Market quoted price

Open-end fund Net asset value 

~48~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

  • 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 (not including subsidiaries, associates and joint ventures) : Please refer to table 1.

  • D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.

  • E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • F. Disposal of real estate reaching NT$300 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: Please refer to table 2.

  • H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.

  • I. Trading in derivative financial instruments undertaken during the reporting periods: None.

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China ): Please refer to table 5.

  • (3) Information on investments in Mainland China

  • A. The related information of investments in Mainland China: Please refer to table 6.

  • B. Significant transactions, either directly or indirectly throught a third area, with investee companies in the Mainland Area:

For the significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please refer to tables 2 and 4.

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 Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

(3) Information about segment profit or loss, assets and liabilities

None. 

~49~

Altek Corporation and subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

June 30, 2016

June 30, 2016
Table 1
Securities held by		 Marketable securities Relationship with the
securities issuer		 General
ledger account		 As ofJune 30,2016
Expressed in thousands of NTD
(Except as otherwise indicated)
Number of shares Bookvalue Ownership (%) Fairvalue
Altek Corporation
"
"
Altek (Kunshan) Co., Ltd.
"
Altek Investment Co., Ltd.
Altek Autotronics Corporation
Altek Semiconductor
Corporation
Altek Biotechnology
Corporation		 Gianta Co., Ltd. - Common stock
Yung Li Investments Inc. - Common
stock
Hua-chuang Automobile Information
Technical Center Co., Ltd. - Common
stock
Guangdong Kingding Optical Machine
Co., Ltd.
CPEC Huachuang Private Equity
(Kunshan) Enterprise (Linited
Portnership)
Money Market Fund
Money Market Fund
Money Market Fund
Money Market Fund		 Director
None
None
Director
None
None
None
None
None		 Financial assets carried at
cost - non-current
"
"
"
"
Financial assets at fair value
through profit or loss-current
"
"
"		 762,876
1,999,355
10,000,000
1,200,000
N/A
427,807
25,518,848
4,630,619
19,239,564		 10,312
$ 13,947
93,450
5,840
19,469
6,828
336,604
75,334
393,023		 14.55%
4.84%
2.00%
6.45%
(Note)
N/A
N/A
N/A
N/A		 10,312
$ 13,947
93,450
5,840
19,469
6,828
336,604
75,334
393,023

Note : 1.03% of CPEC Huachuang Private Equity (Kunshan) Enterprise (Linited Portnership)’s capital contribution.

Table 1, Page 1

Altek Corporation and subsidiaries

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

For the six-month period ended June 30, 2016

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller Counterparty Relationship with the
counterparty		 Transaction Transaction Differences in transaction terms
compared to third party
transactions		 Differences in transaction terms
compared to third party
transactions		 Notes/accounts
receivable(payable)		 Notes/accounts
receivable(payable)
Purchases
(sales)		 Amount Percentage of
total purchases
(sales)		 Credit term Unitprice Credit term Balance Percentage of
total notes/accounts
receivable(payable)
Altek Corporation
Altek International
Investment Co.,
Ltd.		 Altek International
Investment Co., Ltd.
Altek (Kunshan) Co., Ltd.		 Parent and affiliated
company
"		 Purchases
Purchases		 1,394,840
$ 2,048,153		 95%
100%		 Net 120 days
Net 75 days		 Approximately
the same price
with third parties
"		 Note
"		 1,752,908)
($ 923,700)
(		 97%
98%

Note: The payment term with third parties was net 60~120 days.

Table 2, Page 1

Altek Corporation and subsidiaries

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

June 30, 2016

Table 3
Creditor		 Counterparty Relationship
with the counterparty		 Balance as atJune30,2016 Turnover rate Overdue receivables Overdue receivables Amount collected
subsequent to the
balance sheet date
Allowance for
doubtful accounts
Expressed in thousands of NTD
(Except as otherwise indicated)		 Amount collected
subsequent to the
balance sheet date
Allowance for
doubtful accounts
Expressed in thousands of NTD
(Except as otherwise indicated)
Amount Action taken
Altek International
Investment Co., Ltd.
Altek (Kunshan) Co., Ltd.		 Altek Corporation
Alteck International Investment
Co., Ltd.		 Parent company
Parent company		 1,752,908
$ 923,700		 1.81
8.63		 -
$ -		 N/A
N/A		 361,515
$ 357,943		 -
$ -

Table 3, Page 1

Altek Corporation and subsidiaries

Table 4

Significant inter-company transactions during the reporting periods

For the six-month period ended June 30, 2016

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

Transaction
Companyname Counterparty Relationship
(Note 1)		 General ledger account Amount Transaction terms Percentage of consolidated total operating
revenues or total assets(Note 2)
Altek Corporation
"
Altek International Investment Co., Ltd.
"		 Altek International Investment Co., Ltd.
"
Altek (Kunshan) Co., Ltd.
"		 (1)
(1)
(3)
(3)		 Purchases
Accounts payable
Purchases
Accounts payable		 1,394,840
$ 1,752,908
2,048,153
923,700		 Net 120 days
"
Net 75 days
"		 27%
12%
39%
6%

Note 1: Relationship between transaction and counterparty is classified into the following categories:

  • (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.

Note 3: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Table 4, Page 1

Altek Corporation and subsidiaries

Information on investees

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

For the six-month period ended June 30, 2016

Investor Investee Location Main business activities Initial invest ment amount Shares held as at June 30,2016 held as at June 30,2016 Net profit (loss) of
the investee for the
six-month period
ended June 30,2016		 Investment income(loss)
recognised by the Company
for the six-month period
ended June 30,2016		 Footnote
Balance
as at June 30,
2016		 Balance
as at December 31,
2015		 Number of shares Ownership (%) Book value
Altek Corporation
"
"
"
"
"
Altek International
Investment Co., Ltd.
"
Altek Semiconductor
(Cayman) Co., Ltd.
Altek Biotechnology
Holding (Cayman)
Co., Ltd.		 Altek International
Investment Co., Ltd.
Altek Japan Corporation
Altek Investment Co.,
Ltd.
Altek Autotronics
Corporation
Altek Biotechnology
Corporation
Altek International
Holdomg (BVI) Co, Ltd.
Altek Lab Inc.
JinJing Optical
Technology Co., ltd.
Altek Semiconductor
Corporation
Altek Biotechnology
Corporation		 British Virgin
Islands
Japan
Republic of China
Republic of China
Republic of China
British Virgin
Islands
U.S.A.
Samoa
Republic of China
Republic of China		 Investment and general
business operations
Sale and design of optical
instruments
Investment
Research design,
manufacture and sales of
car electronic components
Research and
development, manufacture
and sales of biotechnology
Investment and general
business operations
Design service
Investment and general
business operations
Research design and sales
of ASIC
Research and
development, manufacture
and sales of biotechnology		 3,033,618
$ 2,869
50,000
184,080
-
415,376
118,763
112,963
200,000
415,376		 3,033,618
$ 2,869
50,000
182,597
1,000
-
118,763
112,963
200,000
-		 92,726,249
1,000
5,000,000
21,775,200
-
12,865,921
11,311,875
3,500,000
20,000,000
40,100,000		 100%
100%
100%
100%
-
100%
100%
23.33%
100%
100%		 9,249,356
$ 14,036
26,236
327,827
-
430,692
61,074
-
300,584
430,692		 130,257)
($ 503
39)
(
10,277)
(
29,736
-
103)
(
54,210)
(
22,879
29,736		 130,257)
($ 503
39)
(
10,248)
(
29,736
-
103)
(
-
16,335
-		 Note 1
Note 3
Note 3
Note 2
Note 3

Note 1: Ownership (%) on Altek Autotronics Corporation held by Altek Corporation and Altek Investment Co., Ltd. are 90.73% and 9.27%, respectively.

Note 2: Common stock of 9,311,875 shares and preferred stock of 2,000,000 shares. Note 3: In June 2016, the Group’s investment structure transfer the share holding of Altek Biotechnology Corporation to be owned by Altek Biotechnology Holding (Cayman) Co., Ltd. , which is a subsidiary of Altek International Holding (BVI) Co., Ltd.

Table 5, Page 1

Altek Corporation and subsidiaries

Information on investments in Mainland China

Table 6

For the six-month period ended June 30, 2016

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland
China		 Main business
activities		 Paid-incapital Investment
method
（Note1）		 Accumulated amount
of remittance from
Taiwan to Mainland
China as of
January1,2016		 Amount remitte
Mainland C
remitted back
the six-monthperiod		 d from Taiwan to
hina/Amount
to Taiwan for
ended June 30,2016		 Accumulated amount
of remittance from
Taiwan toMainland
China as of
June 30,2016		 Net profit (loss) of
investee for the six-
month period ended
June 30,2016		 Ownership
held by
the
Company
(direct or
indirect)		 Investment income
(loss) recognised
by the Company
for the six-month
period
ended June 30,
2016		 Book value of
investments in
Mainland China
as of June 30,
2016		 Accumulated
amount
of investment
income
remitted back to
Taiwan as of
June 30,2016
Remitted to Mainland
China		 Remitted back to
Taiwan
Altek (Kunshan) Co.,
Ltd. (Note 2)
Manufacture and sale of
digital still cameras and
its accessories
1,600,840
$ 2
Altek EMS (Kunshan)
Co., Ltd. (Note 3)
Manufacture and sale of
related engineering
services
161,375
2
Altek Trading
(Shanghai) Limited
Wholesale, import and
export of digital
cameras, digital video
cameras and their
associated accessories
274,338
2
Kinko Optical (Suzhou)
Co., Ltd.
Manufacture and sale of
optical components
484,125
2
Phoenix Optical
(Shanghai) Co., Ltd.
Manufacturing and
marketing of digital
cameras and its key
components, photo
sensor and
optoelectronic
equipment
510,687
2
Altek Precision
(Kunshan) Co., Ltd.
Design, manufacture
and sales of digital
camera parts
445,395
2
Altek Optical
Technology
(Kunshan)
Co., Ltd.
Manufacture and sales
of digital camera and its
accessories and optical
components
484,125
2
Note 1: Investment methods are classified into the following three categories; fill in the n
(1)Directly invest in a company in Mainland China.
(2)Through investing in an existing company in the third area,which then investee
(3)Others.
Note 2: Including retained earnings capitalized of US$4,600 (In thousand of US dollars).
Note 3: Including retained earnings capitalized of US$3,600 (In thousand of US dollars).
Companyname
Accumulat
Mai		 1,452,375
$ -
$ 293,154
-
274,338
-
112,963
-
286,100
-
445,395
-
484,125
-
umber of category each case belongs to:
d in the investee in Mainland China.
ed amount of remittance from Taiwan to
nland China as ofJune 30,2016		 -
$ -
-
-
-
-
-
Investme
Commissiono		 1,452,375
$ 293,154
274,338
112,963
286,100
445,395
484,125
nt amount approved by the In
ftheMinistry of EconomicA		 117,928)
($ 9,041
( 9,554)
( 52,656)
488
( 1,542)
887
vestment
ffairs (MOEA)		 100%
117,928)
($ 100%
9,041
100%
( 9,554)
23.33%
-
40%
-
100%
( 1,542)
100%
887
Ceiling on investments i
by theInvestment C		 3,931,335
$ 798,585
298,609
-
132,947
162,612
147,232
n Mainland China
ommissionof MO		 -
$ -
-
-
-
-
-
imposed
EA
Altek Corporation $ 3,390,161
 $ 4,613,840
 $ -

Note:According to “REGULATIONS COVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL 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.

Table 6, Page 1

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