CHROMA — Annual Report 2015

Nov 13, 2015

Chroma Ate Inc.

Financial Statements for the Years Ended December 31, 2015 and 2014 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Chroma Ate Inc.

We have audited the accompanying balance sheets of Chroma Ate Inc. (the “Corporation”) as of December 31, 2015 and 2014, and the related statements of comprehensive income, change in shareholders’ equity and cash flows for the years ended December 31, 2015 and 2014. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Regulation Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Chroma Ate Inc. as of December 31, 2015 and 2014, and the result of its operations and cash flows for the years ended December 31, 2015 and 2014, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

February 23, 2016

Notice to Readers

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

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

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CHROMA ATE INC.

BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Available-for-sale financial assets - current (Notes 4 and 8) Investments in bonds with no active market quotes (Notes 4, 6 and 10) Notes receivable - related parties (Note 27) Notes receivable - third parties Accounts receivable - third parties, net (Notes 4, 5 and 11) Accounts receivable - related parties (Notes 4, 5, 11 and 27) Other receivable - related parties (Note 27) Inventories (Notes 4, 5 and 12) Prepayments Other current assets (Note 27) Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4 and 8) Financial assets carried at cost - noncurrent (Notes 4 and 9) Investments accounted for by the equity method (Notes 4, 5 and 13) Property, plant and equipment (Notes 4, 14 and 28) Goodwill (Notes 4, 5 and 15) Deferred tax assets (Notes 4, 5 and 22) Prepayments for equipment Refundable deposits Prepayments for investments Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Short-term bills payable Financial liability at fair value through profit or loss - current (Notes 4 and 7) Notes payable Accounts payable Accounts payable - related parties (Note 27) Other payable (Note 18) Current tax payable (Notes 4, 5 and 22) Receipts in advance (Note 27) Current portion of long-term borrowings (Notes 4 and 16) Other current liabilities - other Total current liabilities NONCURRENT LIABILITIES Long-term borrowings (Notes 4 and 16) Bonds payable (Notes 4 and 17) Deferred income tax liabilities (Notes 4 and 22) Net defined benefit liabilities (Notes 4, 5 and 19) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 20 and 24) Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equities Treasury stock Total equities TOTAL		December 31, 2015 Amount % $ 878,892 6 1,824,521 13 - - 3,920 - 6,784 - 591,750 4 1,063,503 8 168,854 1 1,300,519 9 51,834 1 109,114 1 5,999,691 43 359,543 2 181,760 1 3,339,519 24 1,844,215 13 94,424 1 88,429 1 2,046,426 15 1,943 - - - 8,966 - 7,965,225 57 $ 13,964,916 100 $ 100,000 1 - - 1,483 - 35 - 534,402 4 34,647 - 459,173 4 136,340 1 28,111 - - - 16,515 - 1,310,706 10 1,230,000 9 1,758,093 12 115,166 1 140,281 1 566 - 3,244,106 23 4,554,812 33 3,791,699 27 1,302,269 9 1,600,920 11 86,888 1 2,264,377 16 3,952,185 28 399,665 3 (35,714) - 9,410,104 67 $ 13,964,916 100	December 31, 2014 (Audited after Restated) Amount % $ 482,015 4 1,634,854 12 51,091 - 405 - 7,722 - 974,700 7 1,304,757 10 174,126 1 1,256,528 10 28,654 - 100,789 1 6,015,641 45 468,575 4 159,044 1 3,074,447 23 1,907,429 14 94,424 1 80,157 1 1,431,535 11 2,675 - 33,000 - 24,812 - 7,276,098 55 $ 13,291,739 100 $ 150,000 1 - - 927 - 1,051 - 440,799 3 102,703 1 499,106 4 166,794 1 7,815 - 70,000 1 16,167 - 1,455,362 11 630,000 4 1,731,006 13 102,987 1 118,870 1 566 - 2,583,429 19 4,038,791 30 3,787,821 29 1,256,654 9 1,469,276 11 86,888 1 2,180,919 16 3,737,083 28 507,104 4 (35,714) - 9,252,948 70 $ 13,291,739 100	January 1, 2014 (Audited after Restated)	January 1, 2014 (Audited after Restated)
					Amount % $ 404,475 4 - - 1,600 - 15,375 - 574 - 646,126 6 1,031,310 9 217,825 2 1,174,172 11 25,871 - 90,104 1 3,607,432 33 534,668 5 141,777 1 3,136,883 29 1,924,727 17 94,424 1 70,069 1 1,432,824 13 3,137 - 2,767 - 41,778 - 7,383,054 67 $ 10,990,486 100 $ 550,000 5 80,000 1 - - 966 - 351,694 3 33,625 - 397,260 4 113,273 1 8,190 - - - 16,512 - 1,551,520 14 700,000 6 - - 82,872 1 97,395 1 1,003 - 881,270 8 2,432,790 22 3,767,599 34 960,198 9 1,348,787 12 86,888 1 1,951,324 18 3,386,999 31 478,800 4 (35,900) - 8,557,696 78 $ 10,990,486 100

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

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CHROMA ATE INC.

STATEMENTS OF INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES (Notes 4 and 27) Sale revenues Less: Sales returns Sales allowances Net operating revenues OPERATING COSTS (Notes 12, 21 and 27) GROSS PROFIT UNEARNED GROSS PROFIT EARNED OPERATING PROFIT OPERATING EXPENSES (Notes 21 and 27) Selling General administrative Research and development Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSE Share of profits of associates and joint venture, net (Notes 4 and 13) Foreign currency exchange gain, net (Notes 4 and 30) Impairment loss (Notes 4 and 9) Gain on disposal of investments, net (Note 4) Valuation gain on financial assets (liabilities) at fair value through profit, net (Notes 4, 7 and 17) Other expenses Gain on disposal of property, plant and equipment, net (Note 4) Gain on reversal of bad debts Subsidy income (Note 4) Rental income (Note 27) Dividend income (Note 4) Other income - other (Note 27) Interest income (Notes 4 and 27)		Years Ended	December 31	December 31
		2015 Amount % $ 4,605,024 101 (62,184) (1) (3,399) - 4,539,441 100 (1,977,863) (44) 2,561,578 56 (41,744) (1) 2,519,834 55 552,449 12 357,284 8 784,380 17 1,694,113 37 825,721 18 416,646 9 52,536 1 (14,674) - 368 - (556) - (850) - 394 - 9,000 - 18,302 - 30,882 1 29,724 1 20,735 1 6,141 -	2014 (Audited after Restated)
				Amount % $ 5,162,703 100 (20,743) - (6,761) - 5,135,199 100 (2,361,025) (46) 2,774,174 54 (21,257) - 2,752,917 54 539,957 10 406,909 8 753,906 15 1,700,772 33 1,052,145 21 226,181 4 84,046 2 (15,500) - 14,571 - 3,933 - (1,842) - 318 - - - 37,840 1 31,552 1 27,630 - 21,608 - 12,122 - (Continued)

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CHROMA ATE INC.

STATEMENTS OF INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Management service income (Note 27) Interest expense (Notes 4 and 21) Total nonoperating income and expense INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET INCOME OTHER COMPREHENSIVE INCOME, NET (Note 20) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plans Share of other comprehensive income of associates accounted for by the equity-method Item that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Unrealized loss from available-for-sale financial assets Share of other comprehensive income of associates accounted for by the equity-method Total other comprehensive income TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (NT$; Note 23) Basic Diluted		Years Ended	December 31	December 31
		2015 Amount % $ 8,650 - (28,834) (1) 548,464 12 1,374,185 30 137,628 3 1,236,557 27 (26,849) (1) 352 - (17,071) - (99,791) (2) 9,423 - (133,936) (3) $ 1,102,621 24 $3.28 $3.10	2014 (Audited after Restated)
				Amount % $ 11,000 - (21,627) - 431,832 8 1,483,977 29 165,604 3 1,318,373 26 (27,308) (1) 919 - 89,661 2 (63,519) (1) 2,162 - 1,915 - $ 1,320,288 26 $3.51 $3.30

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

(Concluded)

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CHROMA ATE INC.

STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

Issued Capital Capital Surplus BALANCE, JANUARY 1, 2014 $ 3,767,599 $ 960,198 Effect of retrospective application and retrospective restatement - - BALANCE AT JANUARY 1, 2014, AS RESTATED 3,767,599 960,198 Appropriation of the 2013 earnings Legal reserve - - Cash dividends - NT$2.5 per share - - Net income for the year ended December 31, 2014 - - Other comprehensive income for the year ended December 31, 2014 - - Total comprehensive income for the year ended December 31, 2014 - - Change in other capital surplus Equity component of convertible bonds issued by the Corporation - 141,487 Change in capital surplus from investments in subsidiaries, associates and joint ventures accounted for using the equity method - 1,064 Convertible bonds converted to ordinary shares 20,222 115,283 Disposal of the Corporation's share held by subsidiaries - 555 Compensation recognized for employee stock options - 33,278 Adjustment of capital surplus for the Corporation's cash dividends received by subsidiaries - 4,789 Increase (decrease) in total equities for the year ended December 31, 2014 20,222 296,456 BALANCE, DECEMBER 31, 2014, AS RESTATED 3,787,821 1,256,654 Appropriation of the 2014 earnings Legal reserve - - Cash dividends - NT$2.6 per share - - Change in other capital surplus Change in capital surplus from investments in subsidiaries, associates and joint ventures accounted for using the equity method - - Net income for the year ended December 31, 2015 - - Other comprehensive income for the year ended December 31, 2015 - - Total comprehensive income for the year ended December 31, 2015 - - Convertible bonds converted to ordinary shares 42 239 Adjustments of capital surplus for the Corporation's cash dividends received by subsidiaries - 4,994 Compensation recognized on employee stock options 3,836 40,382 Increase (decrease) in total equities for the year ended December 31, 2015 3,878 45,615 BALANCE, DECEMBER 31, 2015 $ 3,791,699 $ 1,302,269	**Retained Earnings **	Total $ 3,406,913 (19,914) 3,386,999 - (941,900 ) 1,318,373 (26,389) 1,291,984 - - - - - - 350,084 3,737,083 - (987,433 ) (7,525 ) 1,236,557 (26,497) 1,210,060 - - - 215,102 $ 3,952,185	Other Equities	Total Other Equities Treasury Stock Total Equities $ 478,800 $ (35,900 ) $ 8,577,610 - - (19,914) 478,800 (35,900) 8,557,696 - - - - - (941,900 ) - - 1,318,373 28,304 - 1,915 28,304 - 1,320,288 - - 141,487 - - 1,064 - - 135,505 - 186 741 - - 33,278 - - 4,789 28,304 186 695,252 507,104 (35,714 ) 9,252,948 - - - - - (987,433 ) - - (7,525 ) - - 1,236,557 (107,439) - (133,936) (107,439) - 1,102,621 - - 281 - - 4,994 - - 44,218 (107,439) - 157,156 $ 399,665 $ (35,714) $ 9,410,104
			Exchange Differences on Unrealized Gain (Loss) from Translating Foreign Operations Available-for-sale Financial Assets $ 44,755 $ 434,045 - - 44,755 434,045 - - - - - - 92,001 (63,697) 92,001 (63,697) - - - - - - - - - - - - 92,001 (63,697) 136,756 370,348 - - - - - - - - (8,788) (98,651) (8,788) (98,651) - - - - - - (8,788) (98,651) $ 127,968 $ 271,697
	Legal Reserve Special Reserve Unappropriated Earnings $ 1,348,787 $ 86,888 $ 1,971,238 - - (19,914) 1,348,787 86,888 1,951,324 120,489 - (120,489 ) - - (941,900 ) - - 1,318,373 - - (26,389) - - 1,291,984 - - - - - - - - - - - - - - - - - - 120,489 - 229,595 1,469,276 86,888 2,180,919 131,644 - (131,644 ) - - (987,433 ) - - (7,525 ) - - 1,236,557 - - (26,497) - - 1,210,060 - - - - - - - - - 131,644 - 83,458 $ 1,600,920 $ 86,888 $ 2,264,377

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

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CHROMA ATE INC.

STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net income before income tax Adjustments for: Share of profits of subsidiaries, associates and joint venture, net Depreciation Unrealized foreign currency exchange gain Unrealized gain on the transactions with subsidiaries, associates and joint ventures Impairment loss on non-derivative financial assets Dividend income Interest expense Compensation cost of employee stock options Impairment loss on financial assets (Gain on reversal) bad debts expense Interest income Gain on disposal and retirement of property, plant and equipment, net Gain on disposal of investments, net Net changes related to operating assets and liabilities Financial assets held for trading Notes receivable Accounts receivable Inventories Prepayments Other current assets Financial liabilities held for trading Notes payable Accounts payable Other payables Receipts in advance Other current liabilities Net defined benefit liabilities Cash provided by operating Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment to acquire property, plant and equipment Payment to acquire available-for-sale financial assets Dividend received Payment to acquire investments accounted for by the equity method Proceeds of the disposal available-for-sale financial assets		Years Ended December 31
		2015 2014 (Audited after Restated) $ 1,374,185 $ 1,483,977 (416,646) (226,181) 158,264 146,470 (43,566) (71,616) 41,744 21,257 32,452 51,000 (29,724) (27,630) 28,834 21,627 25,077 33,278 14,674 15,500 (9,000) 24,000 (6,141) (12,122) (394) (318) (368) (14,571) - 102 (2,577) 7,822 662,903 (561,375) (118,162) (224,300) (23,180) (2,783) (6,175) 16,323 556 (3,933) (1,016) 85 30,657 152,394 (40,500) 101,610 20,296 (375) 348 (345) (5,438) (5,833) 1,687,103 924,063 (164,175) (101,152) 1,522,928 822,911 (658,699) (25,526) (300,000) (2,163,975) 259,269 425,859 (131,840) (59,163) 119,942 546,164 (Continued)

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CHROMA ATE INC.

STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Proceeds from disposal of investment in bonds with no quoted market Payment to acquire financial assets at cost Decrease in other noncurrent assets Cash returned of capital reduction of financial assets carried at cost Decrease in other receivables - related parties Interest received Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Payment to acquire investment in bonds with no quoted market Increase in prepayments for long-term investments Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payment of dividends Increase in long-term borrowings Decrease in short-term borrowings Employee incentive stock options Interest paid Proceeds of the issuance of convertible bonds payable Increase in short-term bills payable Decrease in guarantee deposits Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR		Years Ended December 31
		2015 2014 (Audited after Restated) $ 51,091 $ - (16,140) (30,000) 15,846 16,966 11,750 - 11,384 51,560 6,303 12,772 3,452 836 732 462 - (49,491) - (33,000) (626,910) (1,306,536) (987,433) (941,900) 530,000 - (50,000) (400,000) 19,141 - (13,480) (16,048) - 1,994,680 - (80,000) - (437) (501,772) 556,295 2,631 4,870 396,877 77,540 482,015 404,475 $ 878,892 $ 482,015

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

(Concluded)

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NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHROMA ATE INC.

1. GENERAL INFORMATION

Chroma Ate Inc. (the “Corporation”) was incorporated in the Republic of China (ROC) in November 1984. The Corporation mainly designs, assembles, calibrates, manufactures, sells, repairs and maintains software/hardware for computers and peripherals, computerized automatic test systems, electronic test instruments, signal generators, power supplies, telecom power supplies, etc. as well as serves as an agent to sell these products. The Corporation’s shares have been listed on the Taiwan Stock Exchange since December 21, 1996.

The Corporation’s functional currency is New Taiwan dollars (NTD).

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Corporation’s Board of Directors on February 23, 2016.

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

• a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC

Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC on April 3, 2014, stipulated that the Corporation should apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers starting January 1, 2015.

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 IFRSs version would not have any material impact on the Corporation’s accounting policies:

1) IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive, please refer to Note 13 for related disclosures

• 2) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required by the previous standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy previously required only for financial instruments will be extended by IFRS 13 to cover all assets and liabilities within its scope.

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The fair value measurements under IFRS 13 are applied prospectively from January 1, 2015. Refer to Note 26 for related disclosures.

• 3) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 requires items of other comprehensive income to be grouped into those items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified subsequently to profit or loss. Income taxes on related items of other comprehensive income are grouped on the same basis. Under previous IAS 1, there were no such requirements.

The Corporation retrospectively applied the above amendments starting in 2015. Items not expected to be reclassified to profit or loss are remeasurements of the defined benefit plans and the share of the defined benefit plans of associates and joint ventures accounted for using the equity method. Items expected to be reclassified to profit or loss are the exchange differences on translating foreign operations, unrealized gain (loss) on available-for-sale financial assets, and share of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates and joint ventures accounted for using the equity method. The application of the above amendments did not have any impact on the net profit for the period, other comprehensive income for the period (net of income tax), and total comprehensive income for the year.

• 4) Revision to IAS 19 “Employee Benefits”

Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminates the “corridor approach” permitted under previous IAS 19 and accelerates the recognition of past service costs. The revision requires all remeasurements of the defined benefit plans to be recognized immediately through other comprehensive income in order for the net pension asset or liability to reflect the full value of the plan deficit or surplus. Remeasurement of the defined benefit plans is presented separately as other equity.

Furthermore, the interest cost and expected return on plan assets used in previous IAS 19 are replaced with a “net interest” amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. The revised IAS 19 introduces certain changes in the presentation of the defined benefit cost, and also includes more extensive disclosures.

In addition, revised IAS 19 changes the definition of short-term employee benefits as “employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service”. The Corporation’s unused annual leave, which can be carried forward within 24 months after the end of the annual period in which the employee renders service previously classified as short-term employee benefits is classified as other long-term employee benefits under revised IAS 19. Related defined benefit obligation of such other long-term benefit is calculated using the Projected Unit Credit Method. However, this change did not affect unused annual leave presented as a current liability in the consolidated balance sheet.

On initial application of the revised IAS 19, as a result of the retrospective application, the changes in cumulative employee benefit costs as of December 31, 2013 are adjusted to net defined liabilities, deferred tax assets and retained earnings; the carrying amounts of inventories are not adjusted. In addition, in preparing the financial statements for the year ended December 31, 2015, the Corporation elected not to present 2014 comparative information about the sensitivity of the defined benefit obligation. In addition, in preparing the financial statements for the year ended December 31, 2015, the Corporation elects not to present 2014 comparative information about the sensitivity of the defined benefit obligation.

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The impact on the prior period is set out below:

Impact on Assets, Liabilities and Equity As Originally Stated Adjustments Arising from Initial Application December 31, 2014 Investments accounted for by the equity method $ 3,074,762 $ (315) Deferred tax assets 78,193 1,964 Total effect on assets $ 3,152,955 $ 1,649 Net defined benefit liabilities $ 99,544 $ 19,326 Retained earnings $ 2,198,596 $ (17,677) January 1, 2014 Investments accounted for by the equity method $ 3,137,235 $ (352) Deferred tax assets 67,895 2,174 Total effect on assets $ 3,205,130 $ 1,822 Net defined benefit liabilities $ 75,659 $ 21,736 Retained earnings $ 1,971,238 $ (19,914) Year ended December 31, 2014 Operating cost $ (2,361,384) $ 359 Operating expense (1,702,515) 1,743 Share of profit of subsidiaries, associates and joint venture 226,144 37 Income tax expense (165,394) (210) Total effect on net income for the year 1,929 Item that will not be reclassified to profit or loss: Remeasurement of defined benefit plan (27,616) 308 Share of the other comprehensive income of associates adjust ventures 919 - Total effect on other comprehensive income for the year $ 308 Total effect on comprehensive income for the year $ 2,237 Impact on earnings per share Basic $ 3.51 $ - Diluted $ 3.30 $ -

Restated $ 3,074,447 80,157 $ 3,154,604 $ 118,870 $ 2,180,919 $ 3,136,883 70,069 $ 3,206,952 $ 97,395 $ 1,951,324 $ (2,361,025) (1,700,772) 226,181 (165,604) (27,308) 919 $ 3.51 $ 3.30

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

The Corporation has not applied the following New IFRSs issued by the IASB but not yet endorsed by the FSC. As of the date the financial statements were authorized for issue, the FSC has not announced their effective dates.

New IFRSs Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 15 “Revenue from Contracts with Customers” IFRS 16 “Leases” Amendment to IAS 1 “Disclosure Initiative” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 27 “Equity Method in Separate Financial Statements” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”

Effective Date Announced by IASB(Note 1)

July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 3) January 1, 2018 January 1, 2018 To be determined by IASB January 1, 2016 January 1, 2016 January 1, 2018 January 1, 2019 January 1, 2016 January 1, 2017 January 1, 2017 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2016 January 1, 2014 January 1, 2014 January 1, 2014

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

• Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

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The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Corporation’s accounting policies, except for the following:

• 1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

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

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

The impairment of financial assets

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

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

• 2) IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations from January 1, 2017.

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

• Identify the contract with the customer;

• Identify the performance obligations in the contract;

• Determine the transaction price;

• Allocate the transaction price to the performance obligations in the contracts; and

• Recognize revenue when the entity satisfies a performance obligation.

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The accompanying financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Preparation

The accompanying financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• c. Level 3 inputs are unobservable inputs for the asset or liability.

When preparing its financial statements, the Corporation used equity method to account for its investment in subsidiaries, associates and jointly controlled entities. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the financial statements to be the same with the amounts attributable to the owner of the Corporation in its consolidated financial statements, adjustments arising from the differences in accounting treatment between basis and consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and joint ventures and related equity items, as appropriate, in the financial statements.

Classification of Current and Noncurrent Assets and Liabilities

Current assets include:

• a. Assets held primarily for the purpose of trading;

• b. Assets expected to be realized within twelve months after the reporting period; and

• c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

• a. Liabilities held primarily for the purpose of trading;

• b. Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

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• c. Liabilities for which the Corporation does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as noncurrent.

Foreign Currencies

In preparing the Corporation’s financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Nonmonetary items that are measured at historical cost in a foreign currency are not retranslated.

Inventories

Inventories consist of raw materials, semifinished goods, finished goods and work-in-process, which are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

Investments Accounted for Using Equity Method

Investments in subsidiaries, associates and jointly controlled entities are accounted for by the equity method.

• a. Investment in subsidiaries

Subsidiaries are the entities that are controlled by the Corporation.

Under the equity method, the investment is initially recognized at cost and adjusted thereafter to recognize the Corporation's share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the Corporation’s share of the change in other equity of the subsidiary.

Changes in the Corporation’s ownership interest in a subsidiary that do not result in the Corporation losing control of the subsidiary are equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

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When the Corporation’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the subsidiary), the Corporation continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Corporation assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested Corporation. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Corporation recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Corporation loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Corporation had directly disposed of the related assets or liabilities.

Profits and losses resulting from downstream transactions are eliminated in full in the Corporation’s financial statement. Profits and losses from upstream transactions and transactions between subsidiaries are recognized in the Corporation’s financial statements only to the extent of interests in the subsidiary that are not related to the Corporation.

b. Investment in associates and joint ventures

An associate is an entity over which the Corporation has significant influence and that is neither a subsidiary nor an interest in a joint venture. Joint venture is a joint arrangement whereby the Corporation and other parties that have joint control of arrangement have right to the net assets of the arrangement.

The Corporation uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Corporation also recognizes the changes in the Corporation’s share of equity of associates and joint venture.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Corporation subscribes for additional new shares of the associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Corporation’s proportionate interest in the associate and joint

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venture. The Corporation records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Corporation’s share of equity of associates and joint ventures. If the Corporation’s ownership interest is reduced due to the additional subscription of the new shares of associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

When the Corporation’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the associate and joint venture), the Corporation discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Corporation has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Corporation discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that associate and the joint venture on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Corporation continues to apply the equity method and does not remeasured the retained interest.

When a group entity transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Corporation’s financial statements only to the extent of interests in the associate and the joint venture that are not related to the Corporation.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Properties, plant and equipment in the course of construction are carried at cost, less any recognized impairment loss. Cost include professional fees and borrowing cost eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

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On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

Goodwill

For the purposes of impairment testing, goodwill is allocated to each of the Corporation’s cash-generating units or groups of cash-generating units (referred to as cash-generating unit) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the Corporation disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Intangible Assets

• a. Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

• b. Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

• c. Derecognition of intangible assets

On derecognition of intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

Impairment of Tangible and Intangible Assets Other Than Goodwill

At the end of each reporting period, the Corporation reviews the carrying amounts of its tangible and intangible assets (other than goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimates the recoverable amount of the CGUs to which the asset belongs. Corporate assets are allocated to the smallest corporation of cash-generating units on a reasonable and consistent basis of allocation.

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Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

Financial Instruments

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

• a. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• 1) Measurement category

Financial assets are classified into the following categories: Available-for-sale financial assets, and loans and receivables.

• a) Available-for-sale financial assets (AFS financial assets)

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Corporation’s right to receive the dividends is established.

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Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in profit or loss or other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

• b) Loans and receivables

Loans and receivables (including trade receivables, cash and cash equivalent, debt investments with no active market) are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

Cash equivalent includes time deposits with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• 2) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as trade receivables and other receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Corporation’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

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When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and other receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivables and other receivables are considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables and other receivables that are written off against the allowance account.

• 3) Derecognition of financial assets

The Corporation derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset are transferred to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

b. Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Corporation are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Corporation’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Corporation’s own equity instruments.

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• c. Financial liabilities

• 1) Subsequent measurement

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method:

• Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is designated as at fair value through profit or loss.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A financial liability may be designated as at fair value through profit or loss upon initial recognition when doing so results in more relevant information and if:

• a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• b) The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Corporation’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• c) The contract contains one or more embedded derivatives so that the entire combined contract (asset or liability) can be designated as at fair value through profit or loss.

Financial liabilities held for trading are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest or dividend paid on the financial liability. Fair value is determined in the manner described in Note 26.

• 2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

d. Convertible bonds

The component parts of compound instruments (convertible bonds) issued by the Corporation are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

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The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to capital surplus - share premium. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premium.

Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and reduced for estimated customer returns, rebates and other similar allowances.

• a. Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

• 1) The Corporation has transferred to the buyer the significant risks and rewards of ownership of the goods;

• 2) The Corporation retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• 3) The amount of revenue can be measured reliably;

• 4) It is probable that the economic benefits associated with the transaction will flow to the Corporation; and

• 5) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Corporation does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

• b. Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Corporation and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Corporation and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time that the assets are substantially ready for their intended use or sale.

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Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Corporation will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Corporation recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, Government grants whose primary condition is that the Corporation should purchase, construct or otherwise acquire noncurrent assets are recognized as deferred revenue in the statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are used to compensate for expenses or losses already incurred or to give the Corporation immediate financial support with no future related costs are recognized in profit or loss in the period in which they become receivable.

Employee Benefits

• a. Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

• b. Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur/when the plan amendment or curtailment occurs/when the settlement occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Corporation’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• c. Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plan except that remeasurement is recognized in profit or loss.

Employee Stock Options

Equity-settled share-based payments arrangements granted to employee and others providing similar services are measured at the fair value of the equity instruments at the grant date.

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The fair value determined at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Corporation's estimate of employee share options that will eventually vest, with a corresponding increase in capital surplus - employee share options. The fair value determined at the grant date of the employee share options is recognized as an expense in full at the grant date when the share options granted vest immediately.

At the end of each reporting period, the Corporation revises its estimate of the number of employee share options expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the capital surplus - employee share options.

Taxation

Income tax expense represent the sum of the current tax payable and deferred tax.

• a. Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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

• b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforward and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures, and personnel training expenditures to extent that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Previously unrecognized deferred tax assets are also reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply to in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences based on the manner in which the Corporation expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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• c. Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

Key Sources of Estimation and Uncertainty

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, which that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

• a. Impairment of tangible and intangible assets other than goodwill

In the valuation of assets for impairment, on assets, the Corporation uses subjective judgment to determine the individual cash flows, useful lives and future revenues and expenses of specific asset groups based on subjective judgment, the assets’ useful model and industrial specific. Any changes in estimation due to economic circumstances and the Corporation’s strategies could result in significant impairment of tangible and intangible assets.

• b. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. The information on the measurement of goodwill impairment is shown in Note 15.

• c. Impairment of investment in the subsidiaries, associates and joint ventures

The Corporation immediately recognizes impairment loss on its net investment in the associate when there is any indication that the investment may be impaired and the carrying amount may not be recoverable. The Corporation’s management evaluates the impairment based on the estimated future cash flow expected to be generated by the associate, including growth rate of sale and capacity of production facilities estimated by the associate’s management. The Corporation also takes into consideration the market conditions and industry development to evaluate the appropriateness of assumptions.

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d. Realizability of deferred tax assets

Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be used. The management’s significant accounting judgment and estimation should be taken into consideration when measuring the reliability of deferred tax assets, including assumptions on the predicted growth rate of sales and gross profit rate, tax-exempt period, unused tax credits and tax planning, etc. Any changes in industrial circumstances and tax laws could result in significant adjustments to deferred tax assets.

e. Valuation of inventories

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

• f. Recognition and measurement of defined benefit plans

Net defined benefit liabilities and the resulting pension expense under defined benefit pension plans are calculated using the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, and long-term average future salary increase. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.

g. Impairment of accounts receivable

When there is objective indication of impairment, the Corporation will concern the estimate of future cash flow. The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, excluding future credit losses, discounted at the receivable’s original effective interest rate. If the actual amount of future cash flows is less than estimated, the Corporation may have significant impairment loss on accounts receivable.

6. CASH

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2015 $ 2,698 876,194 $ 878,892	2014 $ 2,630 479,385 $ 482,015

At the balance sheet dates, the interest rates intervals of bank deposits and time deposits with maturities less than 3 months from date of investments were as follows:

Bank deposits	December 31
	2015 2014 0.001%-0.40% 0.01%-0.45%

As of December 31, 2015 and 2014, time deposits with maturities more than 3 months from date of investments were $0 thousand and $51,091 thousand, respectively, which is classified to investment in bonds with no active market (see Notes 10 and 26).

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7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial liabilities held for trading Derivative instruments Call and put option of convertible bonds payable (Note 17)		December	31
		2015 $ 1,483	2014 $ 927

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Domestic investments Listed stocks Open-end beneficial certificates Current Noncurrent		December 31	December 31
		2015 $ 359,543 1,824,521 $ 2,184,064 $ 1,824,521 359,543 $ 2,184,064	2014 $ 468,575 1,634,854 $ 2,103,429 $ 1,634,854 468,575 $ 2,103,429

9. FINANCIAL ASSETS CARRIED AT COST - NONCURRENT

Domestic unlisted common stocks Foreign open-end beneficial certificates Foreign unlisted common stocks Foreign unlisted preferred stock Classification by measurement of financial instruments Available-for-sale financial assets		December 31	December 31
		2015 $ 171,608 10,152 - - $ 181,760 $ 181,760	2014 $ 134,218 10,152 2,411 12,263 $ 159,044 $ 159,044

The above unlisted stock investments were measured at cost less impairment at the balance sheet date. The Corporation thought the fair value of these investments could not be estimated reliably because the range of reasonable fair value estimates is significant and the probabilities of various estimates cannot be reasonably assessed.

For the years ended December 31, 2015 and 2014, the Corporation recognized impairment losses of $2,411 thousand and $2,410 thousand, respectively, on Qualitysource S.A.S. These impairment losses were recognized to reflect an other-than-temporary decline in value of these investments.

For the year ended December 31, 2014, the Corporation recognized an impairment loss of $3,090 thousand on EVT Technology Co., Ltd. These impairment losses were recognized to reflect an other-thantemporary decline in value of these investments.

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For the years ended December 31, 2015 and 2014, the Corporation recognized impairment losses of $12,263 thousand and $10,000 thousand on Lasfocus Corporation. These impairment losses were recognized to reflect an other-than-temporary decline in value of these investments.

The Corporation did not disposed of financial assets carried at cost for the years ended December 31, 2015 and 2014.

10. DEBT INVESTMENTS WITH NO ACTIVE MARKET

Time deposits with maturities more than 3 months from date of investments		December	31
		2015 $ -	2014 $ 51,091

As of December 31, 2014, the market interest rates of the time deposits with original maturity more than 3 months were 0.5%.

11. ACCOUNTS RECEIVABLE, NET

Accounts receivable Less: Allowance for doubtful accounts Accounts receivable - related parties		December 31	December 31
		2015 $ 627,890 (36,140) 591,750 1,063,503 $ 1,655,253	2014 $ 1,020,056 (45,356) 974,700 1,304,757 $ 2,279,457

The average credit period for sales of goods is 60 to 90 days after the goods were approved, and no interest is charged on accounts receivable. In determining the recoverability of a trade receivable, the Corporation considers any change in the credit quality of the accounts receivable from the date when credit was initially granted up to the balance sheet date. Allowances for doubtful amounts are based on estimated irrecoverable amounts determined by referring to the counterparty’s past default experience of the counterparty’s current financial position.

The Corporation did not recognize an allowance accounts against accounts receivable which were past due at the end of the reporting period because there was not a significant change in credit quality and the amounts were still considered recoverable. In addition, the Corporation did not hold any collateral or other credit enhancements for those accounts receivable.

The aging of receivables was as follows:

Less than 60 days 61-365 days Over 365 days		December 31	December 31
		2015 $ 409,334 116,489 102,007 $ 627,890	2014 $ 710,753 269,738 39,565 $ 1,020,056

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

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Age of receivables that are past due but not impaired:

Less than 60 days 61-365 days Over 365 days		December 31	December 31
		2015 $ 102,627 107,048 78,337 $ 288,012	2014 $ 292,912 252,271 11,070 $ 556,253

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

The movements of the allowance for doubtful accounts receivable were as follows:

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2014 $ 1,937 $ 20,852 Bad debts expense - 24,000 Reclassification of impairment loss from collective assessment individual assessment 1,153 (1,153) Written off as uncollectible (1,433) - Balance at December 31, 2014 $ 1,657 $ 43,699 Balance at January 1, 2015 $ 1,657 $ 43,699 Impairment loss reversed on receivables - (9,000) Reclassification of impairment loss from collective assessment to individual assessment 26,971 (26,971) Reclassification of impairment loss from individual assessment to collective assessment (1,640) 1,640 Written off as uncollected (16) (200) Balance at December 31, 2015 $ 26,972 $ 9,168

Total $ 22,789 24,000 - (1,433) $ 45,356 $ 45,356 (9,000) - - (216) $ 36,140

The impairment recognized represent the difference between the carrying amount of these trade receivables and the present value of the expected proceeds received from liquidation. Included in the allowance for impairment loss were individually impaired trade receivable amount to $26,972 thousand and $1,657 thousand as of December 31, 2015 and 2014, respectively. The Corporation did not hold any collateral over these balances.

12. INVENTORIES

Finished goods Semi-finished products Work in process Raw materials		December 31	December 31
		2015 $ 194,339 277,762 368,814 459,604 $ 1,300,519	2014 $ 187,561 235,541 448,734 384,692 $ 1,256,528

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The costs of inventories recognized as cost of goods sold for the years ended December 31, 2015 and 2014 were included $32,452 thousand and $51,000 thousand due to write-downs of inventories, respectively.

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2015 and 2014 was $1,977,863 thousand and $2,361,025 thousand, respectively.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates Investments in joint venture		December 31	December 31
		2015 $ 2,786,380 535,634 17,505 $ 3,339,519	2014 $ 2,565,745 491,291 17,411 $ 3,074,447

a. Investments in subsidiaries

Unlisted company Neworld Electronics Ltd. San Eagle Development Corp. Wei Kuang Automatic Equipment Co., Ltd. Chroma New Material Corporation Chi Incorporation Ltd. Chen Hwa Technology Inc. Chroma Investment Co., Ltd. Chroma Ate Europe B.V. Chroma Ate Inc. Chroma Systems Solutions Inc. Sensational Holding Ltd. Deep Red Holding Co., Ltd. Adivic Technology Co. Chroma Japan Corp. Testar Electronic Corporation EVT Technology Co., Ltd.		December 31	December 31
		2015 $ 705,291 624,769 446,591 437,683 133,231 111,655 102,030 84,939 68,577 (56,946) 52,699 45,408 36,119 (24,387) 10,446 8,275 $ 2,786,380	2014 $ 632,352 623,006 343,702 444,486 169,518 41,639 96,436 75,774 47,555 (59,374) 49,651 45,487 37,862 (19,737) 37,388 - $ 2,565,745

The Corporation’s percentage of equity interest and voting power in subsidiaries were as follows:

Name of Subsidiaries Neworld Electronics Ltd. Chroma New Material Corporation San Eagle Development Corp. Wei Kuang Automatic Equipment Co., Ltd. Chi Incorporation Ltd.	December 31
	2015 2014 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% (Continued)

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Name of Subsidiaries Testar Electronic Corporation Chroma Ate Inc. Chroma Ate Europe B.V. Chroma Investment Co., Ltd. Chroma Systems Solutions Inc. Sensational Holding Ltd. Chen Hwa Technology Inc. Chroma Japan Corp. Deep Red Holding Co., Ltd. Adivic Technology Co. EVT Technology Co., Ltd.	December 31
	2015 2014 67.2% 67.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 25.0% 25.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 51.0% 51.0% 53.2% 17.9% (Concluded)

On October 27, 2006, the Corporation’s Board of Directors resolved to incorporate a subsidiary, San Eagle Development Corp. (“San Eagle”), in the British Virgin Islands to expand its foreign market. Through San Eagle, the Corporation bought all of the issued shares of Wei Kuang Mech Eng Inc. from Scn Finance Corp. Wei Kuang Mech Eng Inc. had two 100% subsidiaries, Mou Kuan Technologies (Nanjin) Co., Ltd. (“Mou Kuan Nanjin”) and Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. (“Wei Kuang Nanjin”). Mou Kuan Nanjin mainly assembles and sells factory conveyors and related systems and renders after-sales services. Wei Kuang Nanjin mainly sells and maintains of electronic equipment and factory conveyor systems.

To enhance the Corporation’s competitiveness, the Corporation paid $160,000 thousand in December 2006, $134,000 thousand in January 2007 and $239,000 thousand in January 2008 to acquire 100% equity interest in Silver Town Electronic Co., Ltd. (“Silver Town”) from Ever Growth Investment Holding Ltd., respectively. On February 29, 2008, the Corporation’s Board of Directors resolved that the Corporation merge with Silver Town, with the Corporation as the survivor entity, on the record date of March 21, 2008. Since Wei Kuang Automatic Equipment (Taiwan) Co., Ltd. (“Wei Kuang”) was a 100% subsidiary of Silver Town before the merge, Wei Kuang became the Corporation’s subsidiary after its merger with Silver Town. Wei Kuang mainly designs, manufactures, installs and tests automated factory conveyor systems.

To strengthen its relationship with customers and enhance customer service, the Corporation’s Board of Directors resolved on December 28, 2006 to establish Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. (“Wei Kuang Xiamen”) through San Eagle and Wei Kuang Mech Eng Inc. The planned investment would amount to US$2,000 thousand. As of December 31, 2015, the Corporation had remitted out an investment amount of $49,935 thousand. Wei Kuang Xiamen sells and maintains electronic equipment and factory conveyor systems.

To expand its market and strengthen its sales channel in North America, the Corporation acquired 25% equity interest in Chroma Systems Solutions Inc. for US$900 thousand on September 1, 2009. The Corporation’s subsidiary, Chroma Ate Inc. (U.S.A.), held 50% equity interest in Chroma Systems Solutions Inc.; thus, the Corporation directly and indirectly held 75% equity interest in Chroma Systems Solutions Inc. and controlled the investee. Chroma Systems Solutions Inc. mainly sells and maintains electronic test instruments, etc.

To expand its operating scale, the Corporation’s subsidiary, Chroma Systems Solutions Inc., bought the net assets of Quad Tech Inc. for US$3,517 thousand.

Taiwan Wei Kuang, Mou Kuan Nanjin, Wei Kuang Nanjin, Adivic Technology Co. and Chroma Systems Solutions Inc. and the net assets of Quad Tech Inc. purchased by Chroma Systems Solutions Inc. were acquired by the Corporation and were accounted for by the purchase method.

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Refer to Note 17 to the consolidated financial statement as of December 31, 2015 for the movements of differences between cost of investment and net asset value, which were regarded as amortization’s assets.

Refer to Note 17 to the consolidated financial statements as of December 31, 2015 for the movements of the differences between cost of investment and net asset value, which were regarded as goodwill.

To expand the Corporation’s service scope, the Corporation’s Board of Directors resolved on February 27, 2007 to invest jointly with Raster Opto-Mechatronics Co., Ltd. in Testar Electronic Corporation (“Testar”), which will test LED products.

On December 27, 2007, the Corporation’s Board of Directors resolved to incorporate a subsidiary, Chroma Japan Corp., in Japan to expand its foreign market. Chroma Japan Corp. is mainly engaged in the sells and maintains electronic test instruments, etc. In April 2011, Chroma Japan Corp. reduced its capital by 93.3% to offset its deficit and increased its capital by ￥ 150,000 thousand. In that month, the full investment amount was paid. In April 2014, Chroma Japan Corp. reduced its capital by 100% to offset its deficit and increased its capital by ￥ 199,000 thousand. The Corporation’s Board of Directors resolved to fully participate in the capital increase of Chroma Japan Corp. by buying shares; Chroma Japan Corp. is still a 100% held subsidiary of the Corporation.

To develop radio frequency identification (RFID) technology, the Corporation’s Board of Directors resolved to participate in the capital increase of Adivic Technology Co. (“Adivic”) by buying shares amounting to $81,600 thousand in 2013; thus, the Corporation’s equity interest in Adivic rose to 51.0% and the Corporation acquired control over Adivic. In April 2015, Advic increased its capital by $60,000 thousand to strengthen its financial structure. The Corporation’s Board of Director resolved to participate proportionately in the capital increase by buying shares amounting to $30,600 thousand at the same percentage as its original equity interest of Advic. The Corporation’s equity interest in Advic is still 51%.

In May 2015, EVT Technology Co., Ltd. (“EVT”), the Corporation’s investee (originally recognized as financial assets carried at cost), increased its capital by $30,000 thousand to strengthen its financial structure, the Corporation’s Board of Directors resolved to participate in the capital increase of EVT by buying $23,000 but a higher percentage than its previous equity interest; thus, the Corporation equity interest rose to 53.2% and acquired control over EVT. Refer to Note 28 to the consolidated financial statements for the disclosures of the Corporation’s acquisitions of EVT.

In February 2015, Chroma (Shanghai) Trading Co., Ltd., the Corporation’s grandson company increase its capital by US$2,500 thousand to purchase plants and expand its operating scale, the Corporation’s Board of Directors resolved to fully participate in the capital increase of Chroma (Shanghai) Trading Co., Ltd. through Chen Hwa Technology Inc. by buying shares. As of December 31, 2015, the full investment amount has been full paid.

Refer to Note 31 to the consolidated financial statements for the detail of the subsidiaries indirectly held by the Corporation.

The Corporation’s share of profits of subsidiaries under equity method is as follows:

Unlisted company Wei Kuang Automatic Equipment Co., Ltd. Neworld Electronics Ltd. Chroma New Material Corporation	Years Ended December 31
	2015 2014 $ 222,533 $ 78,732 85,873 (11,398) 49,527 64,262 (Continued)

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Adivic Technology Co. Testar Electronic Corporation Chroma Ate Inc. Chroma Ate Europe B.V. Chi Incorporation Ltd. San Eagle Development Corp. Chroma Systems Solutions Inc. EVT Technology Co., Ltd. Chroma Japan Corp. Chen Hwa Technology Inc. Sensational Holding Ltd. Deep Red Holding Co., Ltd. Chroma Investment Co., Ltd.		Years Ended December 31	Years Ended December 31
		2015 $ (32,621) (32,541) 31,090 20,710 (19,416) 11,571 10,255 (7,200) (5,965) 4,173 1,165 961 365 $ 340,480	2014 $ (20,288) (19,931) (7,943) 7,874 3,875 35,961 2,983 - (9,865) 5,686 1,177 9,358 3,120 $ 143,603 (Concluded)

The investments in subsidiaries accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2015 and 2014 was based on the subsidiaries’ financial statements audited by the auditors for the same years.

b. Investment in associate

Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp.		December 31	December 31
		2015 $ 457,674 77,960 $ 535,634	2014 $ 418,932 72,359 $ 491,291

Aggregate information of associates that are not individually material:

The Corporation’s share of: Income from continuing operations Other comprehensive income Total comprehensive income for the year		Years Ended December 31	Years Ended December 31
		2015 $ 76,072 9,015 $ 85,087	2014 $ 82,518 452 $ 82,970

Refer to Table 7 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

The Corporation is able to exercise significant influence over Adlink Technology Inc. even if it holds less than 20% of their voting right, therefore, the Corporation recognizes the gain and loss under the equity method.

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Fair values (Level 1) of investments in associates which were measured at closing prices as balance sheet date, were as follow:

Name of Associates Adlink Technology Inc.		December 31	December 31
		2015 $ 1,763,821	2014 $ 1,590,351

The investments in associates accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2015 and 2014 was based on the associates’ financial statements audited by the auditors for the same years.

c. Investment in joint venture

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		December	31
		2015 $ 17,505	2014 $ 17,411

Aggregate information of joint ventures that are not individually material:

The Corporation’s share of: Income from continuing operations Other comprehensive income Total comprehensive income for the year		Years Ended December 31	Years Ended December 31
		2015 $ 94 - $ 94	2014 $ 60 - $ 60

Refer to Table 7 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

For the investment and development plan, “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians’ Life,” the Board of Directors decided to invest jointly with Dynapack International Corporation and Heran Tech. Co., Ltd. (originally named Heran Co., Ltd.) to set up Chih Ho Shun Development Co., Ltd. (“Chih Ho Shun”). The Corporation invested $17,500 thousand for a 35% entity interest in Chih Ho Shun but did not have control over this investee.

The investments in joint ventures accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2015 and 2014 was based on the joint ventures’ financial statements audited by the auditors for the same years.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2014 Additions Disposals Intercompany transfer Reclassification Balance, December 31, 2014	Land $ 450,575 - - - - $ 450,575	Buildings $ 1,975,926 16,313 - - - $ 1,992,239	Machinery Miscellaneous Equipment $ 88,896 $ 743,699 5,276 43,628 (584) (29,715) 2,806 61,523 144 - $ 96,538 $ 819,135	Total $ 3,259,096 65,217 (30,299) 64,329 144 $ 3,358,487 (Continued)

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Accumulated depreciation and impairment Balance, January 1, 2014 Disposals Intercompany transfer Reclassification Balance, December 31, 2014 Carrying value December 31, 2014 Cost Balance, January 1, 2015 Additions Disposals Intercompany transfer Reclassification Balance, December 31, 2015 Accumulated depreciation and impairment Balance, January 1, 2015 Disposals Depreciation Reclassification Balance, December 31, 2015 Carrying value December 31, 2015	Land $ - - - - $ - $ 450,575 $ 450,575 - - - - $ 450,575 $ - - - - $ - $ 450,575	Buildings $ (657,038) - (85,063) - $ (742,101) $ 1,250,138 $ 1,992,239 8,301 - - - $ 2,000,540 $ (742,101) - (84,354) - $ (826,455) $ 1,174,085	Machinery Miscellaneous Equipment Total $ (66,462) $ (610,869) $ (1,334,369) 584 29,197 29,781 (12,841) (48,566) (146,470) 293 (293) - $ (78,426) $ (630,531) $ (1,451,058) $ 18,112 $ 188,604 $ 1,907,429 $ 96,538 $ 819,135 $ 3,358,487 7,152 46,564 62,017 (332) (16,330) (16,662) 2,294 33,797 36,091 (2,804) 2,804 - $ 102,848 $ 885,970 $ 3,439,933 $ (78,426) $ (630,531) $ (1,451,058) 332 13,272 13,604 (10,792) (63,118) (158,264) 594 (594) - $ (88,292) $ (680,971) $ (1,595,718) $ 14,556 $ 204,999 $ 1,844,215 (Concluded)

The following useful lives are used in the calculation of depreciation:

Building Primary buildings 55 years Mechanical and electrical equipment 10 years Duty-free rooms equipment 10 years Others 6-50 years Machinery 2-12 years Miscellaneous equipment 3-15 years

Refer to Note 29 for property, plant and equipment have been pledged to secure borrowings of the Corporation.

15. GOODWILL

Cost

	Years Ended December 31	Years Ended December 31
	2015 $ 94,424	2014 $ 94,424

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For assessing goodwill for impairment, the Corporation took value in use as basis for calculating the recoverable amount of goodwill. The Corporation used the cash flows of a five-year financial forecast as the basis for calculating value in use to reflect the specific risk of cash-generating units. After these calculations, the Corporation did not recognize any impairment loss on goodwill for the years ended December 31, 2015 and 2014.

16. BORROWINGS

Short-term Borrowings

Unsecured borrowings Bank loans Interest rate (%) Long-term Borrowings Unsecured loans Syndicated bank loans Less: Loans due in one year			December 31	December 31
			2015 2014 $ 100,000 $ 150,000 1.01% 1.15%-1.17% December 31
		2015 $ 1,230,000 - $ 1,230,000		2014 $ 700,000 (70,000) $ 630,000

On August 30, 2012, the Corporation applied to E.SUN and other banks for syndicated bank loans with $2,000,000 thousand credit line. In September 2013, the Corporation borrowed $700,000 thousand to pay the second installment of “The Action Plan for Developing Land surrounding the MRT Airport Station to Improve Civilians Life” (refer to Note 29). The syndicated bank loan is due on September 3, 2018 and repayable from March 2017 to March 2018 in three equal semiannual installments ($246,000 thousand per one installment), the remaining $492,000 thousand will be paid on September 3, 2018 (which is the due date), and the interest is payable monthly. In November 2015, the Corporation acquired new borrowing in the amount of $530,000 thousand to pay the first part of the third installment of the land. As of December 31, 2015 and 2014, the interest rate per annum was 1.60% and 1.69% (floating interest rate), respectively.

17. BONDS PAYABLE

Unsecured domestic convertible bonds Less: Discounts on bonds payable		December 31	December 31
		2015 $ 1,854,100 96,007 $ 1,758,093	2014 $ 1,854,400 123,394 $ 1,731,006

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On May 23, 2014, the Corporation issued its second domestic unsecured 0% convertible bonds with aggregate par value of $2,000,000 thousand and face value of $100 thousand. These bonds were listed on the GreTai Securities Market at the same date. Except for the book closure period, bondholders are entitled to convert bonds into the Chroma Ate Inc.’s common stock at $74.2 (conversion price) per share since June 24, 2014 to May 13, 2019. Due to the appropriation of 2014 and 2013 earnings approved at the annual shareholders meeting for 2015 and 2014, the shareholders approved to distribute dividend of NT$2.6 and NT$2.5 per share, respectively; thus, the conversion price was adjusted to NT$69.3 and NT$72.0 per share, respectively.

If the closing price of the Corporation’s common share exceeds 30% of the conversion price of the bonds payable for 30 consecutive days or the aggregate outstanding amounts of bonds payable is less than 10% of the amounts of original issuance, the Corporation has the right to redeem all of the outstanding bonds payable at face value during the period begin 1 month after the issuance date (June 24, 2014) to 40 days before the maturity date (April 13, 2019).

At end of the third year from the bond issuance date, bondholders have the right to request the Corporation to redeem the convertible bonds at face value.

The convertible bonds contain both liability and equity components. The equity components was presented in equity under the heading of “capital surplus - option” and recognized of $141,487 thousand. The liability components were recognized into embedded derivative and non-derivative liability of $4,989 thousand and $1,849,108 thousand, separately. The estimated fair value of derivative instruments as of December 31, 2015 was $556 thousand.

Proceeds of the issue (less transaction costs $5,320 thousand) Equity component Deferred tax assets Derivative financial liability component Liability component at the date of issue Interest charged at an effective interest rate of 1.57% Current portion of long-term borrowings and bonds payable Liability component as of December 31, 2015	$ 1,994,680 (141,487) 904 (4,989) 1,849,108 44,642 (135,657) $ 1,758,093

18. OTHER PAYABLE

Salaries payable and bonus payable Other payable		December 31	December 31
		2015 $ 393,474 65,699 $ 459,173	2014 $ 429,432 69,674 $ 499,106

19. RETIREMENT BENEFIT PLANS

Defined Contribution Plans

The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The Corporation recognized pension costs of $43,336 thousand and $39,775 thousand for the years ended December 31, 2015 and 2014, respectively.

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Defined Benefit Plans

The defined benefit plan adopted by the Corporation in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of length of service and average monthly salaries of the six month before retirement. The Corporation contribute amount equal to 4% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of year, the Corporation assesses the balances in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Corporation has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Corporation’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Deficit (surplus) Asset ceiling Net defined benefit liability		December 31	December 31
		2015 $ 399,442 (259,161) 140,281 - $ 140,281	2014 $ 362,979 (244,109) 118,870 - $ 118,870

Movements in net defined benefit liability were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of		Benefit
	Obligation	the Plan Assets	Liability
Balance at January 1, 2014	$ 338,167	$ (240,772)	$	97,395
Service cost
Current service cost	4,203	-		4,203
Net interest expense (income)	6,255	(4,624)		1,631
Recognized in profit or loss	10,458	(4,624)		5,834
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,183)		(1,183)
Actuarial loss - changes in demographic
assumptions	4,948	-		4,948
Actuarial loss - changes in financial
assumptions	10,798	-		10,798
Actuarial loss - experience adjustments	12,745	-		12,745
Recognized in other comprehensive income	28,491	(1,183)		27,308
Contributions from the employer	-	(11,667)		(11,667)
Benefits paid	(14,137)	14,137		-
Balance at December 31, 2014	362,979	(244,109)		118,870
				(Continued)

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	Present Value	Present Value
	of the Defined				Net Defined
		Benefit	Fair Value of			Benefit
	Obligation		the Plan Assets		Liability
Service cost
Current service cost	$	4,185	$	-	$	4,185
Net interest expense (income)		6,736		(4,686)		2,050
Recognized in profit or loss		10,921		(4,686)		6,235
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(1,876)		(1,876)
Actuarial loss - changes in demographic
assumptions		9,710		-		9,710
Actuarial loss - changes in financial
assumptions		12,751		-		12,751
Actuarial loss - experience adjustments		6,264		-		6,264
Recognized in other comprehensive income		28,725		(1,876)		26,849
Contributions from the employer		-		(11,673)		(11,673)
Benefits paid		(3,183)		3,183		-
Balance at December 31, 2015	$	399,442	$ (259,161)		$	140,281
						(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Corporation is exposed to the following risks:

• a. Investment risk: The plan assets are invested in domestic/and foreign/equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• b. Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• c. Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	December 31
	2015 2014 1.00%-1.63% 1.50%-1.88% 1.50%-2.50% 1.50%-2.50%

• 39 -

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would (decrease/increase) as follows:

	December 31,
	2015
Discount rate(s)
0.25% increase	$ (13,114)
0.25% decrease	$ 13,743
Expected rate(s) of salary increase
0.25% increase	$ 13,397
0.25% decrease	$ (12,852)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2015 $ 11,564 14 years	2014 $ 11,596 13.5 years

20. EQUITIES

Capital Stock

a. Common stock

Authorized shares (shares in thousands) Authorized capital stock Shares issued and fully received (in thousands) Issued capital		December 31	December 31
		2015 450,000 $ 4,500,000 379,170 $ 3,791,699	2014 450,000 $ 4,500,000 378,782 $ 3,787,821

30,000 thousand shares of the Corporation’s shares authorized were reserved for the employee share options.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends or transferred to share capital (Note) Additional paid-in capital Treasury stock From merger	December 31
	2015 2014 $ 769,143 $ 748,329 160,514 155,520 146,976 146,976 (Continued)

• 40 -

Used to offset a deficit Employee stock options expired May not be used for any purpose Change in share of associates and joint venture Convertible bonds payable options Employee stock options		December 31	December 31
		2015 $ 1,640 24,725 131,166 68,105 $ 1,302,269	2014 $ - 24,725 131,187 49,917 $ 1,256,654 (Concluded)

Note: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and once a year).

• c. Retained earnings and dividend policy

The Corporation’s Articles of Incorporation provide that a 10% legal reserve should be set aside from the annual net income less any deficit. The remainder, special reserve appropriation or reverse appropriation based on regulations or relevant laws, together with unappropriated earnings of prior years, should be distributed as follows:

• 1) Remuneration to directors and supervisors.

• 2) Bonus to employees - 5%-20%.

• 3) Dividends.

Taking into account future capital expenditure requirements and its cash position, the total of cash dividends paid in any given year may not be less than 20% of total dividends distributed in that year. The final amount, type and percentage of the cash dividends and stock dividends are subject to actual earnings and capital requirements of the Corporation in a particular year.

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The consequential amendments to the Corporation’s Articles of Incorporation had been proposed by the Corporation’s board of directors on December 23, 2015 and are subject to the resolution of the shareholders in their meeting to be held on June 7, 2016. For information about the accrual basis of the employees’ compensation and remuneration to directors and supervisors and the actual appropriations for the years ended December 31, 2015 and 2014, please refer to Note 21 employee benefits expense.

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Corporation should appropriate or reverse to a special reserve. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter distributed.

Legal reserve should be appropriated until the reserve equals the Corporation’s paid-in capital. The reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Corporation.

• 41 -

The appropriations of earnings, including bonus to employees, and the remuneration to directors and supervisors for 2014 and 2013, have been approved at the annual shareholders’ meeting on June 10, 2015 and June 11, 2014, respectively. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2014 For Fiscal Year 2013 $ 131,644 $ 120,489 987,433 941,900	Dividends Per Share(NT$)
		For Fiscal Year 2014 For Fiscal Year 2013 $2.6 $2.5

The appropriations of earnings for 2015 had been proposed by the Corporation’s board of directors on February 23, 2016. The appropriations and dividends per share were as follows:

	Appropriation	Dividends Per
	of Earnings	Share (NT$)
Legal reserve	$ 123,656
Cash dividends	910,200	$2.4

The appropriations of earnings for 2015 are subject to the resolution of the shareholders’ meeting to be held on June 7, 2016.

Information on the bonus to employees, directors and supervisors can be accessed on the Market Observation Post System website of the Taiwan Stock Exchange.

d. Other equities

• 1) Exchange differences on translating foreign operations

Balance, beginning of the year Exchange differences on translation of foreign financial statements Share of exchange differences on translation of subsidiaries, associates and joint ventures accounted for using the equity method Balance, end of the year Unrealized gain/loss on available-for-sale financial assets Balance, beginning of the year Unrealized gain/loss on available-for-sale financial assets Share of unrealized gain on revaluation of available-for-sale financial assets of subsidiaries, associates and joint ventures accounted for by the equity method Balance, end of the year		Years Ended December 31	Years Ended December 31
		2015 2014 $ 136,756 $ 44,755 (17,071) 89,661 8,283 2,340 $ 127,968 $ 136,756 Years Ended December 31
		2015 $ 370,348 (99,791) 1,140 $ 271,697	2014 $ 434,045 (63,519) (178) $ 370,348

• 2) Unrealized gain/loss on available-for-sale financial assets

• 42 -

e. Treasury stock

				Corporation’s
				Shares Held by
				Its Subsidiaries
				(In Thousand
				Shares)
Balance, January 1, 2014				1,926
Decreased during the year				(10)
Balance, December 31, 2014				1,916
Balance, January 1, 2015				1,916
Decreased during the year				-
Balance, December 31, 2015				1,916
	Shares Held
	(In Thousand
Subsidiaries	Shares)	Carrying Value		Market Price
December 31, 2015
Chroma Investment Co., Ltd.	1,916	$	35,714	$ 122,405
December 31, 2014
Chroma Investment Co., Ltd.	1,916	$	35,714	$ 157,267

For the year ended December 31, 2014, the Corporation’s subsidiary - Chroma Investment Co., Ltd. sold 10 thousand common shares of the Corporation held by it for $741 thousand.

Under the Securities and Exchange Act, the Corporation shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote. The subsidiaries holding treasury shares, however, retain shareholders’ rights, except the rights to participate in any share issuance for cash and to vote.

21. ADDITIONAL INFORMATION ON EXPENSES

The following items were included in net income for the years ended December 31, 2015 and 2014:

Finance cost Interest on convertible bonds Interest on bank loans Less: Amount included in the cost of qualifying assets Information about capitalized interest were as follows: Capitalized interest Capitalization rate		Years Ended December 31	Years Ended December 31
		2015 $ 27,368 14,119 (12,653) $ 28,834 $ 12,653 1.60%-1.69%	2014 $ 17,274 16,033 (11,680) $ 21,627 $ 11,680 1.66%-1.69% (Continued)

• 43 -

Depreciation expense Depreciation of property, plant and equipment Operating cost Operating expense Employee benefits expense Short-term benefits Share-based payments Equity-settled share-based payments Post-employment benefits (see Note 19) Defined contribution plans Defined benefit plans Other employee benefits Operating cost Operating expense		Years Ended December 31	Years Ended December 31
		2015 $ 158,264 $ 30,724 127,540 $ 158,264 $ 1,211,338 25,077 43,336 6,235 27,893 $ 1,313,879 $ 238,325 1,075,554 $ 1,313,879	2014 $ 146,470 $ 33,261 113,209 $ 146,470 $ 1,205,208 33,278 39,775 5,834 26,077 $ 1,310,172 $ 242,247 1,067,925 $ 1,310,172 (Concluded)

The existing (2014) Articles of Incorporation of the Corporation stipulate to distribute bonus to employees at 5%-20% and remuneration to directors and supervisors at a fixed amount, respectively, of net income (net of the bonus and remuneration). For the year ended December 31, 2014, the employees’ compensation estimated on the basis of past experience was at 13.6% of net income, or $195,000 thousand. For the year ended December 31, 2014, the remuneration to directors and supervisors was $8,000 thousand in cash.

To be in compliance with the Company Act as amended in May 2015, the proposed amended Articles of Incorporation of the Corporation stipulate to distribute employees’ compensation at 5%-20% and remuneration to directors and supervisors at the rates no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration to directors and supervisors. For the year ended December 31, 2015, the employees’ compensation and the remuneration to directors and supervisors were $135,000 thousand and $8,000 thousand, respectively, representing 8.9% and 0.5%, respectively, of the base net profit. The bonus to employees and remuneration to directors and supervisors for the year ended December 31, 2015 have been proposed by the Corporation’s board of directors on February 23, 2016 and are subject to the resolution of the shareholders in their meeting to be held on June 7, 2016.

Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the date the annual consolidated financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.

• 44 -

The bonuses to employees and remuneration to directors and supervisors for 2014 and 2013 which have been approved in the shareholders’ meetings on June 10, 2015 and June 11, 2014, respectively, were as follows:

follows:
Bonus to employees Remuneration of directors and supervisors	Years Ended	December 31
	2014 Cash Dividends Share Dividends $ 195,000 $ - 8,000 -	2013
		Cash Dividends Share Dividends $ 132,000 $ - 8,000 -

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the shareholders’ meetings on June 10, 2015 and June 11, 2014 and the amounts recognized in the consolidated financial statements for the years ended December 31, 2014 and 2013, respectively.

Information on the bonus to employees, directors and supervisors proposed by the Company’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

22. INCOME TAXES

• a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

Current tax In respect of the current period In respect of unappropriated earnings (10%) In respect of prior year’s adjustment Deferred tax In respect of the current period Total income tax expense recognized in profit or loss		Years Ended December 31	Years Ended December 31
		2015 $ 144,443 17,067 (27,789) 133,721 3,907 $ 137,628	2014 $ 157,520 13,650 (16,497) 154,673 10,931 $ 165,604

Reconciliation of accounting profit and income tax expenses the applicable tax rate is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Adjustment Adjustment items in determining taxable income Tax-exempt income Temporary difference Income tax on unapproproated earnings Investment tax credits Prior year’s adjustments Income tax expense recognized in profit or loss		Years Ended December 31	Years Ended December 31
		2015 $ 1,374,185 $ 233,612 (53,969) (12,018) 3,907 17,067 (23,182) (27,789) $ 137,628	2014 $ 1,483,977 $ 252,276 (51,573) (15,619) 10,931 13,650 (27,564) (16,497) $ 165,604

• 45 -

The applicable tax rate used above is the corporate tax rate of 17% payable by the Corporation.

As the status of 2016 appropriations of earnings is uncertain, the potential income tax consequences of 2015 unappropriated earnings are not reliably determinable.

• b. Deferred tax assets and liabilities

The movement of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2015

Balance, Beginning of the Year Recognized in Profit or Loss Deferred tax assets Temporary difference Unrealized intercompany gain $ 38,112 $ 4,175 Net defined benefit liability 9,157 (2,517) Allowance for loss on decline in inventory market price 17,859 3,245 Impairment loss 12,691 1,467 Unrealized foreign exchange Others 2,338 1,902 $ 80,157 $ 8,272 Deferred tax liabilities Temporary difference Investment income on foreign investments accounted for by the equity method $ 89,044 $ 12,835 Unrealized foreign exchange gain 5,149 (1,958) Goodwill 8,794 1,302 $ 102,987 $ 12,179 For the year ended December 31, 2014 Balance, Beginning of the Year Recognized in Profit or Loss Deferred tax assets Temporary difference Unrealized intercompany gain $ 35,986 $ 2,126 Net defined benefit liability 7,767 1,390

Others Balance, End of the Year $ - $ 42,287 - 6,640 - 21,104 - 14,158 - 4,240 $ - $ 88,429 $ - $ 101,879 - 3,191 - 10,096 $ - $ 115,166 Others Balance, End of the Year $ - $ 38,112 - 9,157 (Continued)

• 46 -

Balance, Beginning of the Year Recognized in Profit or Loss Allowance for loss on decline in inventory $ 12,759 $ 5,100 Impairment loss 11,819 872 Unrealized foreign exchange 1,073 (1,073) Others 665 769 $ 70,069 $ 9,184 Deferred tax liabilities Temporary difference Investment income on foreign investments accounted for by the equity method $ 79,882 $ 9,162 Unrealized foreign exchange gain - 5,149 Goodwill 2,990 5,804 $ 82,872 $ 20,115

Others Balance, End of the Year $ - $ 17,859 - 12,691 - - 904 2,338 $ 904 $ 80,157 $ - $ 89,044 - 5,149 - 8,794 $ - $ 102,987 (Concluded)

• c. Information about tax-exemption

Expansion of Construction Project Profits on expansion and construction projects for year 2009 Profits on expansion and construction projects for year 2010	Tax-exemption Period
	2011.1.1-2015.12.31 2013.1.1-2017.12.31

• d. Integrated income tax information is as follows:

Balance of imputation credit account (ICA)		December 31	December 31
		2015 $ 250,190	2014 $ 214,254

The expected and actual creditable ratios for the appropriation of the Corporation’s earnings of 2015 and 2014, respectively, were 15.76% and 16.73%, respectively.

• e. Assessment of income tax returns

As of December 31, 2015, the Corporation’s tax returns through 2013 had been examined and cleared by the tax authorities.

• 47 -

23. EARNINGS PER SHARE

Earnings and weighted average shares used to calculate earnings per share were as follows:

Net Income

Profit for the period attributable to owners of the Corporation Dilutive effect of potential common shares: Interest on unsecured convertible bonds and valuation gain on conversion option Income used to calculate dilutive earnings per share		Years Ended December 31	Years Ended December 31
		2015 $ 1,236,557 27,924 $ 1,264,481	2014 $ 1,318,373 13,341 $ 1,331,714

Shares

Weighted average shares used to calculate basic earnings per share Dilutive effect of potential common shares: Convertible bonds Bonus to employees or employee remuneration Employee stock options Weighted average shares used to calculate dilutive earnings per share		(In Thousands of Shares) Years Ended December 31	(In Thousands of Shares) Years Ended December 31
		2015 376,984 26,755 2,974 1,292 408,005	2014 375,496 22,677 3,109 1,487 402,769

Since the Corporation was able to settle the bonuses or employee remuneration paid to employees by cash or shares, the Corporation presumed that the entire amount of the bonus or employee remuneration would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees is resolved at their meeting in the following year.

24. SHARE-BASED PAYMENT ARRANGEMENTS

The Corporation’s Board of Directors approved Chroma Ate Inc.’s Employee Stock Option Plan on August 7, 2012. The plan was approved by the Securities and Futures Bureau (SFB) on September 17, 2012. The maximum number of options authorized to be granted under the Plan was 8,000 thousand units, with each option eligible to subscribe for one common share of the Corporation when exercised. The options may be granted to qualified employees of the Corporation or any of its subsidiaries, in which the Corporation’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options are valid for six years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plan, the options were granted at an exercise price equal to the closing price of the Corporation’s common shares listed on the TWSE on the grant date. The number of outstanding options and the exercise prices had been adjusted to reflect the distribution of earnings by the Corporation in accordance with the plan. Exercise price was $53.5 per share at the issuance date. Due to the appropriation of 2014 and 2013 earnings approved at the annual shareholders meeting for 2015 and 2014, the shareholders approved to distribute dividend of NT$2.6 and NT$2.5 per share, respectively; thus, the exercise price was adjusted to NT$49.9 and NT$51.9 per share, respectively.

• 48 -

Information on employee share options was as follows:

Balance at January 1 Options forfeited Options exercised Balance at December 31 Options exercisable, end of period Weighted-average fair value of options granted (NT$)	Years Ended	December 31
	2015 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,794 $ 49.9 (118) - (384) 49.9 5,292 1,887 $ 17.88	2014
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 6,000 $ 51.9 (206) - - - 5,794 - $ 17.88

Information about outstanding options as of December 31, 2015 is as follows:

Range of exercise price (NT$) Weighted-average remained contractual life (years)	December 31
	2015 2014 $49.90 $51.90 3.45 4.45

The grant date of aforementioned stock options was July 8, 2013. Chroma Ate Inc. used the Black-Scholes model to determine the fair value of the options. The valuation assumptions were as follows:

Stock price on grant date (NT$/share) $53.5 Exercise price (NT$/share) $53.5 Expected volatility 36.43%-41.74% Expected life 4-5 years Expected dividend rate 0% Risk-free interest rate 1.12%-1.23%

The Corporation recognized compensation cost both of $25,077 thousand and $33,278 thousand for the years ended December 31, 2015 and 2014.

25. CAPITAL MANAGEMENT

The Corporation manages its capital to ensure that entities in the Corporation will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Corporation’s capital management is aims to maintain the sufficiency of financial resources and the soundness of operating strategies to meet the needs for operating capital, capital expenditure, R&D expenses, debt handling, dividend disbursement, etc.

• 49 -

26. FINANCIAL INSTRUMENTS

Information for Fair Value

• a. Fair value of financial statement that are not measured at fair value

The fair values of some financial assets and liabilities were not presented because they have no quoted prices in active market or their cost is close to fair value; thus, their fair values are not disclosed.

• b. Fair value measurements recognized in the consolidated statements

• 1) Fair value hierarchy

December 31, 2015 Available-for-sale financial assets Securities listed in ROC Equity securities Open-end beneficial certificate Financial liabilities at value through profit or loss December 31, 2014 Available-for-sale financial assets Securities listed in ROC Equity securities Equity investments Open-end beneficial certificate Financial liabilities at value through profit or loss	Level 1 $ 359,543 1,824,521 $ 2,184,064 $ - $ 468,575 1,634,854 $ 2,103,429 $ -	Level 2 $ - - $ - $ 1,483 $ - - $ - $ 927	Level 3 $ - - $ - $ - $ - - $ - $ -	Total $ 359,543 1,824,521 $ 2,184,064 $ 1,483 $ 468,575 1,634,854 $ 2,103,429 $ 927

There were no transfers between Levels 1 and 2 for the years ended December 31, 2015 and 2014.

• 2) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivative - convertible Binomial tree valuation model of convertible bonds: The fair value bonds of the derivative financial assets embedded in convertible bonds were determined based on the observable closing price of the stocks at balance sheet date and risk-free interest rate with risk premium.

• 50 -

Categories of Financial Instruments

Financial assets Loan and receivable (a) Available-for-sale financial assets (b) Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities at amortized cost (c)	December 31
	2015 2014 $ 2,546,792 $ 2,823,365 2,365,824 2,262,473 1,483 927 4,116,916 3,625,231

• a. The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, notes receivable, accounts receivable and refundable deposits, and trade and other receivables. Those reclassified to held-for-sale disposal groups are also included.

• b. The balances included the carrying amount of available-for-sale financial assets measured at cost.

• c. The balances included financial liabilities measured at amortized cost, which comprise short-term and long-term loans, short-term bills payable, notes payable, accounts payable, other payables, bonds payable and guarantee deposits received.

Since there is a wide range of estimated fair value of the Corporation’s investments in non-publicly traded-stocks, the Corporation concludes that fair value cannot be reliably measured and therefore should be measured at the cost less any impairment.

Financial Risk Management Objectives and Strategies

The Corporation’s major financial instruments consist of cash and cash equivalents, accounts receivable, long-term and short-term borrowings, short-term bills payable, account payable and bonds payable. The Corporation’s financial risk management pertains to financial risks relating to the operations of the Corporation, including currency risk, interest rate risk, credit risk and liquidity risk. The Corporation seeks to identify, evaluate and hedge against market uncertainties to lower the effect of market changes on the Corporation’s financial performance.

The Corporation manages foreign exchange risk through setting up of foreign currency deposit bank accounts and through the use of foreign currency directly received from sale to pay for purchases in foreign currency to reduce the impact of foreign exchange fluctuation and to achieve a natural hedge effect. The Corporation actively observes the exchange rate information to fully control the foreign currency hedge.

a. Market risk

The Corporation’s activities expose it primarily to the financial risks of changes in exchange rates (see Item (1) below), interest rates (see Item (2) below) and price (see Item (3) below).

There has been no change to the Corporation’s exposure to market risks or the manner in which these risks are managed and measured.

• 51 -

The sensitivity analysis of exchange rates and interest rates is as follows:

1) Exchange rate sensitivity analysis

The Corporation is exposed to foreign currencies arising from engagement in foreign-currency sales and purchases. To avoid the decrease in foreign-currency assets and adverse fluctuations in future cash flow resulting from exchange rate changes, the Corporation used derivative financial instruments (forward exchange contracts) to hedge against adverse risks pertaining to exchange rates. The forward exchange contracts which the Corporation used were less than six months so they were not subject to hedge accounting.

Refer to Note 30 for information of the carrying value of the Corporation’s monetary assets and liabilities denominated in nonfunctional currency and of the derivatives exposing to foreign currency risk at the end of the reporting period.

Foreign currency sensitivity analysis

The Corporation was mainly exposed to USD, EUR, HKD, JPY and RMB.

Had the NTD strengthened/weakened by 5% against the relevant currency, the income before tax would have decreased/increased by $65,104 thousand and $92,021 thousand for the years ended December 31, 2015 and 2014, respectively. The 5% sensitivity rate is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items and their translation at period-end is adjusted for a 5% change in foreign-currency rates.

2) Interest rate risk

The Corporation is exposed to interest rate risk because entities in the Corporation borrow funds both at fixed and floated interest rates. The Corporation evaluates hedging activities regularly to align with interest rate views and defined risk appetite and ensures the most cost-effective hedging strategies are applied.

The carrying amounts of the financial assets and liabilities exposed to interest rates were as follows:

Fair value interest rate risk Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2015 2014 $ 1,758,093 $ 1,731,006 876,077 530,346 1,330,000 850,000

Interest rate sensitivity analysis

The sensitivity analyses below have been determined on the basis of the exposure to interest rates for both derivative and nonderivative instruments at balance sheet dates. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the balance sheet dates outstanding for the entire period. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

• 52 -

Had interest rates been 50 basis points higher/lower and all other variables been held constant, the income before tax would have decreased/increased by $2,270 thousand $1,598 thousand for the years ended December 31, 2015 and 2014, respectively. These pretax income changes would be mainly due to the Corporation’s exposure to interest rates on its variable rate deposits and bank loans.

3) Price risk

The Corporation is exposed to equity price risks arising from investment in available-for-sale financial assets (mainly investment in open-end beneficial certificates and listed stocks in Taiwan), which are held for strategic rather than trading purposes. The Corporation does not actively trade these investments.

The Corporation manages the risk through holding various portfolios of investments and having every equity investment get prior approval from the Corporation’s management.

Price sensitivity analysis

Had equity prices been 5% higher/lower, the other comprehensive income would have increased/decreased by $109,203 thousand and $105,172 thousand because of changes in fair values of available-for-sale financial assets held by the Corporation for the years ended December 31, 2015 and 2014, respectively.

b. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Corporation. The Corporation is exposed to credit risk in relation to the carrying amounts of accounts receivable and deposits from investing activities, fixed-income financial instruments and other financial instruments. Credit risk will arise if the counterparties fail to carry out their contractual obligations as of the balance sheet date.

The Corporation has adopted a policy of dealing only with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Accounts receivables involve a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable, including the evaluation of internal credits, historical transaction records, present economic circumstances, etc. which affect the customers’ payment ability.

The credit risk of bank deposits, fixed-income financial instruments and other financial instruments are evaluated, managed and controlled by the Corporation’s financial department. The Corporation’s exposure to credit risk was limited because the Corporation adopted a policy of only dealing with creditworthy counterparties.

c. Liquidity risk

The Corporation manages liquidity risk by managing and maintaining sufficient cash and cash equivalents to supply the Corporation’s demand and lighten the effects of cash flow fluctuations. The Corporation continuously monitors the use of credit lines and conformity to loan terms.

Bank loans are a significant source of the Corporation’s liquidity risk. As of December 31, 2015 and 2014, the Corporation’s unused bank credit lines in bank were $2,540,000 thousand and $3,020,000 thousand, respectively.

• 53 -

Liquidity and interest risk tables

The following tables detail the Corporation’s remaining contractual maturity for its nonderivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Corporation can be required to pay.

The Bank loans are listed on the earliest date on which the Corporation may be required to pay without considering the probability of the lending bank’s executing its rights; other nonderivative financial liabilities are listed at their contract repayment dates.

Nonderivative financial liabilities Notes payable (including related parties) Accounts payable (including related parties) Other payable Unsecured convertible bonds Floating interest rate instruments Nonderivative financial liabilities Notes payable (including related parties) Accounts payable (including related parties) Other payable Unsecured convertible bonds Fixed interest rate instruments Floating interest rate instruments	December	31, 2015
	Weighted Average Effective Interest Rate (%) Within 1 Year - $ 35 - 569,049 - 459,173 1.57 - 1.02 120,358 $ 1,148,615 December	Over 1 Year to 5 Years $ - - - 1,854,100 1,251,071 $ 3,105,171 31, 2014	More Than 5 Years $ - - - - - $ -
	Weighted Average Effective Interest Rate (%) Within 1 Year - $ 1,051 - 543,502 - 499,106 1.57 - 1.17 50,010 1.59 181,429 $ 1,275,098	Over 1 Year to 5 Years $ - - - 1,854,400 - 649,522 $ 2,503,922	More Than 5 Years $ - - - - - - $ -

The amounts included in the column “within 1 year” in the above table for bank loans are the maximum amounts the Corporation could be forced repay immediately if repayment is demanded by the banks. As of December 31, 2015, the undiscounted principal amounts of the above bank loans were $100,000 thousand and $220,000 thousand, respectively. After considering the financial position of the Corporation, management does not think the banks will execute their rights of requiring the Corporation to repay the bank loans. In addition, management believes the operating funds of the Corporation and subsidiaries are sufficient to meet cash flow demand; thus, liquidity risk is not considered significant.

• 54 -

The Corporation’s operating funds are sufficient to meet the cash flow demand; the Corporation does not make use of its overdraft limit.

27. RELATED-PARTY TRANSACTIONS

The related parties and relationships with the Corporation were as follows:

Related Party Chroma Ate Inc. (“Chroma U.S.A.”) Neworld Electronics Ltd. (“Neworld Electronics”) Chroma Ate Europe B.V. (“Chroma Europe”) Chi Incorporation Ltd. (“Chi”) Chroma Investment Co., Ltd. (“Chroma Investment”) Chen Hwa Technology Inc. (“Chen Hwa”) Sensational Holding Ltd. (“Sensational”) Chroma New Material Corp. (“Chroma New Material”) Chroma Japan Corp. (“Chroma Japan”) Chroma System Solutions Inc. (“CSS”) San Eagle Development Corp. (“San Eagle”) Wei Kuang Automatic Equipment Co., Ltd. (“Wei Kuang Automatic”) Testar Electronic Corp. (“Testar Electronic”) Deep Red Holding Co., Ltd. (“Deep Red”) Adivic Technology Co. (“Adivic Tech.”) Sajet System Technology (Suzhou) Co., Ltd. (“Sajet Suzhou”) Wei Kuang Mech Eng Inc. (“Wei Kuang”) Advic Holding Corp. (“Advic Holding”) Chroma Electronics (Shenzhen) Co., Ltd. (“Chroma Shenzhen”) Chroma Electronics (Shanghai) Co., Ltd. (“Chroma Shanghai”) Chroma (Shanghai) Trading Co., Ltd. (“Chroma Shanghai Trading”) Chroma Ate (Suzhou) Ltd. (“Chroma Suzhou”) Mou Kuan Technologies (Nanjin) Co., Ltd. (“Mou Kuan Nanjin”) Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. (“Wei Kuang Nanjin”) Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. (“Wei Kuang Xiamen”) EVT Technology Co., Ltd. (“EVT”) Wei Da Electric Vehicle Co., Ltd. DynaScan Technology Corp. (“DynaScan”) Chih Ho Shun Development Co., Ltd. Adlink Technology Inc. (“Adlink”) Mon Kuan Technologies Co., Ltd.

Relationship with the Corporation

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (the Corporation acquire control over the subsidiary since June 1, 2015, refer to Note 13) Subsidiary (EVT’s subsidiary) Associate Joint venture Associate Other related party

• 55 -

The related-party transactions were conducted under normal terms unless specified otherwise.

a. Sales Subsidiaries Associates		Years Ended December 31	Years Ended December 31
		2015 $ 2,741,461 18,761 $ 2,760,222	2014 $ 2,796,308 10,266 $ 2,806,574

To raise market share and expand its market in the America, Europe and Mainland China, the Corporation set up Chroma Ate Inc., Chroma Ate Europe B.V. and Neworld Electronics Ltd. The selling prices for Chroma U.S.A., CSS, Chroma Europe, Neworld Electronics, Chroma Suzhou, and Chroma Shenzhen were determined after taking the selling and post-sale service expenses into consideration.

b. Purchase Subsidiaries Associates Other related party c. Notes receivable Subsidiaries d. Accounts receivable (without loans to related parties) Subsidiaries Associates e. Accounts payable (without borrowing to related parties) Subsidiaries Associates Other related parties		Years Ended December 31	Years Ended December 31
		2015 2014 $ 29,971 $ 187,543 12,889 16,535 107 357 $ 42,967 $ 204,435 December 31
		2015 $ 3,920 $ 1,051,854 11,649 $ 1,063,503 $ 28,858 5,789 - $ 34,647	2014 $ 405 $ 1,294,807 9,950 $ 1,304,757 $ 100,327 2,002 374 $ 102,703

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f. Property transaction Subsidiaries Associates g. Loans to related parties Other receivable - financing provided Subsidiaries (Note) Interest receivables Subsidiaries (Note) Interest revenue Subsidiaries (Note)		Years Ended December 31	Years Ended December 31
		2015 2014 $ - $ 5,740 - 78 $ - $ 5,818 December 31
		2015 2014 $ 168,854 $ 174,126 $ 373 $ 471 Years Ended December 31
		2015 $ 5,067	2014 $ 5,707

Note: Other information related to financing provided is shown in Table 1 (attached).

h. Endorsement guarantees provided Subsidiaries (Note)		December 31	December 31
		2015 $ 164,580	2014 $ 159,880

Note: Other information related to endorsement guarantees provided is shown in Table 2 (attached).

• i. Others

1) Commission expense Subsidiaries		Years Ended December 31	Years Ended December 31
		2015 $ 31,878	2014 $ 53,379

Commission expense refers to the disbursements made for business introduction activities.

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2) Rental income Subsidiaries Associates Other related parties		Years Ended December 31	Years Ended December 31
		2015 $ 15,026 1,260 218 $ 16,504	2014 $ 15,204 1,260 623 $ 17,087

The Corporation leased out some floors of the buildings in Hwa-Ya Technical Park in Lin-Kou to the above related parties under operating lease contracts, and these leases were based on market prices. Rents were paid and collected monthly.

3) Management service income Subsidiaries		Years Ended December 31	Years Ended December 31
		2015 $ 6,650	2014 $ 9,000

Management service income was from the Corporation’s provision of administrative services.

4) Other income Subsidiaries Associates		Years Ended December 31	Years Ended December 31
		2015 $ 14,701 - $ 14,701	2014 $ - 25 $ 25

Other income is the earnings on repairs and maintenance.

5) Other current assets - other receivable Subsidiaries Associates Other related parties		December 31	December 31
		2015 $ 93,039 136 - $ 93,175	2014 $ 75,759 1,753 92 $ 77,604

There were allowances for receivables on managerial services and building rentals.

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6) Receipts in advance Subsidiaries 7) Temporary receipts Subsidiaries j. Compensation of key management personnel Short-term employee benefits Post-employment benefits		December 31	December 31
		2015 2014 $ - $ 88 $ 3,909 $ 717 Years Ended December 31
		2015 $ 77,729 2,022 $ 79,751	2014 $ 89,397 1,456 $ 90,853

28. ASSETS PLEDGED

The assets pledged as collaterals for bank loans (unused) were as follows:

Property, plant and equipment, net		December 31	December 31
		2015 $ 540,255	2014 $ 730,213

29. SIGNIFICANT EVENTS

On January 17, 2012, the Corporation, Dynapack International Corporation and Heran Tech. Co., Ltd. (originally named Heran Co., Ltd.) won a bid for the ownership of land and the building and related facilities to be built on the land pertaining to “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians’ Life,” which had been reviewed and approved by the Ministry of the Interior (MOI).

The total bid price was $10,088,890 thousand, covering land with an area of 222,300 square meters. As a result of winning the above bid, the Corporation acquired 35%, or 77,805 square meters, of a certain piece of land for $3,531,112 thousand. On April 18, 2012, the Corporation signed the land purchase contract with the MOI; the payment schedule for this purchase is as follows:

• a. The first installment of the bid amount (10% of the total bid amount, or $353,111 thousand) should be paid within 10 days from the contract date. The Corporation paid the first installment using the bid deposit ($353,040 thousand) and by adding cash.

• b. To meet the schedule for zone expropriation, the Corporation should pay the second installment (30% of the total bid amount) within 10 days of receiving the payment notice from the MOI. The MOI will approve the Corporation’s land usage rights as the payment is made. On September 3, 2013, the Corporation has paid the second installment $1,059,333 thousand.

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• c. To help the MOI provide the compensations for land expropriation and complete the demolition and relocation of structures on the land, the Corporation should pay the third installment (40% of the total bid amount) within 10 days of the payment notice from the MOI. The MOI will then check with the Corporation to see if the demolition and relocation are completed as the payment is made. In November 2015, the Corporation has paid the first part of the third installment $536,729 thousand.

• d. The Corporation should accomplish the following things within four years from the time of obtaining the approval of the land usage rights:

• 1) Open up the main road system and build related public facilities.

• 2) Acquire the building license for 50% percent of all industrial land and register with the authorities to go into operation.

After completing the above requirements, the Corporation should apply to the MOI for the approval to acquire real property rights to the structures and facilities built. The Corporation should pay the fourth installment (20% of the total bid amount) within 10 days upon obtaining the approval and receipt of the payment notice from the MOI. The MOI will issue the transfer-certificate of property rights over the land.

The Corporation has agreed to comply with the MOI’s requirement for the MOI’s placing of caution on undeveloped land before ownership of real property is turned over to the Corporation. The MOI will cancel this caution once it determines that the Corporation has completed all the required land development, building and facility construction and land improvements.

30. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

The monetary assets or liabilities denominated in foreign currencies have material effect on the Corporation and subsidiaries’ financial statements are as follows:

Financial assets Monetary items USD JPY EUR RMB HKD Non-monetary items Investments accounted for by the equity method USD HKD	December 31, 2015
	Foreign Currencies (In Thousands) Exchange Rate Carrying Amount (In Thousands of Dollars) $ 34,110 32.825 $ 1,119,645 560,341 0.273 153,127 1,461 35.88 52,436 28,037 4.995 140,052 169 4.235 715 $ 1,465,975 35,621 32.825 $ 1,137,655 191,695 4.235 811,830 (Continued)

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December 31, 2015

	December 31, 2015
EUR JPY Financial liabilities Monetary items USD Financial assets Monetary items USD JPY EUR RMB HKD Non-monetary items Investments accounted for by the equity method USD HKD EUR JPY Financial liabilities Monetary items USD	Foreign Currencies (In Thousands) Exchange Rate Carrying Amount (In Thousands of Dollars) $ 3,799 35.88 $ 136,318 (59,061) 0.273 (16,124) $ 2,069,679 4,988 32.825 $ 163,735 (Concluded) December 31, 2014
	Foreign Currencies (In Thousands) Exchange Rate Carrying Amount (In Thousands of Dollars) $ 50,644 31.65 $ 1,602,872 358,266 0.265 94,809 1,904 38.47 73,229 35,118 5.09 178,820 4 4.08 15 $ 1,949,745 33,900 31.65 $ 1,041,229 178,342 4.08 727,636 3,212 38.47 123,550 (36,293) 0.265 (9,618) $ 1,882,797 3,455 31.65 $ 109,358

For the years ended December 31, 2015 and 2014, (realized and unrealized) net foreign exchange gains were $52,536 thousand and $84,046 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies.

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31. ADDITIONAL DISCLOSURES

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

• a. Financing provided: Table 1 (attached).

• b. Endorsement/guarantee provided: Table 2 (attached).

• c. Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities): Table 3 (attached).

• d. Marketable securities acquired and disposed of at costs or prices of at least $300 million or 20% of the paid-in capital: None.

• e. Acquisition of individual real estate properties at costs of at least $300 million or 20% of the paid-in capital: Table 4 (attached).

• f. Disposal of individual real estate properties at prices of at least $300 million or 20% of the paid-in capital: None.

• g. Total purchase from or sale to related parties amounting to at least $100 million or 20% of the paid-in capital: Table 5 (attached).

• h. Receivable from related parties amounting to at least $100 million or 20% of the paid-in capital: Table 6 (attached).

• i. Derivative transactions: Note 7.

• j. Names, locations, and related information of investees on which the Corporation exercised significant influence: Table 7 (attached).

• k. Information on investment in Mainland China:

• 1) The name of the investee in Mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8 (attached).

• 2) Significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 5.

  • c) The amount of property transactions and the amount of the resultant gains or losses: None.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None.

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• e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None.

• f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None.

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TABLE 1

CHROMA ATE INC.

FINANCING PROVIDED YEAR ENDED DECEMBER 31, 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Financing Company Name	Counterparty	Financial Statement Account	Related Parties	Maximum Balance for the Period (Note 5)	Ending Balance (Note 5)	Balance Used (Note 5)	Interest Rate	Financing Provided (Note 6)	Transaction Amounts	Reasons for Short-term Financing	Allowance for Bad Debt	**Collateral **	**Collateral **	Financing Limit for Each Borrowing Company	Financing Company’s Financing Amount Limits
													Item	Value
0	Chroma Ate Inc. (the “Corporation”)	Chroma Systems Solutions Inc. Chroma Japan Corp.	Other receivable Other receivable	Y Y	$ 157,118 44,803	$ 127,576 42,414	$ 127,576 41,278	3.25%-4% -	a a	$ 353,916 107,565	- -	$ - -	- -	$ - -	$ 941,010 (Note 1) 941,010 (Note 1)	$ 1,882,021 (Note 2) 1,882,021 (Note 2)
1	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma (Shanghai) Trading Co., Ltd.	Other receivable	Y	54,945	-	-	2.6%	b	-	Purchase for PPE	-	-	-	297,968 (Note 3)	297,968 (Note 3)
2	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Chroma (Shanghai) Trading Co., Ltd.	Other receivable	Y	34,965	3,996	3,996	2.6%	b	-	Purchase for PPE	-	-	-	198,341 (Note 4)	198,341 (Note 4)

Note 1: Based on 10% of the net value of the Corporation ($9,410,104 × 10% = $941,010).

Note 2: Based on 20% of the net value of the Corporation ($9,410,104 × 20% = $1,882,021).

Note 3: Based on 70% of the net value calculated based on the latest financial statements of borrowing company that have been audited ($425,668 × 70% = $297,968).

Note 4: Based on 70% of the net value calculated based on the latest financial statements of borrowing company that have been audited ($283,344 × 70% = $198,341).

Note 5: The amounts listed in columns were translated into New Taiwan dollars at the exchange rate of US$1=NT$32.825, RMB1=NT$4.995 and JPY1 = NT$0.273 as of December 31, 2015. Note 6: Financing provided:

a. For transactions.

b. For short-term financing.

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TABLE 2

CHROMA ATE INC.

ENDORSEMENT/GUARANTEE PROVIDED YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

No.	Endorsement/ Guarantee Provider	Counterparty	Counterparty	Limits on Each Counter- party’s Endorsement/ Guarantee Amount (Note 1)	Highest Amount of Guarantee Provided for the Year	Ending Balance	Amount of Guarantee Actually Used	Value of Collateral	Ratio of Accumulated Amount of Collateral to Net Equity Shown in the Latest Financial Statements	Maximum Collateral/ Guarantee Amounts Allowable (Note 2)	Endorsed/ Guaranteed to Subsidiaries by Parent Company	Endorsed/ Guaranteed to Parent Company by Subsidiaries	Endorsed/ Guaranteed to Investees in Mainland China
		Name	Nature of Relationship
0	Chroma Ate Inc.	Chroma Ate Inc. (U.S.A.) Chroma Japan Corp.	Subsidiary Subsidiary	$ 1,411,516 1,411,516	$ 131,300 33,280	$ 131,300 33,280	$ 65,650 21,840	$ - -	1.40% 0.35%	$ 2,823,031 2,823,031	Y Y	- -	- -

Note 1: According to Regulation of the “Procedures for Endorsement/Guarantee and lending of Funds”, the Corporation limits the endorsement/guarantee amount on each entity to (a) within 15% of the net value of the Corporation ($9,410,104 × 15% = $1,411,516) and (b) the capital issued of the entity endorsed/guaranteed, but 100% held subsidiary is not limited by the regulation.

Note 2: According to Regulation of the “Procedures for Endorsement/Guarantee and Lending of Funds”, the Corporation limits the endorsement/guarantee amount within the 30% of the net value of the Corporation ($9,410,104 × 30% = $2,823,031). Note 3: The amounts listed in columns were translated into New Taiwan dollars at the exchange rate of US$1=NT$32.825 and JPY1 = NT$0.273 as of December 31, 2015.

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TABLE 3

CHROMA ATE INC.

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Marketable Securities Type and Issuer	Relationship with the Holding Company	Financial Statement Account		**December **	31, 2015		Note
				Shares/Units (Thousands)	Carrying Value	Percentage of Ownership	Market Value or Net Asset Value
Chroma Ate Inc. (the “Corporation”) Chroma New Material Corp. Chroma Investment Co., Ltd. Chenhwa Technology Inc.	Fund The RSIT Enhanced Money Market Fund Paradigm Pion Money Market Yuanta Wan Tai Money Market Fuh Hwa You Li Money Market Fund Cathay Taiwan Money Market Mega Diamond Money Market Union Money Market Stocks DynaColor, Inc. Chunghwa Telecom Co., Ltd. China Communications Media Group Co., Ltd. WK Technology Fund IX Ltd. Twoway Catv Service Inc. Tian Zheng International Precision Machinery Co., Ltd. WK Technology Fund IV Ltd. WK Technology Fund VI Ltd. WI Harper INC Fund VII LP Lasfocus Corporation Qualitysource SAS Fund Fuh Hwa You Li Money Market Fund The RSIT Enhanced Money Market Fund Paradigm Pion Money Market Fund Hua Nan Kirin Money Market Fund Stocks Greatek Electronics Inc. Adlink Technology Inc. ICHIA Tech. 2nd Unsecured Convertible Bond Chroma Ate Inc. Fei Hong Industrial Co., Ltd. Cosmactive Broadband Networks Co., Ltd. Prance System Technology Co., Ltd. Hangzhou New Material Chroma Co., Ltd.	- - - - - - - - - - - - - - - - - - - - - - - - The Corporation - - - -	Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - current Available for sale financial assets - noncurrent Available for sale financial assets - noncurrent Available for sale financial assets - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Available for sale financial assets - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent Financial assets carried at cost - noncurrent	24,722 24,732 18,863 21,184 21,282 20,373 13,098 6,050 412 26 4,614 3,561 2,300 3,200 2,125 - 2,179 9 6,829 4,525 2,642 4,925 85 64 10 1,916 4,174 26 111 285	$ 292,341 282,411 282,320 282,295 262,135 252,149 170,870 317,642 40,867 1,034 46,140 39,218 33,000 32,000 21,250 10,152 - - 90,997 53,513 30,171 58,274 3,049 4,872 951 122,405 17,175 110 - 9,355	- - - - - - - 6.0 - - 4.6 4.7 9.9 1.9 1.4 - - 12.2 - - - - - - - - 10.3 1.5 5.1 19.0	$ 292,341 282,411 282,320 282,295 262,135 252,149 170,870 317,642 40,867 1,034 - - - - - - - - 90,997 53,513 30,171 58,274 3,049 4,872 951 122,405 - - - -	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 1 Note 1 Note 1 - - - - - - - - Note 2 Note 2 Note 2 Note 2 Note 1 Note 1 Note 1 Note 1 - - - -

Note 1: Based on the closing price as of December 31, 2015.

Note 2: Based on the net asset value of the fund as of December 31, 2015.

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TABLE 4

CHROMA ATE INC.

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COST OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITA L YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type of Property	Transaction Date	Transaction Amount	Payment Term	Counter-party	Nature of Relationship	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Price Reference	Purpose of Acquisition	Other Terms
							**Owner **	Relationship	Transfer Date	Amount
Chroma Ate Inc.	Construction in progress and prepayments for equipment.	2015.11.16	$ 536,729	Based on a contract; the first part of third installment had been paid.	Ministry of the Interior, Republic of China.	-	-	-	-	$ -	Public bidding	Manufacturing, R&D, operating and building employee dormitories.	Note

Note: Please see Note 29 to the financial statements for related information.

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TABLE 5

CHROMA ATE INC.

TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Nature of Relationship		Transaction	Transaction	Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Chroma Ate Inc. (the “Corporation”) Neworld Electronics Ltd. Chroma Ate Inc. (the “Corporation”) Chroma Ate Inc. (U.S.A.) Chroma Ate Inc. (the “Corporation”) Chroma Systems Solutions Inc. Chroma Ate Inc. (the “Corporation”) Chroma Ate Europe B.V. Chroma Ate Inc. (the “Corporation”) Chroma Electronics (Shenzhen) Co., Ltd. Chroma Ate Inc. (the “Corporation”) Chroma Japan Corp.	Neworld Electronics Ltd. Chroma Ate Inc. (the “Corporation”) Chroma Ate Inc. (U.S.A.) Chroma Ate Inc. (the “Corporation”) Chroma Systems Solutions Inc. Chroma Ate Inc. (the “Corporation”) Chroma Ate Europe B.V. Chroma Ate Inc. (the “Corporation”) Chroma Ate Inc. (Shenzhen) Co., Ltd. Chroma Ate Inc. (the “Corporation”) Chroma Japan Corp. Chroma Ate Inc. (the “Corporation”)	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company	(Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase	$ (1,194,767) 1,194,767 (461,646) 461,646 (353,916) 353,916 (215,646) 215,646 (217,182) 217,182 (107,565) 107,565	(26) 100 (10) 100 (8) 100 (5) 100 (5) 100 2 100	Net 90 days after delivery Net 90 days after delivery Net 180 days after delivery Net 180 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after monthly closing Net 90 days after monthly closing Net 90 days after delivery Net 90 days after delivery	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	- - Note 2 Note 2 - - - - - - - -	$ 210,900 (210,900) 326,335 (326,335) 126,671 (126,671) 51,545 (51,545) 55,065 (55,065) 106,782 (106,782)	13 (100) 20 (100) 8 (100) 3 (100) 3 (100) 6 100	- - - - - - - - - - - -

Note 1: The prices were determined after taking the selling and post-sale services expenses into consideration.

Note 2: The actual credit period longer than other customers, approximately 12 months.

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TABLE 6

CHROMA ATE INC.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Nature of Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note)	Allowance for Bad Debts
					Amount	Action Taken
Chroma Ate Inc.	Neworld Electronics Ltd. Chroma Ate Inc. (U.S.A.) Testar Electronic Corporation Chroma System Solutions Inc. Chroma System Solutions Inc. Chroma Japan Corp. Chroma Japan Corp.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	Accounts receivable $ 210,900 Accounts receivable 326,335 Accounts receivable 139,857 Accounts receivable 126,671 Other receivable - financing provided 127,576 Accounts receivable 106,782 Other receivable - financing provided 41,278	3.17 1.58 0.57 2.79 - 1.15 -	$ - - - - - - -	- - - - - - -	$ 165,422 109,351 - 42,053 - 17,349 -	$ - - - - - - -

Note: The amounts had been accrued as of February 23, 2016.

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TABLE 7

CHROMA ATE INC.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of December 31, 2015	as of December 31, 2015	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				December 31, 2015	December 31, 2014	Shares (Thousands)	Percentage of Ownership	Carrying Value
Chroma Ate Inc. (the “Corporation”) Chroma Ate Inc. (U.S.A.) San Eagle Development Corp. EVT Technology Co., Ltd. Advic Technology Co., Ltd.	Neworld Electronics Ltd. San Eagle Development Corp. Chroma New Material Corporation Adlink Technology Inc. Wei Kuang Automatic Equipment Co., Ltd. CHI Incorporation Ltd. Chroma Investment Co., Ltd. Chroma Ate Europe B.V. DynaScan Technology Corp. Chroma Systems Solutions, Inc. Sensational Holding Ltd. Chroma Ate Inc. (U.S.A.) Deep Red Holding Co., Ltd. Chen Hwa Technology Inc. Adivic Technology Co. Testar Electronic Corporation Chroma Japan Corp. Chih Ho Shun Development Co., Ltd. EVT Technology Co., Ltd. Chroma Systems Solutions Inc. Wei Kuang Mech Eng Inc. Wei Da Electric Vehicle Co., Ltd. Advic Holding Corporation	Hong Kong British Virgin Islands Taoyuan, Taiwan New Taipei, Taiwan Hsinchu, Taiwan British Virgin Islands New Taipei, Taiwan The Netherlands Taoyuan, Taiwan U.S.A. British Virgin Islands U.S.A. Mauritius British Virgin Islands Taipei, Taiwan Taoyuan, Taiwan Japan Taoyuan, Taiwan Taoyuan, Taiwan U.S.A. Mauritius Pingtung, Taiwan Samoa	Sale and maintenance of electronic test instruments, etc. Investment Sale and processing of gold wire Manufacturing, processing and retailing of software/hardware of computers and peripherals Design, manufacturing, installment and testing of automated factory conveyor systems Test of inductance, capacitance and resistance, and sale of parts Investment Sale and maintenance of electronic test instruments etc. Research and manufacture of LED generators Sale and maintenance of electronic test instruments, etc. Investment Sale and maintenance of electronic test instruments, etc. Investment Test of inductance, capacitance and resistance, and sale of parts Sale and research of RF device Testing of LED products Sale and maintenance of electronic test instruments, etc. Construction and development of residence, buildings and specialized field; construction and investment of public works Manufacturing of motorcycles and its parts Sale and maintenance of electronic test instruments, etc. Investments Sale and lease of motorcycles Sale and research of RF device	$ 271,873 186,514 480,715 82,325 533,000 122,884 80,000 54,026 238,746 29,628 38,301 29,895 12,217 98,217 112,200 247,096 147,125 17,500 27,623 64 185,686 3,750 15,223	$ 271,873 186,514 480,715 82,325 533,000 122,884 80,000 54,026 238,746 29,628 38,301 29,895 12,217 19,977 81,600 247,096 147,125 17,500 4,623 64 185,686 3,750 -	64,013 2,050 25,000 23,208 10,000 3,830 14,000 1 9,841 120 1,200 1,000 215 3,085 11,220 20,160 9 1,750 2,658 240 4,475 375 500	100.0 100.0 100.0 11.5 100.0 100.0 100.0 100.0 27.3 25.0 100.0 100.0 100.0 100.0 51.0 67.2 100.0 35.0 53.2 50.0 100.0 75.0 100.0	$ 705,291 624,769 437,683 457,674 446,591 133,231 102,030 84,939 77,960 (56,946) 52,699 68,577 45,408 111,655 36,119 10,446 (24,387) 17,505 8,275 104,745 616,683 (3,567) 5,496	$ (85,873) 11,571 49,527 606,101 220,615 (19,416) 5,358 20,710 21,788 41,021 1,165 31,094 961 4,173 (60,023) (48,424) (5,965) 269 (20,756) 41,021 11,648 (3,251) (10,556)	$ (85,873) 11,571 49,527 70,124 222,533 (19,416) 365 20,710 5,948 10,255 1,165 31,090 961 4,173 (32,621) (32,541) (5,965) 94 (7,200) NA NA NA NA	Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

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TABLE 8

CHROMA ATE INC.

INVESTMENT IN MAINLAND CHINA YEAR ENDED DECEMBER 31, 2015

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (Note 2)	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2015 (Note 3)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2015 (Note 3)	Net Income (Loss) of the Investee	Percentage of Ownership in Investment	Investment Gain (Loss) (Notes 4 and 5)	Carrying Value as of December 31, 2015 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2015
						Outflow	Inflow
Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma (Shanghai) Trading Co., Ltd. Hangzhou New Material Chroma Co., Ltd. Chroma Ate (Suzhou) Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd.	Sale of power supplies automatic test systems, signal generators, DC electronic load, color analyzer, uninterruptible power supply, switching mode rectifier and etc. Sale of power supplies automatic test systems, signal generators, DC electronic load, uninterruptible power supply, switching mode rectifier and etc. International and transit trading, commercial simple processing and commercial consulting service and etc. Production and sale of semiconductor connecting materials Sale of power supplies automatic test systems, signal generators, DC electronic load, uninterruptible power supply, switching mode rectifier and etc. Sale and maintenance of electronic equipment and factory conveyor systems Sale and maintenance of electronic equipment and factory conveyor systems Assembly, sale and maintenance of factory conveyors and related systems and renders related after-sales services Research, development and design of computer network security systems and information management		$ 127,050 (HK$ 30,000) 98,475 (US$ 3,000) 88,628 (US$ 2,700) 49,238 (US$ 1,500) 124,735 (US$ 3,800) 59,296 (RMB 11,871) 57,028 (RMB 11,417) 8,676 (RMB 1,737) 8,671 (RMB 1,736)	b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of Chi Incorporation Ltd. b. Subsidiary of Wei Kuang Mech Eng Inc. b. Subsidiary of Wei Kuang Mech Eng Inc. b. Subsidiary of Wei Kuang Mech Eng Inc. b. Subsidiary of Deep Red Holding Co., Ltd.	$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 6,748 (US$ 200) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ - - 78,240 (US$ 2,500) - - - - - -	$ - - - - - - - - -	$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ 35,684 1,132 (710) 30,339 (19,105) 1,923 9,880 35 946	100 100 100 19 100 100 100 100 100	$ 35,684 1,132 (710) - (19,105) 1,923 9,880 35 946	$ 425,503 59,315 99,230 9,355 164,223 238,736 286,759 48,056 45,397	$ - - - 12,065 (US$ 368) - - - - -
Accumulated Investment in Mainland China as of December 31, 2015		Investment Amounts Authorized by the Investment Commission, MOEA		Upper Limit on Investment
$635,051 (HK$1,200, US$19,312)		$695,162 (HK$1,400, US$21,086) (Note 6)		$5,646,062 (Note 7)

(Continued)

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Note 1: Methods of investment have following types:

• a. Direct investment in mainland China.

• b. Indirect investment in the Company of Mainland China through a third place. c. Other

Note 2: The amounts of paid-in capital and carrying value as of December 31, 2015 were translated into New Taiwan dollars at the rates of HK$1=NT$4.235, US$1=NT$32.825, RMB1=NT$4.995 vailing on December 31, 2015. Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2015 and December 31, 2015 were translated into New Taiwan dollars on the original outflow day.

• Note 4: Based on audited financial statements.

Note 5: Investment income (loss) was translated into New Taiwan dollars at the average rate of HK$1=NT$4.094, US$1=NT$31.739, RMB1=NT$5.033 for the year ended December 31, 2015.

Note 6:

	Approval Letter	Approved Amount	Approved Amount
a.	Letter (1998) II-87710585 of Investment Commission of MOEA	$	5,852
		(HK$	1,400)
b.	Letter (2000) II-89014726 and 89037430 of Investment Commission of MOEA		63,180
		(US$	2,000)
c.	Letter (2001) II-89037430 of Investment Commission of MOEA		33,160
		(US$	1,000)
d.	Letter II-91048640 of Investment Commission of MOEA		63,984
		(US$	1,853) (Note 7)
e.	Letter II-90025170 of Investment Commission of MOEA		60,240
		(US$	1,750)
f.	Letter II-092020235 of Investment Commission of MOEA		19,230
		(US$	560)
g.	Letter II-092043358 of Investment Commission of MOEA		6,748
		(US$	200)
h.	Letter II-093004076 of Investment Commission of MOEA		3,158
		(US$	95)
i.	Letter II-094006092 of Investment Commission of MOEA		6,896
		(US$	219)
j.	Letter II-09500052120 of Investment Commission of MOEA		81,528
		(US$	2,500)
k.	Letter II-09600175700 of Investment Commission of MOEA		120,000
		(US$	3,699)
l.	Letter II-096000006020 of Investment Commission of MOEA		66,580
		(US$	2,000)
m.	Letter II-09600310110 of Investment Commission of MOEA		33,160
		(US$	1,000)
n.	Letter II-09700186010 of Investment Commission of MOEA		46,110
		(US$	1,500)
o.	Letter II-09700403210 of Investment Commission of MOEA		7,096
		(US$	210) (Note 8)
p.	Letter II-10400042770 of Investment Commission of MOEA		78,240
		(US$	2,500)

Note 7: The upper limit on investment was calculated in accordance with the regulations of the Investment Commission of the Ministry of Economic Affairs for 60% of the net equity or consolidated net equity.

Note 8: Chroma Ate Inc. invested accounts receivable amounting to US$853 thousand in Chroma Electronics (Shenzhen) Co., Ltd. through Neworld Electronics Ltd.

Note 9: The investment in Sajet Technology Inc. (liquidated on September 15, 2008) was authorized by the Investment Commission in 2004.

(Concluded)

• 72 -