CHROMA - Interim / Quarterly Report 2016

Chroma Ate Inc. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2016 and 2015 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Chroma Ate Inc.

We have reviewed the accompanying consolidated balance sheets of Chroma Ate Inc. (the “Corporation”) and its subsidiaries as of March 31, 2016 and 2015 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2016 and 2015. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

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

The financial statements of some minor subsidiaries that were included in the consolidated financial statements were unreviewed. As of March 31, 2016 and 2015, the unreviewed assets were 21.73% (NT$3,593,185 thousand) and 23.58% (NT$3,523,604 thousand), respectively, of the consolidated assets, and the unreviewed liabilities were 16.65% (NT$1,100,004 thousand) and 20.52% (NT$1,128,574 thousand), respectively, of the consolidated liabilities. The unreviewed comprehensive losses for the three months ended March 31, 2016 and 2015 were (16.71%) (NT$(47,667) thousand) and (36.48%) (NT$(22,573) thousand), respectively, of consolidated comprehensive income. In addition, as disclosed in Note 15 to the financial statements, the carrying values of some long-term investments accounted for by the equity method were 0.58% (NT$96,242 thousand) and 0.58% (NT$87,077 thousand) of the consolidated assets as of March 31, 2016 and 2015, respectively, and the amounts of share of comprehensive loss and income of associates and joint ventures accounted for by the equity method for the three months ended March 31, 2016 and 2015, respectively, were (0.27%) (NT$(777) thousand) and (4.35%) (NT$(2,693) thousand), respectively, of the consolidated comprehensive income. These investment amounts were calculated and disclosed on the basis of the unreviewed financial statements of the investees as of and for the same reporting periods as those of the Corporation. Further, as disclosed in Note 34 to the consolidated financial statements, other information on the Corporation’s minor subsidiaries and other investees accounted for by the equity method was disclosed on the basis of the unreviewed financial statements as of and for the same reporting periods as those of the Corporation.

Based on our reviews, except for such adjustments, if any, that might have been determined to be necessary had the above investment amounts and related additional disclosures been based on reviewed financial statements, we are not aware of any material modifications that should be made to the consolidated financial statements of Chroma Ate Inc. and its subsidiaries referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission.

April 29, 2016

Notice to Readers

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

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

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 8) Investments in bonds with no active market - current (Notes 4, 10 and 31) Notes receivable Accounts receivable, net (Notes 4 and 11) Accounts receivable - related parties (Notes 4, 11 and 30) Construction contracts receivable (Notes 4 and 12) Inventories (Notes 4 and 13) Prepayments Other current assets (Note 31) 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 using equity method (Notes 4 and 15) Property, plant and equipment (Notes 4, 16 and 31) Goodwill (Notes 4 and 17) Other intangible assets (Notes 4 and 18) Deferred tax assets (Note 4) Prepayments for equipment (Note 4) Refundable deposits Prepayments for investments Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 31) Short-term bills payable (Note 19) Financial liability at fair value through profit or loss - current (Notes 4 and 7) Notes payable Notes payable - related parties (Note 30) Accounts payable Accounts payable - related parties (Note 30) Construction contracts payable (Notes 4 and 12) Dividends payable Other payables (Note 21) Current tax liabilities (Note 25) Receipts in advance (Note 12) Current portion of long-term liabilities (Notes 19 and 31) Other current liabilities - other Total current liabilities NONCURRENT LIABILITIES Bonds payable (Notes 4 and 20) Long-term borrowings (Notes 19 and 31) Deferred income tax liabilities (Note 4) Net defined benefit liabilities - noncurrent (Notes 4 and 22) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 4, 23 and 27) Common stock Advance receipts for share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equities Treasury stock Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS Total equity TOTAL	March 31, 2016 (Reviewed) Amount % $ 2,230,963 13 9,775 - 2,659,710 16 422,388 3 38,072 - 2,359,118 14 12,257 - 246,577 1 1,778,825 11 85,655 1 114,082 1 9,957,422 60 364,188 2 208,218 1 660,279 4 2,765,744 17 194,900 1 4,021 - 186,109 1 2,063,266 13 35,620 - 60,559 1 38,445 - 6,581,349 40 $ 16,538,771 100 $ 301,389 2 - - - - 58,244 - 4,103 - 1,563,460 9 1,906 - 319,635 2 - - 628,298 4 262,079 2 22,845 - 275,414 2 47,236 - 3,484,609 21 1,745,925 10 1,133,810 7 153,209 1 148,435 1 836 - 3,182,215 19 6,666,824 40 3,791,699 23 14,613 - 1,342,876 8 1,600,920 10 86,888 - 2,584,657 16 4,272,465 26 380,548 2 (35,714) - 9,766,487 59 105,460 1 9,871,947 60 $ 16,538,771 100	December 31, 2015 (Audited) Amount % $ 2,489,289 16 8,872 - 2,057,476 13 559,958 3 81,021 - 2,422,708 15 11,650 - 175,863 1 1,635,947 10 83,437 1 106,379 1 9,632,600 60 359,543 2 208,400 2 553,139 4 2,767,608 17 196,052 1 4,524 - 156,651 1 2,097,344 13 39,036 - - - 45,542 - 6,427,839 40 $ 16,060,439 100 $ 301,303 2 - - 1,483 - 19,173 - 3,311 - 1,348,781 9 5,789 - 255,218 2 2,298 - 665,640 4 208,745 1 229,955 2 30,083 - 40,875 - 3,112,654 20 1,758,093 11 1,384,040 8 123,827 1 149,691 1 838 - 3,416,489 21 6,529,143 41 3,791,699 24 - - 1,302,269 8 1,600,920 10 86,888 - 2,264,377 14 3,952,185 24 399,665 2 (35,714) - 9,410,104 58 121,192 1 9,531,296 59 $ 16,060,439 100	March 31, 2015 (Reviewed)	March 31, 2015 (Reviewed)
				Amount % $ 2,180,014 15 9,233 - 1,970,414 13 441,492 3 32,184 - 2,601,794 17 14,410 - 71,843 - 1,587,276 11 89,512 1 95,793 1 9,093,965 61 439,504 3 185,250 1 525,597 4 2,675,827 18 193,309 1 6,030 - 153,393 1 1,542,267 10 46,298 - 33,000 - 50,166 1 5,850,641 39 $ 14,944,606 100 $ 161,450 1 16,000 - 1,298 - 132,759 1 7,973 - 1,076,369 7 1,918 - 289,458 2 - - 644,066 4 237,680 2 89,600 1 145,151 1 43,211 - 2,846,933 19 1,737,434 12 684,455 4 104,729 1 126,407 1 778 - 2,653,803 18 5,500,736 37 3,787,821 25 42 - 1,265,212 8 1,469,276 10 86,888 1 2,304,989 15 3,861,153 26 455,167 3 (35,714) - 9,333,681 62 110,189 1 9,443,870 63 $ 14,944,606 100

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

(With Deloitte & Touche review report dated April 29, 2016)

CHROMA ATE INC. AND SUBSIDIARIES

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

OPERATING REVENUES (Notes 4, 12 and 30) Sales revenues Less: Sales returns Sales allowances Net operating revenues OPERATING COSTS (Notes 4, 13, 24 and 30) GROSS PROFIT REALIZED GROSS PROFIT EARNED OPERATING PROFIT OPERATING EXPENSES (Note 24) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSE Rental income (Note 31) Interest income (Note 4) Dividend income (Note 4) Subsidy income (Note 4) Other income - other Exchange loss, net (Note 4) Other expenses Loss on disposal of property, plant and equipment, net (Note 4) Valuation gain on financial assets at fair value through profit or loss, net (Note 4) Gain on disposal of property, plant and equipment, net (Note 4) Gain on disposal of investments, net (Notes 4 and 7)		For the Three Months	For the Three Months	Ended March 31
		2016 Amount % $ 2,636,230 101 (1,393) - (24,718) (1) 2,610,119 100 1,456,745 56 1,153,374 44 368 - 1,153,742 44 374,803 14 158,307 6 236,304 9 769,414 29 384,328 15 6,522 - 5,037 - 181 - 9 - 3,760 - (22,125) (1) (3,849) - (1,952) - 2,171 - - - $ - -		2015
				Amount % $ 1,998,029 104 (71,068) (4) (3,198) - 1,923,763 100 1,126,520 58 797,243 42 - - 797,243 42 327,944 17 144,171 8 193,945 10 666,060 35 131,183 7 6,542 - 5,200 - - - 2,250 - 35,691 2 (36,400) (2) (1,620) - - - 224 - 1,066 - $ 11 - (Continued)

CHROMA ATE INC. AND SUBSIDIARIES

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

Share of profits of associates and joint ventures, net (Notes 4 and 15) Finance costs (Note 24) Total nonoperating income and expense CONSOLIDATED INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 25) CONSOLIDATED NET INCOME OTHER COMPREHENSIVE INCOME (LOSS), NET (Note 24) Items that will not be reclassified subsequently to profit or loss: Share of the other comprehensive income of associates accounted for by the equity-method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain (loss) from available-for-sale financial assets Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME NET INCOME ATTRIBUTED TO: Owners of the Corporation Noncontrolling interests		For the Three Months	For the Three Months	Ended March 31
		2016 Amount % $ 7,016 - (8,832) - (12,062) (1) 372,266 14 66,276 2 305,990 12 (736) - (24,312) (1) 6,879 - (2,601) - (20,770) (1) $ 285,220 11 $ 321,016 12 (15,026) - $ 305,990 12		2015
				Amount % $ 9,587 1 (10,368) - 12,183 1 143,366 8 29,809 2 113,557 6 732 - (32,717) (2) (26,328) (1) 6,630 - (51,683) (3) $ 61,874 3 $ 123,338 6 (9,781) - $ 113,557 6

(Continued)

CHROMA ATE INC. AND SUBSIDIARIES

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

COMPREHENSIVE INCOME ATTRIBUTED TO: Owners of the Corporation Noncontrolling interests EARNINGS PER SHARE (NT$; Note 26) Basic Diluted		For the Three Months	For the Three Months	Ended March 31
		2016 Amount % $ 301,163 12 (15,943) (1) $ 285,220 11 $0.85 $0.80		2015
				Amount % $ 72,133 4 (10,259) (1) $ 61,874 3 $0.33 $0.32

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

(With Deloitte & Touche review report dated April 29, 2016) (Concluded)

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars, Except Amounts Per Share) (Reviewed, Not Audited)

	Equity Attributable toOwners of theCorporation	Equity Attributable toOwners of theCorporation	Equity Attributable toOwners of theCorporation
Unregistered Share Capital Capital from Bond Conversion Capital Surplus $ 3,787,821 $ - $ 1,256,654 - - - - - - - - - - 42 239 - - 8,319 $ 3,787,821 $ 42 $ 1,265,212 $ 3,791,699 $ - $ 1,302,269 - - 20,272 - - - - - - - - - - 2,886 16,116 - 11,727 4,219 $ 3,791,699 $ 14,613 $ 1,342,876	Retained Earnings	Total $ 3,737,083 123,338 732 124,070 - - $ 3,861,153 $ 3,952,185 - 321,016 (736) 320,280 - - $ 4,272,465	Other Equity	Total Treasury Stock $ 507,104 $ (35,714 ) - - (51,937) - (51,937) - - - - - $ 455,167 $ (35,714) $ 399,665 $ (35,714 ) - - - - (19,117) - (19,117) - - - - - $ 380,548 $ (35,714)
			Exchange Differences on Translating Unrealized Gain (Loss) from Available-for- Foreign Operations sale Financial Assets $ 136,756 $ 370,348 - - (25,609) (26,328) (25,609) (26,328) - - - - $ 111,147 $ 344,020 $ 127,968 $ 271,697 - - - - (25,996) 6,879 (25,996) 6,879 - - - - $ 101,972 $ 278,576
	Legal Reserve Special Reserve Unappropriated Earnings $ 1,469,276 $ 86,888 $ 2,180,919 - - 123,338 - - 732 - - 124,070 - - - - - - $ 1,469,276 $ 86,888 $ 2,304,989 $ 1,600,920 $ 86,888 $ 2,264,377 - - - - - 321,016 - - (736) - - 320,280 - - - - - - $ 1,600,920 $ 86,888 $ 2,584,657

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

(With Deloitte & Touche review report dated April 29, 2016)

CHROMA ATE INC. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income before income tax Adjustments for: Depreciation Exchange loss, net Impairment loss on nonderivative financial assets Finance costs Share of profit of associates and joint ventures accounted for by the equity method, net Interest income Compensation cost of employee share options Loss (gain) on disposal and retirement of property, plant and equipment, net Bad debts expense (reversal of bad debts) Amortization Realized gain on transaction with associates and joint ventures Dividend income Gain on disposal of investments, net Net changes in assets and liabilities Financial assets held for trading Notes receivable Accounts receivable Construction contracts receivable Inventories Prepayments Other current assets Financial liabilities held for trading Notes payable Accounts payable Construction contracts payable Other payables Receipts in advance Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire available-for-sale financial assets Proceeds from disposal of investment in bonds with no active market		For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 372,266 86,183 20,255 13,746 8,832 (7,016) (5,037) 4,430 1,952 1,421 503 (368) (181) - (903) 42,949 39,097 (70,714) (175,326) (2,218) (6,723) (1,497) 39,863 215,216 64,417 (29,230) (207,110) 6,361 (1,256) 409,912 (19,060) 390,852 (600,000) 137,570	2015 $ 143,366 79,950 17,577 5,249 10,368 (9,587) (5,200) 8,627 (1,066) (6,040) 503 - - (11) (595) 1,132 528,643 24,102 (23,647) (33,334) 10,120 371 81,424 (200,227) 285,662 (89,447) 5,369 (824) (1,295) 831,190 (24,603) 806,587 (100,000) - (Continued)

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

CHROMA ATE INC. AND SUBSIDIARIES

Payment to acquire investment accounted for using equity method Increase in prepayments for investments Payments to acquire property, plant and equipment Interest received Decrease in other noncurrent assets Decrease in refundable deposits Proceeds from disposal of property, plant and equipment Dividend received Payments to acquire investment in bonds with no active market Increase in other noncurrent assets Proceeds on sale of available-for-sale financial assets Increase in refundable deposits Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Exercise of employee stock options Interest paid Repayment of long-term debts Cash dividend Increase in short-term borrowings Increase in guarantee deposits Repayments of short-term borrowings Net cash generated from (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ (82,821) (60,559) (45,827) 7,303 7,097 3,416 3,009 181 - - - - (630,631) 11,727 (7,225) (2,557) (2,298) 886 3 - 536 (19,083) (258,326) 2,489,289 $ 2,230,963	2015 $ - - (137,890) 6,308 - - 2,375 - (42,499) (3,683) 6,074 (2,950) (272,265) - (10,799) (1,123) - - - (170,000) (181,922) (20,034) 332,366 1,847,648 $ 2,180,014

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

(With Deloitte & Touche review report dated April 29, 2016)

(Concluded)

CHROMA ATE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

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 dollar (NTD).

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on April 29, 2016.

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

The International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) in issue but not yet endorsed by the FSC

The Group have not applied the following IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) issued by the International Accounting Standards Board (IASB) but not yet endorsed by the FSC.

On March 10, 2016, the FSC announced the scope of IFRSs to be endorsed and will take effect from January 1, 2017. The scope includes all IFRSs that were issued by the IASB before January 1, 2016 and have effective dates on or before January 1, 2017, which means the scope excludes those that are not yet effective as of January 1, 2017 such as IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from Contracts with Customers” and those with undetermined effective date. In addition, the FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new, amended and revised standards and interpretations.

New, Amended or Revised Standards and Interpretations 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”	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 (Continued)

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Effective Date New, Amended or Revised Standards and Interpretations Announced by IASB (Note 1)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets	To be determined by IASB
between an Investor and its Associate or Joint Venture”
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:	January 1, 2016
Applying the Consolidation Exception”
Amendment to IFRS 11 “Accounting for Acquisitions of Interests in	January 1, 2016
Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”	January 1, 2016
IFRS 15 “Revenue from Contracts with Customers”	January 1, 2018
Amendment to IFRS 15 “Clarifications to IFRS 15”	January 1, 2018
IFRS 16 “Leases”	January 1, 2019
Amendment to IAS 1 “Disclosure Initiative”	January 1, 2016
Amendment to IAS 7 “Disclosure Initiative”	January 1, 2017
Amendments to IAS 12 “Recognition of Deferred Tax Assets for	January 1, 2017
Unrealized Losses”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable	January 1, 2016
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”	January 1, 2016
Amendment to IAS 19 “Defined Benefit Plans: Employee	July 1, 2014
Contributions”
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount	January 1, 2014
Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and Continuation of	January 1, 2014
Hedge Accounting”
IFRIC 21 “Levies”	January 1, 2014
	(Concluded)

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

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

a. 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.

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

The impairment of financial assets

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

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

b. IFRS 15 “Revenue from Contracts with Customers” and related amendment

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

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. 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 consolidated financial statements shall prevail.

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Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” endorsed by the FSC. Disclosure information included in the consolidated financial statements is less than those required in a complete set of annual financial statements.

Basis of Preparation

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

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.

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 consolidated financial statements are authorized for issue; and
c. Liabilities of which the Group 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 non-current.

Basis of Consolidation

Principle of preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Group and entities controlled by the Group (its subsidiaries).

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Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Corporation.

Refer to Note 14 and Table 7 for the detail information of subsidiaries, including the equity interest and main business.

Foreign Currencies

In preparing the financial statements of each individual group entity, 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 in which they arise.

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.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including of the subsidiaries, associates, joint ventures or branches operations in other countries or currencies used different with the Corporation) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

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In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Cash and Cash Equivalents

Cash equivalent includes time deposits with original maturities within three months from the date of acquisition and, 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.

Inventories

Inventories consist of raw materials, supplies, 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 in Associates and Joint Ventures

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

The Group 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 Group’s share of the profit or loss and other comprehensive income of the associate and joint venture after the date of acquisition. Besides, the Group also recognizes the changes in the Group’s share of equity of associates and joint venture.

Any excess of the cost of acquisition over the Group’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 Group’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 Group 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 Group’s proportionate interest in the associate and joint venture. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Group’s share of equity of associates and joint ventures. If the Group’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 Group’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 Group’s net investment in the

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associate and joint venture), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group 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 Group 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 Group 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 Group continues to apply the equity method and does not remeasure 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 Group’ consolidated financial statements only to the extent of interests in the associate and the joint venture that are not related to the Group.

Property, Plant and Equipment

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

Properties, plant and equipment in the course of construction are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs 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. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. 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.

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

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) 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 attributed 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

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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 entity 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 an 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 Group 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 Group estimates the recoverable amount of the CGUs to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

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.

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Financial Instruments

Financial assets and financial liabilities are recognized when a group entity 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 or deducted from 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: Financial assets at fair value through profit or loss (FVTPL), available-for-sale (AFS) financial assets, and loans and receivables.

a) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is designated as at fair value through profit or loss.

A financial asset may be designated as at fair value through profit or loss upon initial recognition if:

i. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
ii. The financial asset 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 Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
iii. The contract contains one or more embedded derivatives so that the entire hybrid (combined) contract can be designated as at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 29.

b) Available-for-sale 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.

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Available-for-sale financial assets are measured at fair value. 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 when the Group’s right to receive the dividends is established.

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.

c) Loans and receivables

Loans and receivables (including trade receivables, cash and cash equivalent, and 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.

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 Group’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.

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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.

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 where the carrying amount is reduced through the use of an allowance account. When a trade receivable is 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 that are written off against the allowance account.

3) Derecognition of financial assets

The Group 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 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 a group entity 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.

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 Company’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.
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 Group 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.

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.

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Revenue Recognition

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

a. Sale of goods

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

1) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
2) The Group 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 Group; and
5) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group 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 Group 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 Group 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.

Construction Contracts

When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by referring to the stage of completion of the contract activity at the end of the reporting period. The stage of completion of contract activity is expressed as the percentage of contract costs incurred for work performed as of the balance sheet date relative to the estimated total contract costs, except where this percentage would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be determined reliably and its receipt is considered probable.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.

When contract costs incurred to date plus recognized profits less recognized losses exceed progress billings, the surplus is presented as construction contracts receivable. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is presented as construction contracts payable. Amounts received before the related work is performed are recognized as advances received in the consolidated balance sheet. Amounts billed for work performed but not yet paid by the customer are recognized as accounts receivable in the consolidated balance sheet.

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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.

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 Group 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 Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire noncurrent assets are recognized as deferred revenue in the consolidated 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 Group 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. 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 represents the actual deficit in the Corporation’s defined benefit plan.

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events

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Employee Stock Options

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 Group’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 Group 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 represents the sum of the current tax payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period pretax income the tax rate that would be applicable to expected total annual earnings.

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 in the current year’s tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements 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 carry forward to the extent that it is probable 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 Group 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 utilize 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.

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Deferred tax liabilities and assets are measured at the tax rates that are expected to apply 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 that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred taxes for the period

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 business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

Key Sources of Estimation 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 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 Group 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 Group’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.

c. Impairment of investments in associates and joint ventures

The Group immediately recognizes impairment loss on its net investment in associates and joint ventures when there is any indication that the investment may be impaired and the carrying amount may not be recoverable. The Group’s management evaluates the impairment based on the estimated future cash flow expected to be generated by the associate and joint ventures, including the assumptions about

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the growth rate of sale and capacity of production facilities estimated by the associate’s management, etc. The Group also takes into consideration the market conditions and industry development to evaluate the appropriateness of assumptions. The information on the measurement of goodwill impairment is shown in Note 17.

d. Reliability 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 Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred, discounted at the financial asset’s original effective interest rate. Where the actual future cash flows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Cash on hand	$	4,092	$	4,547	$	4,248
Checking accounts and demand deposits		1,841,996		2,206,259		1,629,516
Cash equivalents
Time deposits with maturities less than 3
months from date of investments		384,875		278,483		466,360
Commercial paper with repurchase agreements		-		-		79,890
	$	2,230,963	$	2,489,289	$	2,180,014

26 -

Cash equivalents include time deposits with maturities less than three months from the date of acquisition, are readily convertible to a known amount of cash, and are subject to an insignificant risk of change in value; these were held for the purpose of meeting short-term cash commitments.

As of March 31, 2016, December 31, 2015 and March 31, 2015, time deposits with maturities more than 3 months from date of investments were $422,388 thousand, $559,958 thousand and $441,492 thousand, respectively, which is classified to investment in bonds with no active market (see Notes 10 and 29).

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

			December	December	31,
	March	31, 2016		2015		March	31, 2015
Financial assets at FVTPL-current
Nonderivative financial assets
Domestic listed stocks	$	8,071	$	7,921		$	8,243
Investment in debt instrument		970		951			990
		9,041		8,872			9,233
Derivative instruments
Call and put option of convertible bonds
payable (Note 20)		734			-		-
Financial assets at fair value through profit or loss	$	9,775	$	8,872		$	9,233
Financial liabilities at FVTPL-current
Derivative instruments
Call and put option of convertible bonds
payable (Note 20)	$	-	$	1,483		$	1,298

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Domestic investments
Listed stocks	$	364,188	$	359,543	$	439,504
Open-end beneficial certificates		2,659,710		2,057,476		1,970,414
	$	3,023,898	$	2,417,019	$	2,409,918
Current	$	2,659,710	$	2,057,476	$	1,970,414
Noncurrent		364,188		359,543		439,504
	$	3,023,898	$	2,417,019	$	2,409,918

27 -

9. FINANCIAL ASSETS CARRIED AT COST-NONCURRENT

		December 31,
	March 31, 2016	2015	March 31, 2015
Domestic unlisted common stocks	$ 171,718	$ 171,718	$ 134,328
Foreign unlisted common stocks	26,348	26,530	28,507
Foreign open-end beneficial certificates	10,152	10,152	10,152
Foreign unlisted preferred stock	-	-	12,263
	$ 208,218	$ 208,400	$ 185,250
Classification by measurement of financial
instruments
Available-for-sale financial assets	$ 208,218	$ 208,400	$ 185,250

In 2015, the Corporation acquired control over EVT Technology Co., Ltd.; EVT Technology Co., Ltd. was included in the consolidate financial statement since the day the Corporation acquired control over it.

The above unlisted stock investments were measured at cost less impairment at the balance sheet date. The Group 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.

The Group did not sell financial assets carried at cost for the three months ended March 31, 2016 and 2015.

10. DEBT INVESTMENTS WITH NO ACTIVE MARKET

		December 31,
	March 31, 2016	2015	March 31, 2015
Time deposits with maturities more than 3
months from date of investments	$ 422,388	$ 559,958	$ 441,492

As of March 31, 2016, December 31, 2015 and March 31, 2015, the amounts of the Corporation’s investment in bonds with no quoted price in active market which had been mortgaged or pledged as collaterals were $3,994 thousand, $14,985 thousand and $84,070 thousand, respectively (refer to Note 31).

11. ACCOUNTS RECEIVABLE, NET

		December 31,
	March 31, 2016	2015	March 31, 2015
Accounts receivable	$ 2,540,504	$ 2,608,385	$ 2,695,183
Less: Allowance for doubtful accounts	(181,386)	(185,677)	(93,389)
	2,359,118	2,422,708	2,601,794
Accounts receivable - related parties	12,257	11,650	14,410
	$ 2,371,375	$ 2,434,358	$ 2,616,204

28 -

The average credit period for sales of goods is 60 to 90 days after the goods were approved, and no interest was charged on accounts receivable. In determining the recoverability of a receivable, the Group considered any change in the credit quality of the accounts receivable since the date when credit was initially granted to the end of the reporting period. Allowances for doubtful accounts are based on estimated irrecoverable amounts determined by referring to the counterparty’s past default and an analysis of the counterparty’s current financial position.

The Group did not recognized 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 Group did not hold any collateral or other credit enhancements for those accounts receivable.

The aging of receivables was as follows:

		December 31,
	March 31, 2016	2015	March 31, 2015
0-60 days	$ 2,107,651	$ 2,126,796	$ 2,116,192
61-180 days	154,769	125,032	187,074
Over 180 days	278,084	356,557	391,917
	$ 2,540,504	$ 2,608,385	$ 2,695,183

The above aging analysis was based on the past due date from end of credit term.

Before accepting any new customer, the Group uses an external credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Customers’ limits and scores are reviewed a periodically every year. Most of the accounts receivable that are neither past due nor impaired have the best credit score under the external credit scoring system used by the Group.

The aging of receivables that were past due but not impaired was as follows:

		December 31,
	March 31, 2016	2015	March 31, 2015
1-60 days	$ 231,463	$ 313,015	$ 317,457
61-180 days	139,290	114,727	264,394
Over 180 days	166,410	207,023	286,877
	$ 537,163	$ 634,765	$ 868,728

The above aging schedule was based on the past due date from end of credit term.

29 -

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

Individual
Assessment of
Impairment
Loss
Collective
Assessment of
Impairment
Loss
Balance at January 1, 2015
$ 30,924
$ 69,240

Add: Impairment losses (reversed) recognized
on receivable
267
(5,908)
Deduct: Amounts written off during the period
as uncollectible
(399)
-
Reclassification of impairment loss from
collective assessment to individual assessment
3,152
(3,152)
Foreign exchange translation losses

(513)

(222)

Balance at March 31, 2015
$ 33,431
$ 59,958

Balance at January 1, 2016
$ 152,272
$ 33,405

Add: Impairment losses recognized on
receivable
274
1,147
Deduct: Amounts written off during the period
as uncollectible
(3,998)
(8)
Reclassification of impairment loss from
collective assessment to individual assessment
250
(250)
Foreign exchange translation gains

(766)

(940)

Balance at March 31, 2016
$ 148,032
$ 33,354

Total
$ 100,164
(5,641)
(399)
-
(735)
$ 93,389
$ 185,677
1,421
(4,006)
-
(1,706)
$ 181,386

The recognized impairment represent the difference between the carrying amount of these trade receivables and the present value of the expected proceeds received from liquidation. The allowance for impairment loss included allowance for individually impaired trade receivable in the amounts of $148,032 thousand, $152,272 thousand and $33,431 thousand as of March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The Corporation did not hold any collateral over these balances.

12. CONSTRUCTION CONTRACTS RECEIVABLE (PAYABLE)

		December 31,
	March 31, 2016	2015	March 31, 2015
Construction contracts receivable
Accumulated contract costs incurred to date plus
recognized profits (less recognized losses)	$ 249,638	$ 178,277	$	76,044
Less: Accumulated progress billings	(3,061)	(2,414)		(4,201)
Due from customers for contract work	$ 246,577	$ 175,863	$	71,843
				(Continued)

30 -

			December	December	31,
	March 31, 2016			2015		March 31, 2015
Construction contracts payable
Accumulated progress billings	$	379,676	$	383,303		$	402,199
Less: Accumulated contract costs incurred to
date plus recognized profits less recognized
losses		(60,041)		(128,085)			(112,741)
Due to customers for contract work	$	319,635	$	255,218		$	289,458
Receipts in advance	$	300	$		-	$	1,554
							(Concluded)

The Group recognized contract revenues of $41,153 thousand and $160,566 thousand for the three months ended March 31, 2016 and 2015, respectively.

13. INVENTORIES

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Finished goods	$	467,594	$	389,914	$	355,715
Semifinished products		313,083		300,641		268,713
Work in process		373,497		369,696		441,462
Raw materials		624,651		575,696		521,386
	$	1,778,825	$	1,635,947	$	1,587,276

The costs of inventories recognized as cost of goods sold for the three months ended March 31, 2016 and 2015 included inventory write-downs of $13,746 thousand and $5,249 thousand, respectively.

14. SUBSIDIARIES

The following direct and indirect subsidiaries of the Corporation were all included in the consolidated financial statements:

Investor
Investee
Business
The Corporation
Neworld Electronics Ltd.
Sale and maintenance of electronic test
instruments, etc.
Chroma Investment Co., Ltd.
Investment
Sensational Holding Ltd.
Investment
Chroma Ate Europe B.V.
Sale and maintenance of electronic test
instruments, etc.
Chroma Ate Inc.
Sale and maintenance of electronic test
instruments, etc.
CHEN HWA Technology Inc.
Test of inductance, capacitance and
resistance equipment and sale of parts.
CHI Incorporation Ltd.
Test of inductance, capacitance and
resistance equipment and sale of parts.
Chroma New Material
Corporation
Processing and sale of gold wire

Percentage of Ownership as of
March 31,
2016
December 31,
2015
March 31,
2015
Explanation
100.0
100.0
100.0
100.0
100.0
100.0
Chroma Investment Co., Ltd.
had 1,916 thousand shares of
the Corporation’s common
stock as of March 31, 2016,
which accounted for 0.5% of
the Corporation’s
outstanding shares
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Note 4
100.0
100.0
100.0
100.0
100.0
100.0

(Continued)

31 -

Investor
Investee
Business
San Eagle Development Corp. Investment
Wei Kuang Automatic
Equipment Co., Ltd.
Design, manufacturing, installment and
testing of automated factory conveyor
systems.
Testar Electronic Corporation
Testing of LED products
Deep Red Holding Co., Ltd.
Investment
Chroma Japan Corp.
Sale and maintenance of electronic test
instruments, etc.
Chroma Systems Solutions Inc. Sale and maintenance of electronic test
instruments, etc.
Adivic Technology Co.
Sale and research of RF device
EVT Technology Co., Ltd.
Manufacturing of motorcycles and its parts
Neworld Electronics
Ltd.
Chroma Electronics
(Shenzhen) Co., Ltd.
Sale of computerized automatic test
systems, peripherals and electronic test
instruments.
Chroma Electronics (Shanghai)
Co., Ltd.
Sale of computerized automatic test
systems, peripherals and electronic test
instruments.
Chroma Ate Inc.
Chroma Systems Solutions Inc. Sale and maintenance of electronic test
instruments, etc.
CHEN HWA
Technology Inc.
Chroma (Shanghai) Trading
Co., Ltd.
International and transit trading, simple
commercial processing, commercial
consulting services, etc.
CHI Incorporation
Ltd.
Chroma Ate (Suzhou) Co., Ltd. Sale of computerized automatic test
systems, peripherals and electronic test
instruments.
San Eagle
Development Corp.
Wei Kuang Mech Eng Inc.
Investment
Wei Kuang Mech Eng
Inc.
Mou Kuan Technologies
(Nanjin) Co., Ltd.
Assembly, sale and maintenance of factory
conveyors and related systems and
rendering after-sales services.
Wei Kuang Automatic
Equipment (Nanjin) Co.,
Ltd.
Sale and maintenance of electronic
equipment and factory conveyor systems
Wei Kuang Automatic
Equipment (Xiamen) Co.,
Ltd.
Sale and maintenance of electronic
equipment and factory conveyor systems
Deep Red Holding
Co., Ltd.
Saject System Technology
(Suzhou) Co., Ltd.
Research, development and design of
computer network security systems and
information management
EVT Technology Co.,
Ltd.
Wei Da Electric Vehicle Co.,
Ltd.
Sale and lease of motorcycles
Adivic Technology
Co.
Advic Holding Corporation
Sale and research of RF device

Percentage of Ownership as of
March 31,
2016
December 31,
2015
March 31,
2015
Explanation
100.0
100.0
100.0
100.0
100.0
100.0
67.2
67.2
67.2
100.0
100.0
100.0
100.0
100.0
100.0
25.0
25.0
25.0
Note 1
51.0
51.0
51.0
Note 2
53.2
53.2
17.9
Note 3
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
50.0
Note 1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
75.0
75.0
Note 3
100.0
100.0
-
Note 5
(Concluded)

Note 1: 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.
Note 2: In April 2015, Advic Technology 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 in Advic Technology. The Corporation’s equity interest in Advic was still 51%.
Note 3: 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 at a higher percentage than its previous equity interest; thus, the Corporation equity interest rose to 53.2% and acquired control over EVT.
Note 4: 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 investment amount has been fully paid.
Note 5: In June 2015, Adivic Technology Co. (“Adivic”), the Corporation’s subsidiary set up Advic Holding Corporation to develop radio frequency identification (RFID) technology in USA.
32 -

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

		December 31,
	March 31, 2016	2015	March 31, 2015
Investments in associates	$ 642,750	$ 535,634	$ 508,162
Investments in joint ventures accounted for by the
equity method	17,529	17,505	17,435
	$ 660,279	$ 553,139	$ 525,597

a. Investments in associates

Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp.		March 31, 2016 Amount Percentage of Equity Interest (%) $ 564,037 11.3 78,713 27.3 $ 642,750		December 31, 2015 Amount Percentage of Equity Interest (%) $ 457,674 11.6 77,690 27.3 $ 535,364		March 31, 2015
						Amount Percentage of Equity Interest (%) $ 438,520 11.6 69,642 27.3 $ 508,162

Refer to Table 6 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

The Group is able to exercise significant influence over Adlink Technology Inc. although the percentage of shares held is less than 20%, therefore, the Group recognizes the gain and loss under the equity method.

Fair values (Level 1) of investments in associates with available published price quotation are summarized as follows:

		December 31,
Name of Associate	March 31, 2016	2015	March 31, 2015
Adlink Technology Inc.	$ 1,788,664	$ 1,763,821	$ 1,709,575

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 three months ended March 31, 2016 and 2015 was based on the joint ventures’ financial statements that have been unreviewed.

b. Investment in joint venture

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		March 31, 2016 Amount Percentage of Equity Interest (%) $ 17,529 35.0		December 31, 2015 Amount Percentage of Equity Interest (%) $ 17,505 35.0		March 31, 2015
						Amount Percentage of Equity Interest (%) $ 17,435 35.0

Refer to Table 6 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

33 -

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 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.

16. PROPERTY, PLANT AND EQUIPMENT

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Cost
Land	$	526,060	$	526,506	$	508,286
Buildings		2,506,010		2,467,073		2,317,582
Machinery		1,066,145		1,069,581		1,008,699
Miscellaneous equipment		1,383,449		1,342,772		1,233,390
		5,481,664		5,405,932		5,067,957
Accumulated depreciation and impairment
Buildings		911,547		889,882		816,167
Machinery		809,102		783,998		697,520
Miscellaneous equipment		995,271		964,444		878,443
		2,715,920		2,638,324		2,392,130
Carrying value	$	2,765,744	$	2,767,608	$	2,675,827

Except for depreciation recognized, the Group had no significant addition, disposal, and impairment of property, plant and equipment during the three months ended March 31, 2016 and 2015. The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

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 31 for property, plant and equipment have been pledged to secure borrowings of the Group.

34 -

17. GOODWILL

Cost Balance, beginning of the period Net effect of exchange differences Balance, end of the period	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 196,052 (1,152) $ 194,900	2015 $ 193,939 (630) $ 193,309

For assessing goodwill for impairment at the end of reporting period, the Group took value in use as basis for calculating the recoverable amount of goodwill. The Group 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 this evaluation, the Group did not recognize any impairment loss on goodwill for the three months ended March 31, 2016 and 2015.

18. OTHER INTANGIBLE ASSETS

			December 31,	December 31,
	March	31, 2016		2015	March	31, 2015
Core Technology	$	4,021	$	4,524	$	6,030

Except for amortization recognized, the Group had no significant addition, disposal, and impairment of other intangible assets during the three months ended March 31, 2016 and 2015. Other intangible assets are amortized on a straight-line basis over 5 years estimated useful life.

19. BORROWINGS

Short-term Borrowings

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Secured borrowings
Bank loans (a)	$	5,600	$	5,600	$	9,900
Unsecured borrowings
Bank loans (b)		295,789		295,703		151,550
	$	301,389	$	301,303	$	161,450

a. Secured by Testar Electronic Corporation’s Machinery (refer to Note 31). As of March 31, 2016, December 31, 2015 and March 31, 2015, the interest rate on the bank loans was 1.32% per annum.
b. As of March 31, 2016, December 31, 2015 and March 31, the interest rate on the bank loans was 0.94%-3.50%, 1.01%-3.25% and 1.35%-3.25% per annum, respectively.
35 -

Short-term Bills Payable

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Commercial paper		$ -		$ -		$ 16,000
Interest rate (%)		-		-		1.39%
Due date		-		-	2015.06.23
Long-term Borrowings
			December 31,
	March 31, 2016			2015	March 31, 2015
Secured borrowings
Bank loans (a)	$	105,999	$	108,886	$	105,987
Bank loans (b)		51,321		52,964		23,619
Bank loans (c)		12,724		12,481		-
		170,044		174,331		129,606
Unsecured borrowings
Syndicated bank loans (d)		1,230,000		1,230,000		700,000
Bank loans (e)		9,180		9,792		-
		1,409,224		1,414,123		829,606
Less: Current portion		(275,414)		(30,083)		(145,151)
Long-term borrowings	$	1,133,810	$	1,384,040	$	684,455

a. Secured by Chroma Systems Solutions Inc.’s land and buildings (refer to Note 31). The bank loan is due on November 16, 2019 and repayable from November 2012 to November 2019 in equal monthly installments with additional interest. As of March 31, 2016, December 31, 2015 and March 31, 2015, the effective interest rate on the bank loans was 4.00% per annum.
b. Secured by Chroma U.S.A.’s buildings in California (refer to Note 31). The bank loan is due on July 4, 2022 and repayable in equal monthly installments with additional interest. As of March 31, 2016, December 31, 2015 and March 31, 2015, the effective interest rate on the bank loans was 0.9%-4.25%.
c. Secured by Chroma Japan’s properties (refer to Note 31). The bank loan is due on April 30, 2025 and repayable in equal monthly installments with additional interest. As of March 31, 2016, December 31, 2015, the effective interest rate on the Bank loans was 2.25% per annum.
d. On August 30, 2012, the Corporation applied to E.SUN and other banks for syndicated bank loans with $2,000,000 thousand credit line to pay each installment of “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians Life” (refer to Note 32). The Corporation borrowed $700,000 thousand in September 2013 to pay the second installment and $530,000 thousand in November 2015 to pay the first part of the third installment. 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. As of March 31, 2016, December 31, 2015 and March 31, 2015, the interest rate per annum was 1.58%, 1.60% and 1.67% (floating interest rate), respectively.
36 -
e. EVT Technology Co., Ltd applied for the bank loan due on December 16, 2019. As of March 31, 2016 and December 31, 2015, the interest rate on the bank loan was 1.86% and 1.43% per annum, respectively.

20. BONDS PAYABLE

		December 31,
	March 31, 2016	2015	March 31, 2015
Unsecured domestic convertible bonds	$ 1,834,100	$ 1,854,100	$ 1,854,100
Less: Current portion	88,175	96,007	116,666
	$ 1,745,925	$ 1,758,093	$ 1,737,434

On May 23, 2014, the Group 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 2015 and 2014 earnings approved at the annual shareholders meeting for 2016 and 2015, 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 per share, respectively.

If the closing price of the Group’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 Group 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 Group 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 nonderivative liability of $4,989 thousand and $1,849,108 thousand, respectively. The estimated fair value of derivative instruments as of March 31, 2016 was $2,231 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 March 31, 2016	$ 1,994,680 (141,487) 904 (4,989) 1,849,108 51,490 (154,673) $ 1,745,925

37 -

21. OTHER PAYABLES - CURRENT

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Other payables
Payable on construction and equipment	$	11,004	$	18,771	$	42,716
Salaries payable and bonus payable (including
employee compensations/bonus payable and
remuneration to directors and supervisors)		496,604		532,015		463,535
Other payables and accrued expense		120,690		114,854		137,815
	$	628,298	$	665,640	$	644,066

22. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $1,676 thousand and $1,609 thousand for the three months ended March 31, 2016 and 2015, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2015 and 2014.

23. EQUITIES

Capital Stock

a. Common stock

		December 31,
	March 31, 2016	2015	March 31, 2015
Authorized shares (shares in thousands)	450,000	450,000	450,000
Authorized capital stock	$ 4,500,000	$ 4,500,000	$ 4,500,000
Shares issued and fully received (in
thousands)	379,170	379,170	378,782
Issued capital	$ 3,791,699	$ 3,791,699	$ 3,787,821

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

b. Capital surplus

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital (Note)
Additional paid-in capital	$	789,954	$	769,143	$	748,589
Treasury stock		160,514		160,514		155,520
From merger		146,976		146,976		146,976
						(Continued)

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			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Used to offset a deficit
Employee stock options expired	$	1,640	$	1,640	$	-
May not be used for any purpose
Share of changes of subsidiaries, associates or
joint ventures’ capital surplus		44,997		24,725		24,725
Convertible bonds payable options		129,751		131,166		131,166
Employee stock options		69,044		68,105		58,236
	$	1,342,876	$	1,302,269	$	1,265,212
						(Concluded)

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

c. Appropriation of 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 24 employee benefits expense.

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.

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.

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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.

The appropriations of earnings for 2015 and 2014 have been proposed by the board of directors on February 23, 2016 and approved in the annual shareholders’ meeting on June 10, 2015, respectively. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2015 For Fiscal Year 2014 $ 123,656 $ 131,644 910,200 987,433	Dividend Per Share (NT$)
		For Fiscal Year 2015 For Fiscal Year 2014 $2.4 $2.6

d. Other equities

Exchange differences on translating foreign operations

Balance, beginning of the period Exchange differences on translation of foreign financial statements Share of exchange differences on translation of associates and joint ventures accounted for using the equity method Balance, end of the period Noncontrolling interests Balance, beginning of the period Share of noncontrolling interests Net loss Exchange differences on the translation of foreign financial statements Compensation cost of employee share options - subsidiaries (Note 27) Balance, end of the period	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 2015 $ 127,968 $ 136,756 (23,395) (32,239) (2,601) 6,630 $ 101,972 $ 111,147 For the Three Months Ended March 31
		2016 $ 121,192 (15,026) (917) 211 $ 105,460	2015 $ 120,140 (9,781) (478) 308 $ 110,189

e. Noncontrolling interests

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f. Treasury stock

	Shares Held
	(In Thousand
Subsidiaries	Shares)	Carrying Value		Market Price
March 31, 2016
Chroma Investment Co., Ltd.	1,916	$	35,714	$ 132,558
December 31, 2015
Chroma Investment Co., Ltd.	1,916	$	35,714	$ 122,405
March 31, 2015
Chroma Investment Co., Ltd.	1,916	$	35,714	$ 148,840

For the three months ended March 31, 2016 and 2015, there were no changes in the shares held by the subsidiary.

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.

24. ADDITIONAL INFORMATION ON EXPENSES

The following items were included in net income for the three months ended March 31, 2016 and 2015:

Finance cost Interest on bank loans Interest on convertible bonds Less: Amount included in the cost of qualifying assets Information about capitalized interest was as follows: Capitalized interest Capitalization rate Depreciation and amortization expense Depreciation of property, plant and equipment Amortization of intangible assets	For the Three Months Ended March 31
	2016 2015 $ 6,880 $ 6,601 6,848 6,709 13,728 13,310 (4,896) (2,942) $ 8,832 $ 10,368 $ 4,896 $ 2,942 1.58%-1.60% 1.67%-1.69% $ 86,178 $ 79,950 503 503 $ 86,681 $ 80,453 (Continued)

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Depreciation expense by function Operating cost Operating expense Amortization expense by function Operating expense Employee benefit expense Short-term employee benefits Share-based payments Equity-settled share-based payments Post-employment benefits (see Note 22) Defined contribution plans Defined benefit plans Other employee benefit Summarized by function Operating cost Operating expense	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 36,030 50,148 $ 86,178 $ 503 $ 618,438 4,430 16,756 1,676 17,808 $ 659,108 $ 126,230 532,878 $ 659,108	2015 $ 33,231 46,719 $ 79,950 $ 503 $ 524,884 8,627 15,771 1,609 16,970 $ 567,861 $ 130,717 437,144 $ 567,861 (Concluded)

The Articles of Incorporation of the Corporation before amendment in December 2015 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 three months ended March 31, 2015, the employees’ compensation estimated on the basis of past experience was at 12.6% of net income or $16,000 thousand. For the three months ended March 31, 2015, the remuneration to directors and supervisors was $1,950 thousand in cash.

In compliance with the Company Act as amended in May 2015, the proposed amendments to its Articles of Incorporation 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 three months ended March 31, 2016, the employees’ compensation and the remuneration to directors and supervisors were $66,000 thousand and $1,950 thousand, respectively, representing 14.77% and 0.44%, respectively, of the base net profit.

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.

The appropriations for employee’s compensation and remuneration to directors and supervisors for 2015 have been resolved by the Corporation’s board of directors on February 23, 2016, and the appropriations for bonuses to employees and remuneration to directors and supervisors for 2014 have been approved in the shareholders’ meeting on June 10, 2015 (details are shown on the table below). The employee’s compensation and remuneration to directors and supervisors for 2015 are subject to the resolution of the amendments to the Corporation Articles of Incorporation by the shareholders in their meeting to be held on

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June 7, 2016, and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

Employee’s compensation/bonus to employees Remuneration of directors and supervisors	Years Ended	December 31
	2015 Cash Dividends Share Dividends $ 135,000 $ - 8,000 -	2014
		Cash Dividends Share Dividends $ 195,000 $ - 8,000 -

There was no difference between the amounts of the employee’s compensation and the remuneration to directors and supervisors resolved by the board of directors on February 23, 2016 and the amounts to the bonus to employees and the remuneration to directors and supervisors approved in the shareholder’s meetings on June 10, 2015, and the respective amounts recognized in the financial statements for the years ended December 31, 2015 and 2014.

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

25. 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 prior year’s adjustment Deferred tax In respect of the current period Total income tax expense recognized in profit or loss Integrated income tax information is as follows: March 31, 2016 Balance of imputation credit account (ICA) The Corporation $ 254,193 Chroma New Material Corp. $ 8,723 Chroma Investment Co., Ltd. $ 10,664 Wei Kuang Automatic Equipment Co., Ltd. $ 31,791		March 31
	2016 2015 $ 69,830 $ 33,051 (2,451) - 67,379 33,051 (1,103) (3,242) $ 66,276 $ 29,809 December 31, 2015 March 31, 2015 $ 250,190 $ 214,254 $ 8,723 $ 5,144 $ 10,664 $ 9,780 $ 31,791 $ 30,599

b. Integrated income tax information is as follows:

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Creditable ratio for distribution of earnings The Corporation Chroma New Material Corp. Wei Kuang Automatic Equipment Co., Ltd.	Years Ended December 31
	2015 (Expected) 2014 15.76% `16.73% 20.77% 20.54% 22.75% 28.00%

As of 2015 and 2014, Chroma Investment Co., Ltd., Adivic Technology Co., EVT Technology Co., Ltd. and Wei Da Electric Vehicle Co., Ltd. had no retained earnings to be distributed, so the creditable ratios were not calculated.

c. Assessment of income tax returns

As of March 31, 2016, the Corporation’s tax returns through 2013 had been examined and cleared by the tax authorities.

The tax returns through 2014 of the Group’s subsidiaries - Chroma New Material Corp., Adivic Technology Co., Chroma Investment Co., EVT Technology Co., Ltd. and Wei Da Electric Vehicle Co., Ltd. and Wei Kuang Automatic Equipment Co. - had been examined and cleared by the tax authorities.

The tax returns through 2013 of the Group’s subsidiaries - Wei Kuang Automatic Equipment Co. and Testar Electronic Corp. had been examined and cleared by the tax authorities.

d. Information about tax-exemption

As of March 31, 2016, profits attributable to the following expansion projects were exempted from income tax for a four- or five-year period:

Expansion of Construction Project Profits on expansion and construction projects for year 2010	Tax-exemption Period
	2013.01.01-2017.12.31

26. EARNINGS PER SHARE

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

Net Income

Income attributed to the parent Dilutive effect of potential common shares: Bonus to employees Income used to calculate dilutive earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 321,016 4,632 $ 325,648	2015 $ 123,338 7,080 $ 130,418

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(In Thousands of Shares)

Weighted average shares used to calculate basic earnings per share Dilutive effect of potential common shares: Convertible bonds Employees compensation Employee share option Weighted average shares used to calculate dilutive earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 377,254 26,667 2,905 1,200 408,026	2015 376,867 26,490 1,905 1,663 406,925

Since the Corporation is able to settle compensation paid to employees by cash or shares, the Corporation presumed that the entire amount of the 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 at their meeting in the following year.

27. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan of Chroma Ate Inc.

The Corporation granted employee stock options 7,900 thousand units in March 2016 and 6,000 thousand units in July 2013, respectively, with each option eligible to subscribe for one common share of the Corporation when exercised. The options are valid for six years and exercisable at certain percentages subsequent to the second year of the grant date. The related information for the units granted and exercise price were as follows:

Number of options (in thousands of shares) Exercise prices per share on grant date (market value on grant date) Exercise prices per share on balance sheet data (adjusted based on employee stock option plan)	Grant Date
	March 25, 2016 July 8, 2013 7,900 6,000 $67.8 $53.5 $67.8 $49.9

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Information on granted employee share options was as follows:

Balance at January 1 Options granted Options exercised Balance at March 31 Options exercisable, end of period	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,292 $49.9 7,900 67.8 (235) 49.9 12,957 60.8 1,652	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,794 $51.9 - - - - 5,794 51.9 -

Information about outstanding options as of March 31, 2016 and 2015 is as follows:

For the Three Months Ended March 31	For the Three Months Ended March 31
2016 Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $49.9 3.20 67.8 5.90	2015
	Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $51.9 4.20 - -

The Group used the Black-Scholes model to determine the fair value of the options. The valuation assumptions were as follows:

Vested Period Expected volatility Risk-free interest rate Expected dividend rate Expected life	Grant Date	Grant Date
	March 25, 2016 2 Years 3 Years 4 Years 31.64% 32.62% 33.08% 0.52% 0.55% 0.61% - - - 4 years 4.5 years 5 years	July 8, 2013
		2 Years 3 Years 4 Years 36.43% 38.36% 41.74% 1.12% 1.18% 1.23% - - - 4 years 4.5 years 5 years

The Group used the fair value of stock option to calculate the compensation cost for employee stock options granted on March 25, 2016 and July 8, 2013, respectively.

Vested Period Fair value of options (NT$ per share)	Grant Date	Grant Date
	March 25, 2016 2 Years 3 Years 4 Years $17.37 $18.97 $20.30	July 8, 2013
		2 Years 3 Years 4 Years $16.08 $17.88 $20.28

The Group recognized compensation cost of $4,219 thousand and $8,319 thousand for the three months ended March 31, 2016 and 2015, respectively.

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b. Employee share option plan of Adivic Technology Co.

Adivic Technology Co. granted its employees stock options 1,360 thousand units in March 2014, with each option eligible to subscribe for one common share of Adivic Technology Co. when exercised. The options are valid for eight years and exercisable at certain percentages subsequent to the second year of the grant date. The related information for the units granted and exercise price were as follows:

Number of options (in thousands of shares) Exercise prices per share on grant date (market value on grant date) Exercise prices per share on balance sheet data (adjusted based on employee stock option plan) Risk-free interest rate	Grant Date
	March 12, 2014 1,360 $10 $10 1.18%-1.52%

Balance at January 1 Options forfeited Balance at March 31 Options exercisable, end of period	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 930 $ 10.0 (125) 10.0 805 10.0 322	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 1,360 $ 10.0 - - 1,360 10.0 -

Information about outstanding options as of March 31, 2016 and 2015 is as follows:

For the Three Months Ended March 31	For the Three Months Ended March 31
2016 Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) 10.0 5.85	2015
	Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) 10.0 6.85

Adivic Technology Co. used the Black-Scholes model to determine the fair value of the options. The valuation assumptions were as follows:

Vested Period Expected volatility Risk-free interest rate Expected dividend rate Expected life	Grant Date
	March 12, 2014
	2 Years 3 Years 4 Years 38.75% 40.09% 40.40% 1.18% 1.24% 1.30% - - - 5 years 5.5 years 6 years

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The Group used the fair value of stock option to calculate the compensation cost for employee stock options granted on March 12, 2014.

Vested Period Fair value of options (NT$ per share)	Grant Date
	March 12, 2014
	2 Years 3 Years 4 Years $2.27 $2.52 $2.69

The Group recognized compensation cost of $211 thousand and $308 thousand for the three months ended March 31, 2016 and 2015, respectively.

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group’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.

29. FINANCIAL INSTRUMENTS

Information for Fair Value

a. Fair value of financial instrument 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.

b. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy

March 31, 2016 Financial assets at FVTPL Securities listed in ROC Equity securities Debt securities Call and put option of convertible bonds payable Available-for-sale financial assets Securities listed in ROC Equity securities Open-end beneficial certificate	Level 1 $ 8,071 970 - $ 9,041 $ 364,188 2,659,710 $ 3,023,898	Level 2 $ - - 734 $ 734 $ - - $ -	Level 3 $ - - - $ - $ - - $ -	Total $ 8,071 970 734 $ 9,775 $ 364,188 2,659,710 $ 3,023,898 (Continued)

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December 31, 2015 Financial assets at FVTPL Securities listed in ROC Equity securities Debt securities Available-for-sale financial assets Securities listed in ROC Equity securities Open-end beneficial certificate Financial liability at value through profit or loss Call and put option of convertible bonds payable March 31, 2015 Financial assets at FVTPL Securities listed in ROC Equity securities Debt securities Available-for-sale financial assets Securities listed in ROC Equity securities Open-end beneficial certificate Financial liability at value through profit or loss Call and put option of convertible bonds payable	Level 1 $ 7,921 951 $ 8,872 $ 359,543 2,057,476 $ 2,417,019 $ - $ 8,243 990 $ 9,233 $ 439,504 1,970,414 $ 2,409,918 $ -	Level 2 $ - - $ - $ - - $ - $ 1,483 $ - - $ - $ - - $ - $ 1,298	Level 3 $ - - $ - $ - - $ - $ - $ - - $ - $ - - $ - $ -	Total $ 7,921 951 $ 8,872 $ 359,543 2,057,476 $ 2,417,019 $ 1,483 $ 8,243 990 $ 9,233 $ 439,504 1,970,414 $ 2,409,918 $ 1,298 (Concluded)

There were no transfers between Levels 1 and 2 for the three months ended March 31, 2016 and 2015.

2) Valuation techniques and inputs applied for the purpose of measuring level fair value measurement:

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

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Categories of Financial Instruments

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Financial assets
Fair value through profit or loss (FVTPL)
Designated as at FVTPL (a)	$	9,775	$	8,872	$	9,233
Loans and receivables (b)		5,185,879		5,681,793		5,371,242
Available-for-sale financial assets (c)		3,232,116		2,625,419		2,595,168
Financial liabilities
Fair value through profit or loss (FVTPL)
Designated as at FVTPL		-		1,483		1,298
Amortized cost (d)		5,713,385		5,519,349		4,608,353

a. The balances included loans and receivables measured at amortized cost, which comprise (cash and cash equivalents, debt investments with no active market, and trade, other receivables (other current assets), and refundable deposits). 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, trade and other payables, bonds issued and guarantee deposits received).

Financial Risk Management Objectives and Strategies

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

The Group 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 Group actively observes the exchange rate information to fully control the foreign currency hedge.

a. Market risk

The Group’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 Group’s exposure to market risks or the manner in which these risks are managed and measured.

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

1) Exchange rate sensitivity analysis

The Group 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 Group used derivative financial instruments (forward exchange contracts) to hedge against adverse risks pertaining to exchange rates. The forward exchange contracts which the Group used were less than six months so they were not subject to hedge accounting.

The carrying values of the Group’s monetary assets and liabilities denominated in nonfunctional currency (including the monetary items denominated in nonfunctional currency and had been excluded from consolidated financial statements) were as follows:

		December 31,
	March 31, 2016	2015	March 31, 2015
Assets
USD	$ 3,359,225	$ 2,720,899	$ 2,673,236
JPY	167,316	111,698	118,325
RMB	679,951	889,238	828,295
EUR	74,450	53,300	66,149
HKD	606	18,136	11,897
Liabilities
USD	1,585,699	1,029,054	1,082,899
RMB	211,003	405,923	53,036

Foreign currency sensitivity analysis

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

Had the NTD strengthened/weakened by 5% against the relevant currency, profits would have decreased/increased by $124,241 thousand and $128,098 thousand for the three months ended March 31, 2016 and 2015, 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 Group is not exposed to interest rate risk because entities in the Group borrow funds at fixed interest rates and floated interest rates. The Group evaluates hedging activities regularly to align with interest rate views and defined risk appetite and ensures that the most cost-effective hedging strategies are applied.

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

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Fair value interest rate risk
Financial assets	$	803,269	$	838,441	$	903,672
Financial liabilities		2,126,538		2,133,726		307,056
Cash flow interest rate risk
Financial assets		1,841,797		2,191,155		1,629,483
Financial liabilities		1,330,000		1,339,793		700,000

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.

If interest rates had been 50 basis points higher/lower and all other variables been held constant, the Group’s pre-tax profit for the three months ended March 31, 2016 and 2015 would have decreased/increased by $640 thousand and increased/decreased $1,162 thousand, respectively. These pre-tax profit changes would be mainly due to the Group’s exposure to interest rates on its variable rate deposits and bank loans.

3) Price risk

The Group is exposed to equity price risks arising from the following:

a) 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 Group does not actively trade these investments.
b) Financial assets at fair value through profit or loss (mainly investment in open-end beneficial certificates and listed stocks in Taiwan)

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

Price sensitivity analysis

Had equity prices been 5% higher/lower, the income before tax would have increased/decreased by $452 thousand and $462 thousand as a result of the changes in fair values of financial assets held by the Group for trading purposes for the three months ended March 31, 2016 and 2015, respectively; and other comprehensive income would have increased/decreased by $151,195 thousand and $120,496 thousand because of changes in fair values of available-for-sale financial assets held by the Group for the three months ended March 31, 2016 and 2015, respectively.

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b. Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure of counterparties to discharge an obligation and financial guarantees provided by the Group could arise from:

1) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and
2) The amount of contingent liabilities in relation to financial guarantee issued by the Group.

The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

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.

Except for the major customers of the Group, Company A and Company B, the Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

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

c. Liquidity risk

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

Bank loans are a significant source of the Group’s liquidity risk. As of March 31, 2016, December 31, 2015 and March 31, 2015, the Group’s unused bank credit lines in bank were $3,288,766 thousand, $3,505,123 thousand and $4,099,400 thousand, respectively.

Liquidity and interest risk tables

The following tables detail the Group’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 Group can be required to pay.

The bank loans are listed on the earliest date on which the Group 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.

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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 Nonderivative financial liabilities Notes payable (including related parties) Accounts payable (including related parties) Dividend payable Other payable Unsecured convertible bonds Fixed interest rate instruments Floating interest rate instruments Nonderivative financial liabilities Short-term bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payable Unsecured convertible bonds Fixed interest rate instruments Floating interest rate instruments		March 31, 2016
		Within 1 Year Over 1 Year to 5 Years $ 62,347 $ - 1,565,366 - 628,298 - - 1,834,100 236,299 139,358 365,540 1,000,267 $ 2,857,850 $ 2,973,725 December 31, 2015	More Than 5 Years $ - - - - 29,475 - $ 29,475
		Within 1 Year Over 1 Year to 5 Years $ 22,484 $ - 1,354,570 - 2,298 - 665,640 - - 1,854,100 233,620 124,095 122,945 1,258,831 $ 2,401,557 $ 3,237,026 March 31, 2015	More Than 5 Years $ - - - - - 33,079 - $ 33,079
		Within 1 Year Over 1 Year to 5 Years $ 16,000 $ - 140,732 - 1,078,287 - 644,066 - - 1,854,100 172,600 139,182 150,940 576,831 $ 2,202,625 $ 2,570,113	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 Group could be forced repay immediately if repayment is demanded by the banks. As of March 31, 2016, December 31, 2015 and March 31, 2015, the undiscounted principal amount of the above bank loans were $582,117 thousand, $338,409 thousand and $328,463 thousand, respectively. After considering the financial position of the Group, management does not think the banks will execute their rights of requiring the Group to repay the bank loans. In addition, management believes the operating funds of the Group and subsidiaries are sufficient to meet cash flow demand; thus, liquidity risk is not considered significant.

54 -

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

30. RELATED-PARTY TRANSACTIONS

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and its related parties are disclosed below.

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

a. Sales Investment in associates b. Purchase Investment in associates Other related parties	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 5,585 $ 3,007 4,405 $ 7,412	2015 $ 9,831 $ 2,230 6,473 $ 8,703

c. The balances of accounts receivable at balance sheet date were as follows:

		December 31,
	March 31, 2016	2015	March 31, 2015
Associates	$ 12,257	$ 11,650	$ 14,410

Outstanding trade receivables from related parties were unsecured. As of March 31, 2016, December 31, 2015 and March 31, 2015, there was no impairment of trade receivables from related parties; thus, no impairment allowance was recognized.

d. The balances of notes payable at the balance sheet date were as follows:

			December 31,	December 31,
	March	31, 2016		2015	March	31, 2015
Associates	$	164	$	-	$	-
Other related parties		3,939		3,311		7,973
	$	4,103	$	3,311	$	7,973

55 -
e. The balances of accounts payable at balance sheet date were as follows:

			December 31,	December 31,
	March	31, 2016		2015	March	31, 2015
Associates	$	1,892	$	5,789	$	1,882
Other related parties		14		-		36
	$	1,906	$	5,789	$	1,918

The outstanding trade payables from related parties are unsecured.

f. Others
1) Rental income

Associates Other related parties	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 315 - $ 315	2015 $ 315 131 $ 446

2) The balances of other current assets - other at balance sheet date were as follows:

			December 31,	December 31,
	March	31, 2016		2015	March	31, 2015
Associates	$	407	$	136	$	2,058
Other related parties		-		-		92
	$	407	$	136	$	2,150

g. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 27,316 523 $ 27,839	2015 $ 16,858 506 $ 17,364

The remuneration of directors and key executives is determined by the remuneration committee on the basis of the performance of individuals and market trends.

56 -

31. ASSETS PLEDGED

The assets pledged as collaterals for bank loans and for product warranty were as follows:

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Property, plant and equipment, net
Used bank loans	$	338,364	$	293,492	$	213,294
Unused bank loans		721,129		723,040		728,774
Restricted deposit		3,994		14,985		84,070
	$	1,063,487	$	1,031,517	$	1,026,138

32. OTHER SIGNIFICANT EVENTS

On January 17, 2012, the Corporation, Dynapack International Corporation and 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.
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 installments $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 over 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.

57 -

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.

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

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

Financial assets Monetary items USD JPY RMB EUR HKD Financial liabilities Monetary items USD RMB	March 31, 2016 Foreign Currencies Exchange Rate (In Thousands) (Note) $ 104,372 32.185 585,022 0.286 136,756 4.972 2,039 36.51 146 4.15 49,268 32.185 42,438 4.972	December 31, 2015 Foreign Currencies Exchange Rate (In Thousands) (Note) $ 82,891 32.825 409,149 0.273 178,026 4.995 1,486 35.88 4,282 4.235 31,350 32.825 81,266 4.995	March 31, 2015
			Foreign Currencies Exchange Rate (In Thousands) (Note) $ 85,406 31.300 455,098 0.260 174,214 5.044 1,966 33.650 2,948 4.036 34,597 31.300 10,515 5.044

Note: Exchange rate represents the number of N.T. dollars for which one foreign currency could be exchanged.

For the three months ended March 31, 2016 and 2015, (realized and unrealized/unrealized) net foreign exchange losses were $22,125 thousand and $36,400 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.

34. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the Securities and Futures Bureau for the Group 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: None.
f. Disposal of individual real estate properties at prices of at least $300 million or 20% of the paid-in capital: None.
58 -
g. Total purchase from or sale to related parties amounting to at least $100 million or 20% of the paid-in capital: Table 4 (attached).
h. Receivable from related parties amounting to at least $100 million or 20% of the paid-in capital: Table 5 (attached).
i. Information about derivative instrument transactions: Note 20.
j. Names, locations, and related information of investees on which the Group exercised significant influence: Table 6 (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 7 (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: None.
- 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.
- 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.
l. Business relationship and significant intercompany transactions for three months ended March 31, 2014: Table 8 (attached).

35. SEGMENT INFORMATION

The information provided to the Group’s chief operating decision maker to allocate resources to the segments and assess their performance focuses on types of products delivered or services provided. The Group’s reportable segments are as follows:

a. Special materials department.
b. Test instrument department.
c. Automatic equipment department.
59 -

d. Other

1) Segment revenues and results

For the three months ended March 31, 2016 Revenue from third parties Intercompany revenue Segment revenue Consolidated revenue Segment operating profit Share of profits of associates and joint venture, net Rental income Interest income Dividend income Loss on disposal of property, plant and equipment, net Exchange loss, net Valuation gain on financial assets at fair value through profit or loss, net Other revenue and expense, net Interest expense Operating income before tax For the three months ended March 31, 2015 Revenues from external customers Intersegment revenues Segment revenues Consolidated revenues Segment income Share of profits of associates accounted for using the equity method Rental income Interest income Gain on disposal of property, plant and equipment, net Gain on disposal of investments, net Exchange gain, net Valuation gain on financial assets (liabilities) at fair value through profit or loss, net Other revenue and expense, net Interest expense Operating income before tax	Special Materials Department $ 567,869 - $ 567,869 $ 16,155 $ 594,981 - $ 594,981 $ 15,471	Test Instrument Department $ 1,903,780 1,452,113 $ 3,355,893 $ 393,622 $ 1,064,959 564,241 $ 1,629,200 $ 94,113	Automatic Equipment Department $ 41,153 79,880 $ 121,033 $ (6,188) $ 160,566 42,309 $ 202,875 $ 40,132	Other $ 97,317 2,990 $ 100,307 $ (29,335) $ 103,257 - $ 103,257 $ (29,186)	Elimination $ - (1,534,983) $ (1,534,983) $ 10,074 $ - (606,550) $ (606,550) $ 10,653	Total $ 2,610,119 - 2,610,119 $ 2,610,119 $ 384,328 7,016 6,522 5,037 181 (1,952 ) (22,125 ) 2,171 (80 ) (8,832) $ 372,266 $ 1,923,763 - 1,923,763 $ 1,923,763 $ 131,183 9,587 6,542 5,200 1,066 11 (36,400 ) 224 36,321 (10,368) $ 143,366

The sales between segments are based on fair value.

The above revenues were generated through transactions with external customers and among segments. The intersegment revenues for the three months ended March 31, 2016 and 2015 had been adjusted and eliminated from the consolidated financial statements.

Segment operating income refers to profits earned by each segment, excluding remuneration to directors, share of profits or loss of associates and joint venture, gain (loss) on disposal of investment, rental income, interest income, gain (loss) on disposal and retirement of property, plant and equipment, gain (loss) on disposal of investment, foreign exchange gain (loss), valuation gain (loss) on financial instrument and interest expense. This is the measure reported to the Group’s chief operating decision maker to allocate resources to each segment and evaluate its performance.

60 -

2) Segment assets

March 31, 2016
Segment assets
Special materials department
$ 959,038
Test instrument department
12,159,497
Automatic equipment department
1,251,815
Other
580,599
Adjustments and eliminations

(2,983,404)

11,967,545
Financial assets at fair value through
profit or loss - current
9,775
Available-for-sale financial assets -
current
2,659,710
Investment in bonds with no active
market
422,388
Available-for-sale financial assets -
noncurrent
364,188
Financial assets carried at cost -
noncurrent
208,218
Investments accounted for by the equity
method
660,279
Prepayments for investments
60,559
Deferred tax assets

186,109

Total segment assets
$ 16,538,771

Segment liabilities
Special material departments
$ 683,960
Test instrument departments
4,088,282
Automatic equipment department
593,504
Other
291,152
Adjustments and eliminations

(2,599,821)

Total segment liabilities
3,057,077
Short-term borrowings
301,389
Short-term bills payable
-
Financial liabilities at fair value through
profit or loss
-
Long-term borrowings and current portion
of long-term liabilities
1,409,224
Bonds payable
1,745,925
Deferred income tax liabilities

153,209

Consolidated total liabilities
$ 6,666,824

December 31,
2015
March 31, 2015
$ 958,336 $ 906,810

11,904,615
10,558,855

1,052,305
1,323,901

641,493
715,133

(2,400,349)

(2,317,976)

12,156,400
11,186,723

8,872
9,233

2,057,476
1,970,414

559,958
441,492

359,543
439,504

208,400
185,250

553,139
525,597

-
33,000

156,651

153,393
$ 16,060,439
$ 14,944,606
$ 694,925 $ 625,769

3,454,229
3,054,887

505,502
634,334

318,419
321,161

(2,042,761)

(1,985,932)

2,930,314
2,650,219

301,303
161,450

-
16,000

1,483
1,298

1,414,123
829,606

1,758,093
1,737,434

123,827

104,729
$ 6,529,143
$ 5,500,736

61 -

For the purpose of monitoring segment performance and allocating resources between segments:

a) All assets were allocated to reportable segments other than interests in associates accounted for using the equity method, other financial assets, and current and deferred tax assets. Goodwill was allocated to reportable segments. Assets used jointly by reportable segments were allocated on the basis of the revenues earned by individual reportable segments; and
b) All liabilities were allocated to reportable segments other than borrowings, other financial liabilities, current and deferred tax liabilities. Liabilities for which reportable segments are jointly liable were allocated in proportion to segment assets.
62 -

TABLE 1

CHROMA ATE INC. AND SUBSIDIARIES

FINANCING PROVIDED THREE MONTHS ENDED MARCH 31, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Financing Company Name	Counterparty	Financial Statement Account	Related Parties	Maximum Balance for the Period	Ending Balance	Balance Used	Interest Rate	Financing Provided (Note 7)	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	$ 125,089 42,414	$ 125,089 40,605	$ 125,089 43,028	3.25% -	a a	$ 67,938 23,682	- -	$ - -	- -	$ - -	$ 976,649 (Note 1) 976,649 (Note 1)	$ 1,953,297 (Note 2) 1,953,297 (Note 2)
1	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma Ate (Suzhou) Ltd.	Other receivable	Y	16,613	16,613	13,312	-	a	6,524	-	-	-	-	42,371 (Note 3)	84,742 (Note 4)
2	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Chroma (Shanghai) Trading Co., Ltd.	Other receivable	Y	3,978	-		2.60%	b	-	Purchase PPE	-	-	-	197,427 (Note 5)	197,427 (Note 5)

Note 1: Based on 10% of the net value of the Corporation ($9,766,487 × 10% = $976,649).

Note 2: Based on 20% of the net value of the Corporation ($9,766,487 × 20% = $1,953,297).

Note 3: Based on 10% of the net value calculated on the latest financial statements of borrowing company that have been audited ($423,708 × 10% = $42,371).

Note 4: Based on 20% of the net value calculated on the latest financial statements of borrowing company that have been audited ($423,708 × 20% = $84,742).

Note 5: Based on 70% of the net value calculated on the latest financial statements of borrowing company that have been audited ($282,039 × 70% = $197,427).

Note 6:

The amounts listed in columns were translated into New Taiwan dollars at the exchange rate of US$1=NT$32.185, RMB1=NT$4.972 and JPY1=NT$0.286 as of March 31, 2016.

Note 7: Financing provided:

a. For transactions.

b. For short-term financing.

63 -

TABLE 2

CHROMA ATE INC. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED THREE MONTHS ENDED MARCH 31, 2016

(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	$ 1,464,973 1,464,973	$ 128,740 33,280	$ 64,370 33,280	$ 64,370 22,880	$ - -	0.66% 0.34%	$ 2,929,946 2,929,946	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 ($9,766,487 × 15% = $1,464,973) 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 ($9,766,487 × 30% = $2,929,946).

Note 3: The above amounts were translated into New Taiwan dollars at the exchange rate of US$1=NT$32.185, JPY1=NT$0.286 as of March 31, 2016.

64 -

TABLE 3

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) THREE MONTHS ENDED MARCH 31, 2016

(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		March 31, 2016	March 31, 2016		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.	Fund The RSIT Enhanced Money Market Fund Paradigm Pion Money Market Fund Yuanta Wan Tai Money Market Fund Fuh Hwa You Li Money Market Fund Cathay Taiwan Money Market Fund Mega Diamond Money Market Fund Taishin 1699 Money Market Fund Union Money Market Fund Yuanta De-Li Money Market Fund Capital Money Market Fund 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.	- - - - - - - - - - - - - - - - - - - - - - - - - -	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 - 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 Available-for-sale financial assets - current	24,722 24,732 18,863 21,184 21,282 36,521 14,970 13,098 6,210 6,274 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 68	$ 292,630 282,683 282,578 282,536 262,331 452,467 200,150 171,027 100,085 100,066 318,247 45,156 785 46,140 39,218 33,000 32,000 21,250 10,152 - - 91,075 53,566 30,200 58,316 3,130 4,941	- - - - - - - - - - 6.0 - - 4.6 4.7 9.9 1.9 1.4 - - 12.2 - - - - - -	$ 292,630 282,683 282,578 282,536 262,331 452,467 200,150 171,027 100,085 100,066 318,247 45,156 785 - - - - - - - - 91,075 53,566 30,200 58,316 3,130 4,941	Note 2 Note 2 Note 2 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

(Continued)

65 -

Holding Company Name	Marketable Securities Type and Issuer	Relationship with the Holding Company	Financial Statement Account		March 31, 2016	March 31, 2016		Note
				Shares/Units (Thousands)	Carrying Value	Percentage of Ownership	Market Value or Net Asset Value
Chen Hwa 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 - - - -	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	10 1,916 4,174 26 111 285	$ 970 132,558 17,175 110 - 9,173	- 0.5 10.3 1.5 5.1 19.0	$ 970 132,558 - - - -	Note 1 Note 1 - - - -

Note 1: Based on the closing price as of March 31, 2016.

Note 2: Based on the net asset value of the fund as of March 31, 2016.

(Concluded)

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TABLE 4

CHROMA ATE INC. AND SUBSIDIARIES

TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL THREE MONTHS ENDED MARCH 31, 2016

(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.	Neworld Electronics Ltd. The Corporation	Subsidiary Parent company	(Sale) Purchase	$ (914,426) 914,426	(55) 100	Net 90 days after delivery Net 90 days after delivery	Note Note	- -	$ 763,041 (763,041)	37 (100)	- -

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

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TABLE 5

CHROMA ATE INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL THREE MONTHS ENDED MARCH 31, 2016

(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 Japan Corp.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	Accounts receivable $ 763,041 Accounts receivable 257,405 Accounts receivable 142,010 Other receivable - financing provided 125,089 Accounts receivable 114,800 Other receivable - financing provided 43,028	7.51 0.66 0.13 - 0.86 -	$ - - - - - -	- - - - - -	$ 338,417 261 - - 25,998 -	$ - - - - - -

Note: The amounts had been accrued as of April 29, 2016, the date of the accompanying independent accountants’ audit report.

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TABLE 6

CHROMA ATE INC. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE THREE MONTHS ENDED MARCH 31, 2016

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

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2016	Balance as of March 31, 2016	Balance as of March 31, 2016	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				March 31, 2016	December 31, 2015	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. Chen Hwa Technology Inc. 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. Chroma Japan Corp. Adivic Technology Co. Chih Ho Shun Development Co., Ltd. Testar Electronic Corporation 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 Taipei, Taiwan Hsinchu, Taiwan British Virgin Islands British Virgin Islands Taipei, Taiwan The Netherlands Taoyuan, Taiwan U.S.A. British Virgin Islands U.S.A. Mauritius Japan Taipei, Taiwan Taoyuan, Taiwan 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 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 Sale and maintenance of electronic test instruments, etc. Sale and research of RF device Construction and development of residence, buildings and specialized field; construction and investment of public works Testing of LED products 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	$ 271,873 186,514 480,715 165,146 533,000 122,884 98,217 80,000 54,026 238,746 29,628 38,301 29,895 12,217 147,125 112,200 17,500 247,096 27,623 64 185,686 3,750 15,223	$ 271,873 186,514 480,715 82,325 533,000 122,884 98,217 80,000 54,026 238,746 29,628 38,301 29,895 12,217 147,125 112,200 17,500 247,096 27,623 64 185,686 3,750 15,223	64,013 2,050 25,000 24,502 10,000 3,830 3,085 14,000 1 9,841 120 1,200 1,000 215 9 11,220 1,750 20,160 2,658 240 4,475 375 500	100.0 100.0 100.0 11.3 100.0 100.0 100.0 100.0 100.0 27.3 25.0 100.0 100.0 100.0 100.0 51.0 35.0 67.2 53.2 50.0 100.0 75.0 100.0	$ 707,865 610,227 449,528 564,037 445,144 140,139 109,511 101,954 86,186 78,713 (63,870) 52,072 44,680 42,076 (32,429) 26,404 17,529 12,699 6,921 96,652 602,278 (4,041) 808	$ 581 (2,431) 11,685 53,300 (1,458) 15,419 34 (118) 9,778 2,758 (12,468) 412 (19,555) (2,520) (6,077) (18,091) 69 (5,165) (2,547) (12,468) (2,419) 3,095 (4,716)	$ 581 (2,431) 11,685 6,239 (1,447) 15,419 34 (118) 9,778 753 (3,117) 412 (19,395) (2,520) (6,077) (9,729) 24 (3,471) (1,354) NA NA NA NA	Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

69 -

TABLE 7

CHROMA ATE INC. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA THREE MONTHS ENDED MARCH 31, 2016

(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)	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2016 (Note 3)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2016 (Note 3)	Net Income (Loss) of the Investee	Percentage of Ownership in Investment	Investment Gain (Loss) (Notes 4 and 5)	Carrying Value as of March 31, 2016 (Note 2)	Accumulated Inward Remittance of Earnings as of March 31, 2016
							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		$ 124,500 (HK$ 30,000) 96,555 (US$ 3,000) 86,900 (US$ 2,700) 48,278 (US$ 1,500) 122,303 (US$ 3,800) 59,023 (RMB 11,871) 56,765 (RMB 11,417) 8,636 (RMB 1,737) 8,631 (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) 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)	$ - - - - - - - - -	$ - - - - - - - - -	$ 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)	$ (490) 4,964 76 1,954 15,256 (1,550) (833) 10 (2,540)	100 100 100 19 100 100 100 100 100	$ (490) 4,964 76 - 15,256 (1,550) (833) 10 (2,540)	$ 423,200 63,947 97,360 9,173 176,020 232,569 280,331 47,119 42,066	$ - - - - - - -

Accumulated Investment in Mainland China as of March 31, 2016		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)			$5,859,892 (Note 7)

(Continued)

70 -

Note 1: Methods of investment have following type:

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 March 31, 2016 were translated into New Taiwan dollars at the rates of HK$1=NT$4.15, US$1=NT$32.185, RMB1=NT$4.972 prevailing on March 31, 2016. Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2016 and March 31, 2016 were translated into New Taiwan dollars on the original outflow day.

Note 4: Based on unreviewed financial statements.

Note 5: Investment income (loss) was translated into New Taiwan dollars at the average rate of HK$1=NT$4.263, US$1=NT$33.134, RMB1=NT$5.05 for the three months ended March 31, 2016.

Note 6:

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

71 -

TABLE 8

CHROMA ATE INC. AND SUBSIDIARIES

BUSINESS RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
0	Chroma Ate. Inc. (the “Corporation”)	Neworld Electronics Ltd. Chroma Europe Chroma Systems Solutions Inc. Chroma U.S.A. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Japan Testar Electronic Co. Wei Kuang Automatic Equipment Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Testar Electronic Co. Chroma U.S.A. Neworld Electronics Ltd. Chroma Systems Solutions Inc. Chroma Japan Testar Electronic Co. Chroma New Material Corporation EVT Technology Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. CHROMA USA Neworld Electronics Ltd. Chroma U.S.A. Chroma Systems Solutions Inc. Neworld Electronics Ltd. Chroma New Material Corporation Testar Electronic Co. Chroma Systems Solutions Inc. Neworld Electronics Ltd. Chroma U.S.A. Testar Electronic Co. Chroma Japan Chroma Systems Solutions Inc. Chroma Europe Chroma Electronics (Shenzhen) Co., Ltd.	a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a	Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Rental income Rental income Rental income Commissions expense Commissions expense Commissions expense Commissions expense Operating expense Operating expense Interest revenue Non-operating income Non-operating income Non-operating income Non-operating income Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable	$ 914,426 71,504 67,938 47,856 44,301 29,009 27,170 23,682 4,551 79,215 12 2,500 2,368 94 43 19 3,470 168 101 2,058 1,645 1,567 478 744 610 1,041 5,983 1,500 150 9 763,041 257,405 142,010 114,800 92,320 79,923 42,825	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Note 2 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Note 3 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	35 3 3 2 2 1 1 1 - 3 - - - - - - - - - - - - - - - - - - - - 5 2 1 1 1 - -
							(Continued)

72 -

Number	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
		Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Systems Solutions Inc. Chroma Japan Testar Electronic Co. Neworld Electronics Ltd. Chroma New Material Corporation EVT Technology Co., Ltd. Chroma Systems Solutions Inc. Wei Kuang Automatic Equipment Co., Ltd. Chroma U.S.A. Chroma Systems Solutions Inc. Chroma Europe Chroma Japan Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Chroma Ate (Suzhou) Ltd. Chroma U.S.A. Chroma Electronics (Shanghai) Co., Ltd. Chroma Japan Chroma U.S.A. Chroma Systems Solutions Inc.	a a a a a a a a a a a a a a a a a a a a a a a	Accounts receivable Accounts receivable Other receivable - financing provided Other receivable - financing provided Other receivable Other receivable Other receivable Other receivable Interest receivable Account payable Account payable Account payable Account payable Account payable Account payable Accrued expense Accrued expense Accrued expense Accrued expense Accrued expense Accrued expense Temporary receipts Temporary receipts	$ 29,009 21,114 125,089 43,028 80,168 4,267 1,178 60 339 108,148 518 64 33 30 12 1,645 746 656 541 450 157 1,955 54	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - 1 - - - - - 1 - - - - - - - - - - - - -
1	CHROMA U.S.A	Advic Holding Corp. Testar Electronic Co. Advic Holding Corp. Testar Electronic Co.	b b b b	Operating revenue Operating revenue Accounts receivable Accounts receivable	4,716 41 4,580 40	Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - - -
2	Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	a b a b a a b a b a a b b a a b b	Operating revenue Operating revenue Operating revenue Commissions expense Commissions expense Commissions expense Commissions expense Accounts receivable Accounts receivable Accounts receivable Other receivable Prepayments Other payable Other payable Other payable Other payable Receipts in advance	112,350 32,016 6,985 27,137 10,118 2,951 378 112,075 41,658 6,997 143,841 136,192 22,524 6,121 827 368 136,840	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	4 1 - 1 - - - 1 - 1 1 - - - - 1

(Continued)

73 -

Number	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
3	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Adivic Technology Co. Chroma Ate (Suzhou) Ltd. Chroma (Shanghai) Trading Co., Ltd. Sensational Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma (Shanghai) Trading Co., Ltd. Chroma Ate (Suzhou) Ltd. Chroma Ate (Suzhou) Ltd. Chroma Electronics (Shanghai) Co., Ltd. Sensational	b b b b b b b b b b b b b b b	Operating revenue Operating revenue Operating revenue Operating costs Rent expense Rent expense Commissions expense Commissions expense Accounts receivable Accounts receivable Other receivable Other receivable Account payable Account payable Other payable	$ 6,628 5,306 419 613 675 76 23 16 23,467 18,933 1,994 13,312 713 19 74	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - - - - - - - - - - - - -
4	Chroma Electronics (Shanghai) Co., Ltd.	Chroma Ate (Suzhou) Ltd. Chroma Ate (Suzhou) Ltd.	b b	Operating costs Account payable	3,234 10,141	Based on regular terms Based on regular terms	- -
5	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Sajet System Technology (Suzhou) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	b b b	Operating costs Account payable Receipts in advance	112 117 3,510	Based on regular terms Based on regular terms Based on regular terms	- - -
6	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	Mou Kuan Technologies (Nanjin) Co., Ltd. Chroma Ate (Suzhou) Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd.	b b b	Operating revenue Operating revenue Accounts receivable	359 305 137	Based on regular terms Based on regular terms Based on regular terms	- - -
7	Chroma Ate (Suzhou) Ltd.	Sajet System Technology (Suzhou) Co., Ltd.	b	Account payable	1,718	Based on regular terms	-
8	EVT Technology Co., Ltd.	Wei Da Electric Vehicle Co., Ltd.	a	Accounts receivable	1,219	Based on regular terms	-

Note 1: a. From parent to subsidiary. b. Between subsidiaries.

Note 2: The prices were determined after taking the selling and post-sale service expenses into consideration.

Note 3: The collection periods of about 12 months were longer than those for third parties.

(Concluded)

74 -

AI assistant

CHROMA — Interim / Quarterly Report 2016

52029_rns_2016-11-25_a337639b-7c73-4db8-a2d7-6627b32cdc9a.pdf

Chroma Ate Inc. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

April 29, 2016

Notice to Readers

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

CHROMA ATE INC. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

Effective Date New, Amended or Revised Standards and Interpretations Announced by IASB (Note 1)

a. IFRS 9 “Financial Instruments”

The impairment of financial assets

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Preparation

Classification of Current and Noncurrent Assets and Liabilities

Basis of Consolidation

Principle of preparing consolidated financial statements

Foreign Currencies

Cash and Cash Equivalents

Inventories

Investments in Associates and Joint Ventures

Property, Plant and Equipment

Goodwill

Intangible Assets

Impairment of Tangible and Intangible Assets Other Than Goodwill

Financial Instruments

c) Loans and receivables

2) Impairment of financial assets

Financial liabilities at fair value through profit or loss

Revenue Recognition

Construction Contracts

Borrowing Costs

Government Grants

Employee Benefits

a. Short-term employee benefits

Employee Stock Options

Taxation

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

e. Valuation of inventories

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

9. FINANCIAL ASSETS CARRIED AT COST-NONCURRENT

10. DEBT INVESTMENTS WITH NO ACTIVE MARKET

11. ACCOUNTS RECEIVABLE, NET

12. CONSTRUCTION CONTRACTS RECEIVABLE (PAYABLE)

13. INVENTORIES

14. SUBSIDIARIES

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

a. Investments in associates

b. Investment in joint venture

16. PROPERTY, PLANT AND EQUIPMENT

17. GOODWILL

18. OTHER INTANGIBLE ASSETS

19. BORROWINGS

Short-term Borrowings

Short-term Bills Payable

20. BONDS PAYABLE

21. OTHER PAYABLES - CURRENT

22. RETIREMENT BENEFIT PLANS

23. EQUITIES

Capital Stock

a. Common stock

CHROMA Interim / Quarterly Report 2016