CHROMA — Interim / Quarterly Report 2017

Nov 29, 2017

Chroma Ate Inc. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2017 and 2016 and Independent Auditors' Review Report

Deloitte.

勒業眾信聯合會計師事務所 10596 台北市民生東路三段156號12樓

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

Tel:+886 (2) 2545-9988 Fax:+886 (2) 4051-6888 www.deloitte.com.tw

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. and its subsidiaries (the "Group") as of June 30, 2017 and 2016, the consolidated statements of comprehensive income for the three months and the six months ended June 30, 2017 and 2016, and the consolidated statements of changes in equity and cash flows for the six months ended June 30, These consolidated financial statements are the responsibility of the 2017 and 2016. 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 June 30, 2017 and 2016, the unreviewed assets were 21.32% (NT\$4,072,668 thousand) and 22.80% (NT\$3,967,218 thousand), respectively, of the consolidated assets, and the unreviewed liabilities were 14.98% (NT\$1,158,968 thousand) and 14.37% (NT\$1,139,866 thousand), respectively, of the consolidated liabilities. The unreviewed comprehensive (loss) income for the three months ended June 30, 2017 and 2016 were 10.20% (NT\$52,029 thousand) and 4.28% (NT\$15,595 thousand), respectively, of the consolidated comprehensive income; and those of the six months ended June 30, 2017 and 2016 were (4.16%) (NT\$(25,520) thousand) and (4.94%) (NT\$(32,072) thousand), respectively, of the consolidated comprehensive income. In addition, as disclosed in Note 15 to the financial statements, the carrying values of some investments accounted for using equity method were 0.56% (NT\$107,406 thousand) and 0.58% (NT\$100,527 thousand) of the consolidated assets as of June 30, 2017 and 2016, respectively; and the related shares of comprehensive income of associates and joint ventures for the three months ended June 30, 2017 and 2016 were 0.64% (NT\$3,254 thousand) and 1.18% (NT\$4,285 thousand), respectively, of the consolidated comprehensive income; and those for the six months ended June 30, 2017 and 2016 were 0.23% (NT\$1,399 thousand) and 0.78% (NT\$5,062 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 "Interim Financial Reporting" endorsed by the Financial Supervisory Commission.

Relaine & Touche

Deloitte & Touche Taipei, Taiwan Republic of China

July 31, 2017

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.

CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)

$\lambda$

	June 30, 2017 (Reviewed)		December 31, 2016 (Audited)		June 30, 2016 (Reviewed)
ASSETS	Amount	$\%$	Amount	$\frac{n}{\sigma}$	Amount	$\frac{1}{2}$
CURRENT ASSETS
Cash and cash equivalents (Note 6)	\$4,066,790	21	\$3,149,970	17	\$2,691,970	$\mathfrak{g}$
Financial assets at fair value through profit or loss - current (Note 7) Available-for-sale financial assets - current (Note 8)	9,684 1,468,860	$\overline{a}$ 8	9,161 2,291,504	12	11,391 2,561,513	15
Debt investments with no active market - current (Notes 10 and 31)	357,072	$\overline{2}$	378,515	$\overline{2}$	394,938	2
Notes receivable	79,985	٠	61,769		70,807
Trade receivables, net (Note 11)	2,830,992	15	2,988,773	16	2,655,964	15
Trade receivables - related parties (Notes 11 and 30) Construction contracts receivable (Note 12)	44,254 208,495	$\blacksquare$ $\mathbf{1}$	7,890 214,816	$\ddot{}$ 1	10,943 244,648	$\mathbf{I}% =\mathbf{I}^{T}\mathbf{e}^{T}\mathbf{I}^{T}\mathbf{e}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I}^{T}\mathbf{I$
Inventories (Note 13)	2,341,090	12	1,906,496	10	2,016,652	$\overline{12}$
Prepayments	171,932	-1	76,076	1	94,618	$\mathbf{I}$
Other current assets	83,098	$\mathbf{I}$	127,722	$\mathbf{1}$	128,139
Total current assets	11,662,252	61	11,212,692	60	10,881,583	63
NON-CURRENT ASSETS
Available-for-sale financial assets - non-current (Note 8) Financial assets measured at cost - non-current (Note 9)	253,753 218,127	1	314,233 198,649	$\overline{\mathbf{c}}$ $\mathbf{I}$	310,280 198,656	$\overline{\mathbf{2}}$ $\mathbf{I}$
Investments accounted for using equity method (Note 15)	645,680	4	641,497	4	671,611	4
Property, plant and equipment (Notes 16 and 31)	2,648,846	14	2,714,127	15	2,765,935	16
Goodwill (Note 17)	216,942	1	220,236	$\mathbf{1}$	225,873	$\mathbf{I}$
Other intangible assets Deferred tax assets	5,704 222,685		7,267 220,064	$\overline{\phantom{a}}$ 1	3,519 193,330	$\mathbf{1}$
Prepayments for land and equipment	3,153,235	17	3,035,154	16	2,079,915	12
Refundable deposits	25,036		20,045	٠	33,791
Prepayments for investments Other non-current assets	15,877 33,335		20,000 28,814	÷	34,527
Total non-current assets	7,439,220	39	7,420,086	40	6,517,437	37
TOTAL	\$19,101,472	100	\$18,632,778	100	\$17,399,020	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 18 and 31)	488,430 s	3	196,705 s	1	s 327,989 100,000	$\overline{\mathbf{2}}$ 1
Short-term bills payable (Note 18) Notes payable	77,436		55,511	$\overline{\phantom{a}}$	127,045	$\mathbf{1}$
Notes payable - related parties (Note 30)	6,190		2,595	٠	9,099
Trade payables Trade payables - related parties (Note 30)	1,638,144 8,173	9	1,976,229 11,813	$\mathbf{11}$ ×	1,677,322 3,771	10
Construction contracts payable (Note 12)	348,192	$\sqrt{2}$	229,858	1	247,323	$\mathbf{1}$
Other payables (Note 20)	2,251,694	12	853,070	5	1,643,144	9
Current tax liabilities Receipts in advance	244,195 235,532	$\mathbf{1}$ 1	264,461 290,774	1 $\overline{\mathbf{2}}$	231,978 55,696	$\mathbf{1}$
Current portion of long-term borrowings (Notes 18 and 31)	815,094	4	815,317	4	281,077	$\overline{\mathbf{2}}$
Other current liabilities	31,383		27,078	÷	37,474
Total current liabilities	6,144,463	32	4,723,411	25	4,741,918	27
NON-CURRENT LIABILITIES
Bonds payable (Note 19) Long-term borrowings (Notes 18 and 31)	254,721 952,003	1 5	1,397,140 1,368,085	8 7	1,722,169 1,143,300	10 $\overline{7}$
Deferred tax liabilities	219,518	$\mathbf{1}$	187,170	1	178,720	1
Net defined benefit liabilities	163,482	$\mathbf{1}$	168,266	1	146,501	$\mathbf{1}$
Guarantee deposits received	839		855		837
Total non-current liabilities	1,590,563	$_{8}$	3,121,516	17	3,191,527	19
Total liabilities	7,735,026	40	7,844,927	42	7,933,445	46
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 22 and 26)
Ordinary share capital	4,052,754	$-21$	3,898,872	$_{21}$	3,796,935	22
Advance receipts for share capital Capital surplus	30,774 2,980,848	16	1,960,159	$_{11}$	10,506 1,397,661	$_{8}$
Retained earnings
Legal reserve	1,896,570	10	1,724,576	9	1,724,576	10
Special reserve Unappropriated earnings	86,888 2,241,893	× 12	86,888 2,923,811	16	86,888 1,993,636	-1 $\mathbf{1}$
Total retained earnings	4,225,351	22	4.735.275	25	3,805,100	22
Other equity Treasury shares	(91, 898) (35, 837)		58,035 (35, 714)	$\equiv$	306,830 (35,714)	$\mathbf{1}$
Total equity attributable to owners of the Corporation	11,161,992	59	10,616,627	$\equiv$ 57	9,281,318	∸ 53
NON-CONTROLLING INTERESTS	204,454	$\Box$	171,224	$\mathbf{I}$	184,257	$\overline{\phantom{0}}$
Total equity	11,366,446	60	10,787,851	$-58$	9,465,575	54
TOTAL	\$19,101,472	100	\$18,632,778	100	\$17,399,020	100

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

(With Deloitte & Touche review report dated July 31, 2017)

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$\overline{\mathbf{t}}$

$\widetilde{\mathcal{C}}$

$\mathcal{D}$

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

			For the Three Months Ended June 30				For the Six Months Ended June 30
	2017 Amount	$\frac{0}{0}$	2016 Amount	$\frac{0}{2}$	2017 Amount	$\frac{0}{0}$	2016 Amount	$\frac{0}{6}$
OPERATING REVENUE (Notes 12 and 30)
Sales Less: Sales returns	\$ 3,029,621	102	\$2,715,759 (505)	101	\$5,850,655 (134)	102 ٠	\$5,351,989 (1,898)	101
Sales allowances	(45,300)	(2)	(33,029)	(1)	(90, 494)	(2)	(57, 747)	(1)
Net sales revenues	2,984,321	100	2,682,225	100	5,760,027	100	5,292,344	100
OPERATING COSTS (Notes 13, 23 and 30)	1,534,668	52	1,358,740	51	2,943,958	$-51$	2,815,485	53
GROSS PROFIT	1,449,653	48	1,323,485	49	2,816,069	49	2,476,859	47
UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES	(43)		(56)
REALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT
VENTURES					118		312
REALIZED GROSS PROFIT	1,449,610	48	1,323,429	49	2,816,187	49	2,477,171	47
OPERATING EXPENSES (Note 23) Selling and marketing expenses	450,164	15	387,573	14	870,846	15	762,376	14
General and administrative expenses	164,834	5	181,824	$\overline{7}$	363,675	6	340,131	$\overline{7}$
Research and development expenses	292,033	$-10$	245,242	$^{9}$	571,343	10	481,546	9
Total operating expenses	907,031	30	814,639	$-30$	1,805,864	$-31$	1,584,053	$-30$
PROFIT FROM OPERATIONS	542,579	18	508,790	19	1,010,323	18	893,118	17
NON-OPERATING INCOME AND EXPENSES
Finance costs (Note 23) Share of profit of associates	(4, 147)		(11,609)		(10, 461)		(20, 441)
and joint ventures	16,276	1	14,868	1	16,278		21,884
Interest income	6,006		5,285	÷	12,582		10,322
Rental income (Note 30)	5,491		6,678	$\sim$	11,912		13,200
Dividend income	6,736		18,065	1	7,046		18,246
Other income	8,710		3,941		14,136		7,710
Gain on disposal of property, plant and equipment, net Gain on disposal of	1,738		225		1,587
investments, net	4,387		114		8,457		114
Exchange gain, net Valuation gain on financial assets (liabilities) at fair value through profit or loss,	44,361	$\mathbf 2$	978
net	83		1,671		1,633		3,842
Other expenses Loss on disposal of property,	(550)		(4,940)		(1,047)		(8, 789)
plant and equipment, net			٠			$\overline{\phantom{a}}$	(1, 727)
Exchange loss, net					(90, 897)	(1)	(21, 147)
Total non-operating income and expenses	89,091	$\overline{\mathbf{3}}$	35,276	$_{2}$	(28, 774)	(1)	23,214	(Continued)

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

(Reviewed, Not Audited)

÷,

			For the Three Months Ended June 30				For the Six Months Ended June 30
	2017 Amount	$\frac{0}{0}$	2016 Amount	$\frac{0}{0}$	2017 Amount	$\frac{0}{6}$	2016 Amount	$\frac{0}{0}$
PROFIT BEFORE INCOME TAX	S 631,670	21	544,066 S	21	981,549 s	17	916,332 S	17
INCOME TAX EXPENSE (Note 24)	121,285	$\overline{4}$	106,558	4	189,438	3	172,834	$\overline{\mathbf{3}}$
NET PROFIT FOR THE PERIOD	510,385	17	437,508	17	792,111	14	743,498	14
OTHER COMPREHENSIVE INCOME (LOSS), NET Items that will not be reclassified subsequently to profit or loss: Share of the other comprehensive income of associates accounted for using equity method Items that may be reclassified					251		(736)
subsequently to profit or loss: Exchange differences on translating foreign operations	24,978	$\mathbf{1}$	(14, 633)	(1)	(100, 113)	(2)	(38, 945)	(1)
Unrealized loss on available-for-sale financial assets Share of other comprehensive income of	(13, 626)	(1)	(52, 105)	(2)	(66, 042)	(1)	(45,226)	(1)
associates and joint ventures accounted for using equity method	(11, 436)		(6, 812)		(12, 464)		(9, 413)
Total other comprehensive loss	(84)		(73, 550)	(3)	(178, 368)	(3)	(94, 320)	(2)
TOTAL COMPREHENSIVE INCOME	510,301	17	363,958	$_{14}$	613,743	$_{11}$	649,178	$\overline{\phantom{0}12}$
NET PROFIT ATTRIBUTED TO:
Owners of the Corporation Non-controlling interests	516,573 S (6,188)	17 $\overline{\phantom{a}}$	442,835 S (5, 327)	16 $\overline{\phantom{a}}$	804,250 s (12, 139)	14 $\overline{\phantom{a}}$	763,851 S (20, 353)	14 $\overline{a}$
	510,385 S.	17	437,508 S	16	792,111 S	14	743,498 S	14
COMPREHENSIVE INCOME ATTRIBUTED TO: Owners of the Corporation Non-controlling interests	515,090 S (4,789) 510,301 s	17 . . 17	369,117 \$ (5,159) 363,958	14 $\overline{a}$ 14	S 629,513 (15,770) 613,743 S	11 $\overline{z}$ $\perp$	670,280 S (21, 102) 649,178 S	13 (1) $\frac{12}{1}$
EARNINGS PER SHARE (NTS; Note 25) Basic Diluted	1.29 \$ 1.26		1.17 \$. 1.09		2.05 1.99		2.02 1.89 S

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

(With Deloitte & Touche review report dated July 31, 2017)

(Concluded)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Talwan Dollars)
(Reviewed, Not Andited)

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							Equity Attributable to Owners of the Corporation		Other Equity
		Advance			Retained Earnings			Differences on Translating Exchange	Unrealized Gain Available-for- $(L$ oss) on
	Ordinary Share Capital	Share Capital Receipts for	Capital Surplus	Legal Reserve	Special Reserve	Unappropriated Earnings	Total	Operations Foreign	sale Financial Assets	Employee Benefit Uncarned	Total	Treasury Shares	Total	Non-controlling Interests	Total Equity
BALANCE, JANUARY 1, 2016	3,791,699 n	× 'n	5 1,302,269	1,600,920	86,888 n	2,264,377 S,	3,952,185 $\overline{a}$	127,968 ÿ	271,697 S	n	399,665 S	(35,714) и	9,410,104 s	121,192 s	9,531,296 S
Cash dividends - NTS2.4 per share Appropriation of 2015 carnings Legal reserve	. .		. .	123,656		$(123,656)$ $(910,200)$	(910, 200)						(910, 200)	$\cdots$	(910,200)
associates and joint ventures accounted for using Change in capital surplus from investments in Other changes in capital surplus equity method			23,604										23,604		23,604
Net profit (loss) for the six months ended June 30, 2016					٠	763,851	763,851						763,851	(20, 353)	743,498
Other comprehensive income (loss) for the six months ended June 30, 2016					4	(736)	(736)	(47, 609)	(45, 226)		(92, 835)		(93,571)	(749)	(94,320)
Total comprehensive income (loss) for the six montlis ended June 30, 2016					η	763,115	763,115	(47, 609)	(45, 226)		(92, 835)		670,280	(21, 102)	649,178
Conversion of convertible bonds	2,886	4,618	41,993										49,497		49,497
Slare-based payment transaction	2,350	5,888	29,795										38,033	ą	38,455
Increase in non-controlling interest					1									83,745	83,745
BALANCE, JUNE 30, 2016	5 3,796,935	10,506	1.397.661	1,724,576	$5 - 86,888$	1,993,636	3,805,100	80,359	226,471 ui	Uì.	306,830	(35.714)	9,281,318	184,257 vi	$5 - 9,465,575$
BALANCE, JANUARY 1, 2017	\$ 3,898,872		5 1,960,159	$5 \t1.724,576$	86,888 v,	2,923,811 m	4,735,275 ç,	(24,914) s	232,901 Ÿ,	(149.952) i,	58,035 ú,	(35,714) s	\$10,616,627	171,224 n	\$ 10,787,851
Cosh dividends - NT\$3.3 per share Appropriation of 2016 carnings Legal reserve				171,994		$(171, 994)$ (1.314,425)	(1,314,425)						(1,314,425)		(1.314, 425)
Net profit (loss) for the six months ended June 30, 2017						804,250	804,250						804,250	(12, 139)	792,111
Other comprehensive income (loss) for the six months ended June 30, 2017					۰,	251	$\overline{\mathbf{5}}$	(108, 930)	(66,058)		(174,988)		(174, 737)	(3.631)	(178,368)
Total comprehensive income (loss) for the six months ended June 30, 2017					Ή	804,501	804,501	(108.930)	166,058		(174,988)		629.513	(15.770)	613.743
Conversion of convertible bonds	149,582	27,217	969,737										1,146,536		1,146,536
Share-based payment transaction	4,300	3,557	50,952							25,055	25,055		83,864		83,864
Buy-back of treasury slares												(123)	(123)		(123)
Increase in non-controlling interests														49,000	49,000
BALANCE, JUNE 30, 2017	$5 - 4.052.754$	5 30,774	2.280848	5 1,896,570	86,888 ᆡ	2.241.893	5 4,225,351	$S = (133.844)$	$5 - 166.843$	$S = (124.892)$	\$1.898	$S = (35.832)$	S. 11.161.992	5-204.454	2 11.366.446

The accompanying notes are an integral part of consolidated the financial statements. (With Deboite $\&$ Touche review report dated July 31, 2017)

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$-6-$

$\mathbb{Z}$

$\ddot{\phantom{a}}$

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

	For the Six Months Ended June 30
	2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	\$ 981,549	S	916,332
Adjustments for:
Depreciation	156,217		169,572
Amortization	1,563		1,005
Provision for bad debts expense	8,578		3,373
Net gain on fair value changes of financial assets (liabilities)
designated as at fair value through profit or loss	(1,633)		(3,842)
Finance costs	10,461		20,441
Interest income	(12, 582)		(10, 322)
Dividend income	(7,046)		(18, 246)
Compensation costs of share-based payment	66,667		20,841
Share of profit of associates and joint ventures accounted for using
equity method	(16, 278)		(21, 884)
Loss (gain) on disposal of property, plant and equipment, net	(1, 587)		1,727
Gain on disposal of investments	(8, 457)		(114)
Impairment (reversal of impairment) loss on non-financial assets	(34,881)		21,453
Realized gain on transactions with associates and joint ventures	(118)		(312)
Exchange loss, net	75,178		28,856
Net changes in assets and liabilities
Financial assets held for trading			(228)
Notes receivable	(18,216)		10,214
Trade receivables	38,419		(202, 934)
Construction contracts receivable	6,321		(68, 785)
Inventories	(441, 754)		(428, 027)
Prepayments	(95, 856)		(11, 181)
Other current assets	59,881		(18,902)
Notes payable	25,520		113,660
Trade payables	(330, 425)		320,877
Construction contracts payable	118,334 75,828		(7,895) 81,433
Other payables
Receipts in advance Other current liabilities	(55, 242) 4,305		(174, 259) (3, 421)
Net defined benefit liabilities	(4, 784)		(3,190)
Cash generated from operations	599,962		736,242
Income tax paid	(196, 955)		(142, 724)
Net cash generated from operating activities	403,007		593,518
			(Continued)

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

	For the Six Months Ended June 30
	2017		2016
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire available-for-sale financial assets	\$ (80,000)	S	(600,000)
Proceeds from disposal of available-for-sale financial assets	905,535		100,114
Proceeds from disposal of debt investments with no active market	8,781		163,628
Cash returned of capital reduction of financial assets measured at cost			9,587
Payment to acquire investment accounted for using equity method			(82, 821)
Increase in prepayments for investments	(15, 877)
Payments to acquire property, plant and equipment	(185, 883)		(95, 333)
Proceeds from disposal of property, plant and equipment	20,749		10,370
(Increase) decrease in refundable deposits	(4,991)		6,045
Net cash outflows from business combination			(56, 249)
	(4,521)
(Increase) decrease in other non-current assets Interest received			11,015
Dividend received	14,303		11,587
	7,046		18,246
Net cash generated from (used in) investing activities	665,142		(503, 811)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings	296,580		(18, 715)
Increase in short-term bills payable			100,000
Repayment of long-term borrowings	(407, 359)		(6,758)
Increase in guarantee deposits			3
Cash dividend paid	(4,838)		(2,298)
Exercise of employee stock options	15,415		17,614
Payments for buy-back of ordinary shares	(123)
Interest paid	(19, 407)		(16,906)
Increase in non-controlling interests	49,000		53,225
Proceeds from issuance of employee restricted shares	1,850
Net cash generated from (used in) financing activities	(68, 882)		126,165
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS	(82, 447)		(37, 304)
NET INCREASE IN CASH AND CASH EQUIVALENTS	916,820		178,568
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	3,149,970		2,489,289
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	\$4,066,790		\$2,667,857 (Continued)

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

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at June 30, 2017 and 2016:

	June 30
	2017	2016
Cash and cash equivalents in consolidated balance sheets	\$4,066,790	\$2,691,970
Bank overdraft		(24, 113)
Cash and cash equivalents in consolidated statements of cash flow	\$4,066,790	2,667,857

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

(With Deloitte & Touche review report dated July 31, 2017)

(Concluded)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (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 consolidated financial statements are presented in the Corporation's functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were reported to the board of directors and issued on July 31, 2017.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the "IFRSs") endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group's accounting policies:

1) Amendment to IFRS 2 "Share-Based Payment" in Annual Improvements to IFRSs of 2010-2012 Cycle

The amended IFRS 2 changes the definitions of "vesting condition" and "market condition" and adds definitions for "performance condition" and "service condition". The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Group or another entity in the same group or the market price of the equity instruments of the Group or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Group, but also of other entities outside the Group. The share-based payment arrangements with market conditions, non-market conditions or non-vesting conditions are accounted for differently, and the aforementioned amendment should be applied prospectively to those share-based payments granted on or after January 1, 2017.

2) Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

The amendments include additions of several accounting items and requirements for disclosures of impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions and goodwill.

The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president, or is the spouse or second immediate family of the chairman of the board of directors or president of the Corporation are deemed to have a substantive related party relationship, unless it can be demonstrated that no control, joint control, or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationship with whom the Corporation has significant transaction. If the transaction or balance with a specific related party is 10% or more of the Corporation's respective total transaction or balance, such transaction should be separately disclosed by the name of each related party.

The amendments also require additional disclosure if there is a significant difference between the actual operation after business combination and the expected benefit on acquisition date.

When the amendments are applied retrospectively from January 1, 2017, the disclosures of related party transactions are enhanced. Refer to Note 30 for related disclosures.

b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2018

	Effective Date
New IFRSs	Announced by IASB (Note 1)
Annual Improvements to IFRSs 2014-2016 Cycle	Note 2
Amendment to IFRS 2 "Classification and Measurement of	January 1, 2018
Share-based Payment Transactions"
Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with	January 1, 2018
IFRS 4 Insurance contracts"
IFRS 9 "Financial Instruments"	January 1, 2018
Amendments to IFRS 9 and IFRS 7 "Mandatory Effective Date of	January 1, 2018
IFRS 9 and Transition Disclosures"
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
Amendments to IFRS 15 "Clarifications to IFRS 15 Revenue from	January 1, 2018
Contracts with Customers"
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 40 "Transfers of investment property"	January 1, 2018
IFRIC 22 "Foreign Currency Transactions and Advance	January 1, 2018
Consideration"

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 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.

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:

1) IFRS 9 "Financial Instruments"

Recognition, measurement and impairment of financial assets

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

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

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

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

Based on an analysis of the Group's financial assets as at June 30, 2017 on the basis of the facts and circumstances that exist at that date, the Group has performed a preliminary assessment of the impact of IFRS 9 to the classification and measurement of financial assets as follows:

• a) Listed shares, emerging market shares, and unlisted shares classified as available-for-sale will be classified as at fair value through profit or loss and designated as at fair value through other comprehensive income. When it is designated as at fair value through other comprehensive income, the fair value gains or losses accumulated in other equity will be transferred directly to retained earnings instead of being reclassified to profit or loss on disposal. Besides, unlisted shares measured at cost will be measured at fair value instead;
• b) Mutual funds classified as available-for-sale will be classified as at fair value through profit or loss because the contractual cash flows are not solely payments of principal and interest on the principal outstanding and they are not equity instruments;

c) Debt investments classified as debt investments with no active market and measured at amortized cost will be classified as measured at amortized cost under IFRS 9 because on initial recognition, the contractual cash flows that are solely payments of principal and interest on the principal outstanding and these investments are held within a business model whose objective is to collect the contractual cash flows.

IFRS 9 requires impairment loss on financial assets to be recognized by using the "Expected Credit" Losses Model". The 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 take into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

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

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, the Group recognizes 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 $\bullet$
• $\bullet$ Recognize revenue when the Group satisfies a performance obligation.

Except for the above impact, 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.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs	Effective Date Announced by IASB (Note)
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"	To be determined by IASB
IFRS 16 "Leases"	January 1, 2019
IFRS 17 "Insurance Contracts"	January 1, 2021
IFRIC 23 "Uncertainty Over Income Tax Treatments"	January 1, 2019

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

IFRS 16 "Leases"

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

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

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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 and issued into effect by the FSC. Disclosure information included in the consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
• 2) 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
• 3) Level 3 inputs are unobservable inputs for the asset or liability.

c. Basis of consolidation

The basis of preparing the consolidated financial statements is consistent with the consolidated financial statements for the year ended December 31, 2016.

Refer to Note 14, Table 7 and Table 8 for the detailed information of subsidiaries, including the percentage of ownership and main business.

d. Other significant accounting policies

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, For the summary of other significant accounting policies, please refer to the Group's 2016. consolidated financial statements for the year ended December 31, 2016.

1) Retirement benefits

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.

2) Taxation

Income tax expense represent 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's pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Group's consolidated financial statements for the year ended December 31, 2016.

6. CASH AND CASH EQUIVALENTS

	June 30, 2017		December 31, 2016		June 30, 2016
Cash on hand	\$ 5,269	S	6,098	S	4,402
Checking accounts and demand deposits	2,648,137		2,768,658		2,347,849
Cash equivalents
Time deposits with maturities less than 3
months from date of investments	1,333,470		245,315		339,719
Repurchase agreements collateralized by bonds	79,914		129,899
	4,066,790		3,149,970		2.691,970

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

		December 31,
	June 30, 2017	2016	June 30, 2016
Financial assets held for trading - current
Non-derivative financial assets
Domestic listed stocks	8,372 S.	7,453 S	7,716 Ж
Investment in debt instrument	998	983	972
	9,370	8,436	8,688
Derivative instruments
Call and put option of convertible bonds
payable (Note 19)	314	725	2,703
	9,684	9.161	11,391

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

		December 31,
	June 30, 2017	2016	June 30, 2016
Current
Open-end beneficiary certificates	1,468,860	\$2,291,504	\$2,561,513
Non-current
Listed stocks	253,753	314,233	310,280

9. FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT

		December 31,
	June 30, 2017	2016	June 30, 2016
Domestic unlisted common stocks	182,131 S	162,131 S	162,131 S
Foreign unlisted common stocks	25,844	26,366	26,373
Foreign open-end beneficiary certificates	10,152	10,152	10,152
	218,127	\$198,649	198,656
Classification by measurement of financial
instruments Available-for-sale financial assets	218,127	198,649	198,656

The above investments were measured at cost less impairment at the balance sheet date. The Group believed the fair value of these investments could not be estimated reliably because the range of reasonable fair value estimates was significant and the probabilities of various estimates could not be reasonably assessed.

In order to expand the market of biotechnology equipment, the Group's board of directors resolved to invest in TFBS Bioscience Inc. of \$20,000 thousand in November 2016.

10. DEBT INVESTMENTS WITH NO ACTIVE MARKET - CURRENT

	June 30, 2017	December 31, 2016	June 30, 2016
Time deposits with maturities more than 3 months from date of investments	349,355 S	372,437 \$.	384,273 S
Pledge deposits	7,717	6,078	10,665
	\$357,072	\$378,515	\$394.938
11. TRADE RECEIVABLES
	June 30, 2017	December 31, 2016	June 30, 2016
Trade receivables	\$2,986,428	3,159,134 S	2,837,341 S
Allowance for impairment loss Less:	(155, 436)	(170, 361)	(181, 377)
	2,830,992	2,988,773	2,655,964
Trade receivables - related parties	44,254	7,890	10,943
	2,875,246	\$2,996,663	2,666,907

The average credit period for sales of goods is 60 to 90 days from the date when the goods were inspected and accepted by customers, and no interest was charged on trade receivables. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date when credit was initially granted to the end of the reporting period. Allowances for impairment loss are based on the estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

For the trade receivables balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss, because there was no significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.

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 irregularly every year. Most of the trade receivables 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 was as follows:

		December 31,
	June 30, 2017	2016	June 30, 2016
Less than 60 days	2,464,936	\$2,536,446	\$2,398,239
$61-180$ days	226,932	396,642	166,319
Over 180 days	294,560	226,046	272,783
	2,986,428	3,159,134	2,837,341

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

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

		December 31,
	June 30, 2017	2016	June 30, 2016
Less than 60 days	314,565 S	\$ 381,176	198,482 S
$61-180$ days	212,586	385,443	155,349
Over 180 days	212,145	131,886	136,579
	739,296	898,505	490,410

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

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

	Individually Assessed for Impairment	Collectively Assessed for Impairment	Total
Balance at January 1, 2016	152,272 S	33,405 \$	185,677 S
Add: Impairment loss recognized on receivables	614	2,759	3,373
Add: Addition through business combinations (Note 27)		1	1
Less: Amounts written off during the period as uncollectible	(4,096)	(8)	(4, 104)
Reclassification of impairment loss from collective assessment to individual assessment Foreign exchange translation gains	416 (1,982)	(416) (1,588)	(3,570)
Balance at June 30, 2016	147,224	34,153	181,377
Balance at January 1, 2017	135,696 \$	34,665 \$	170,361 S
Add: Impairment loss recognized on receivables	1,662	6,916	8,578
Less: Amounts written off during the period as uncollectible	(20, 570)	(227)	(20, 797)
Reclassification of impairment loss from collective assessment to individual assessment	5,554	(5, 554)
Foreign exchange translation gains	(1, 539)	(1,167)	(2,706)
Balance at June 30, 2017	120,803	34,633	155,436

The allowance for impairment loss individually assessed due to customers were in liquidation or in severe financial difficulties were \$120,803 thousand, \$135,696 thousand and \$147,224 thousand as of June 30, 2017, December 31, 2016 and June 30, 2016, respectively. The Group did not hold any collateral over these balances.

12. CONSTRUCTION CONTRACTS RECEIVABLE (PAYABLE)

	June 30, 2017	December 31, 2016	June 30, 2016
Construction contracts receivable
Construction costs incurred plus recognized profits (less recognized losses) to date Progress billings Less:	221,921 S (13, 426)	217,326 S. (2,510)	261,328 S (16,680)
Due from customers for construction contracts	208,495 S	\$214,816	\$244,648
Construction contracts payable
Progress billings Construction costs incurred plus Less:	S 482,889	346,218 S	372,137 S.
recognized profits less recognized losses to date	(134, 697)	(116,360)	(124, 814)
Due to customers for construction contracts	348,192	229,858	247,323

The Group recognized construction contract revenues of \$162,232 thousand and \$96,616 thousand for the three months ended June 30, 2017 and 2016, respectively. The Group recognized construction contract revenue of \$242,137 thousand and \$137,769 thousand for the six months ended June 30, 2017 and 2016, respectively.

13. INVENTORIES

	December 31,
	June 30, 2017	2016	June 30, 2016
Finished goods	613,564 S	494,715 \$	596,806 S
Semi-finished products	345,739	342,056	308,306
Work in process	638,476	472,453	506,051
Raw materials	740,550	597,017	605,489
Inventory in transit	2,761	255
	\$2,341,090	1,906,496	\$2,016,652

The cost of goods sold for the three months and six months ended June 30, 2017 included the reversal of inventory write-downs of \$48,682 thousand and \$34,881 thousand, respectively.

The cost of goods sold for the three months and six months ended June 30, 2016 included inventory write-downs of \$7,707 thousand and \$21,453 thousand, respectively.

14. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

				Percentage of Ownership as of
Investor	Investee	Business	June 30, 2017	December 31, 2016	June 30, 2016	Remark
The Corporation	Neworld Electronics Ltd.	Sale and maintenance of electronic test	100.0	100.0	100.0
		instruments, etc.
	Chroma Investment Co., Ltd.	Investment	100.0	100.0	100.0	Chroma Investment Co., Ltd. had 1,916 thousand shares of the Corporation's common stock as of June 30, 2017. which accounted for 0.5% of the Corporation's outstanding shares
	Sensational Holding Ltd.	Investment	100.0	100.0	100.0
	Chroma Ate Europe B.V.	Sale and maintenance of electronic test instruments, etc.	100.0	100.0	100.0
	Chroma Ate Inc. ("Chroma $USA$ "	Sale and maintenance of electronic test instruments, etc.	100.0	100.0	100.0
	Chen Hwa Technology Inc.	Test of inductance, capacitance and resistance equipment and sale of parts.	100.0	100.0	100.0
	CHI Incorporation Ltd.	Test of inductance, capacitance and resistance equipment and sale of parts.	100.0	100.0	100.0
	Chroma New Material Corporation	Processing and sale of gold wire	100.0	100.0	100,0
	San Eagle Development Corp.	Investment	100.0	100,0	100.0
	Wei Kuang Automatic	Design, manufacturing, installment and	100.0	100.0	100.0
	Equipment Co., Ltd.	testing of automated factory conveyor systems.
	Testar Electronic Corporation	Testing of LED products	67.2	67.2	67.2
	Deep Red Holding Co., Ltd.	Investment	100.0	100.0	100.0
	Chroma Japan Corp.	Sale and maintenance of electronic test instruments, etc.	100.0	100.0	100.0
	Chroma Systems Solutions Inc.	Sale and maintenance of electronic test instruments, etc.	25.0	25.0	25.0	Note 1
	Adivic Technology Co.	Sale and research of RF device	51.0	51.0	51.0	Note 2
	EVT Technology Co., Ltd.	Manufacturing of motorcycles and its parts	53.2	53.2	53.2
	Quantel Private Ltd.	Sale and maintenance of test instruments, etc.	60.0	60.0	60.0	Note 3
Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments.	100.0	100.0	100.0
	Chroma Electronics (Shanghai) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments.	100.0	100.0	100.0
Chroma Ate Inc. ("Chroma USA")	Chroma Systems Solutions Inc.	Sale and maintenance of electronic test instruments, etc.	50.0	50.0	50,0	Note 1
Chen Hwa Technology Inc.	Chroma (Shanghai) Trading Co., Ltd.	International and transit trading, simple commercial processing, commercial consulting services, etc.	100.0	100.0	100.0
CHI Incorporation Ltd.	Chroma Ate (Suzhou) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments.	100.0	100.0	100.0
San Eagle Development Corp.	Wei Kuang Mech Eng Inc.	Investment	100.0	100.0	100.0
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.	100.0	100.0	100.0
	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	Sale and maintenance of electronic equipment and factory conveyor systems	100.0	100.0	100.0
	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Sale and maintenance of electronic equipment and factory conveyor systems	100.0	100.0	100.0
Deep Red Holding Co., Ltd.	Saject System Technology (Suzhou) Co., Ltd.	Research, development and design of computer network security systems and information management	100.0	100.0	100.0
EVT Technology Co., Ltd.	Wei Da Electric Vehicle Co., Ltd.	Sale and lease of motorcycles	75.0	75.0	75.0
Adivic Technology Co.	Advic Holding Corporation	Sale and research of RF device	100.0	100.0	100.0

• Note 1: The Corporation and the Corporation's subsidiary, Chroma USA, held 75% equity interest in Chroma Systems Solutions Inc.
• Note 2: In April 2017, Advic Technology Co. decreased its capital by \$140,000 thousand to make up for losses and increased its capital by cash injection of \$100,000 thousand to strengthen its financial structure. The Corporation's board of directors decided to participate in the capital injection at the same percentage as originally owned. The Corporation's equity interest in Advic remained the same.

Note 3: To expand its market scale and lay out sales network in Southeast Asia, the Corporation's board of directors resolved to acquire 60% equity interest of Quantel Private Ltd. amounting to SGD3,240 thousand. Quantel Private Ltd. is mainly engaged in the sales of electronic test instruments, etc. In April 2016, Ouantel Private Ltd. increased its capital by SGD2,500 thousand to strengthen its financial structure. The Corporation's board of directors resolved to participate proportionally in the capital increase. The Corporation's equity interest in Quantel Private Ltd. remained the same.

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31,
	June 30, 2017	2016	June 30, 2016
Investments in associates Investments in joint ventures	\$628,064 17,616	\$623,904 17,593	\$654,040 17,571
	645,680	641.497	671,611

a. Investments in associates

	June 30, 2017			December 31, 2016	June 30, 2016
	Amount	Percentage of Equity Interest $(\% )$	Amount	Percentage of Equity Interest $(\%)$	Amount	Percentage of Equity Interest $(\% )$
Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp.	538,274 89,790	11.3 27.3	\$535,490 88,414	11.3 27.3	571,084 S. 82,956	11.3 27.3
	628,064		\$623,904		654,040

Refer to Table 7 "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 Associates	June 30, 2017	2016	June 30, 2016
Adlink Technology Inc.	1,509,339	\$1,497,088	\$1,629,400

The investments in associate accounted for using equity method and the share of profit or loss and other comprehensive income of those investments for the six months ended June 30, 2017 and 2016 was based on the associate's financial statements that have not been reviewed.

b. Investments in joint ventures

	June 30, 2017			December 31, 2016	June 30, 2016
	Amount	Percentage of Equity Interest $(\% )$	Amount	Percentage of Equity Interest $(\% )$	Amount	Percentage of Equity Interest $(\%)$
Joint ventures that are not individually material Chih Ho Shun Development
Co., Ltd.	\$17,616	35.0	\$17,593	35.0	\$17,571	35.0

Refer to Table 7 "Information on Investees" for the nature of activities, principal place of business and country of incorporation of the joint venture.

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.

The investments in joint ventures accounted for using equity method and the share of profit or loss and other comprehensive income of those investments for the six months ended June 30, 2017 and 2016 was based on the joint ventures' financial statements that have not been reviewed.

16. PROPERTY, PLANT AND EQUIPMENT

	December 31,
	June 30, 2017	2016	June 30, 2016
Land	522,015 \$	525,615	527,806
Buildings	1,493,602	1,550,521	1,607,580
Machinery	160,841	187,080	238,632
Miscellaneous equipment	472,388	450,911	391,917
	2.648.846	2.714.127	2.765.935

Except for depreciation recognized, the Group had no significant addition, disposal, and impairment of property, plant and equipment during the three months ended June 30, 2017 and 2016 and six months ended June 30, 2017 and 2016. 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
Clean room 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.

17. GOODWILL

	For the Six Months Ended June 30
	2017	2016
Cost
Balance, beginning of the period Acquisition through business combination (Note 27) Net effect of exchange differences	\$220,236 (3,294)	196,052 S 30,811 (990)
Balance, end of the period	\$216,942	225,873

Refer to Note 17 in the consolidated financial statements for the year ended December 31, 2016 for goodwill impairment assessment. There was no significant evidence indicating impairment of goodwill as of June 30, 2017.

18. BORROWINGS

a. Short-term borrowings

	June 30, 2017	December 31, 2016	June 30, 2016
Secured borrowings
Bank loans (1)	25,000 S	25,000 S	25,000 S
Bank overdrafts			24,113
Unsecured borrowings
Bank loans (2)	463,430	171,705	278,876
	488,430	196,705	327,989

• 1) Secured by Testar Electronic Corporation's Machinery (refer to Note 31). As of June 30, 2017, December 31, 2016 and June 30, 2016, the interest rate on the bank loans was 1.29%, 1.32% and 1.35% per annum, respectively.
• 2) As of June 30, 2017, December 31, 2016 and June 30, 2016, the interest rate on the bank loans was 0.99%-4.25%, 1.23%-3.50% and 0.88%-3.50% per annum, respectively.
• b. Short-term bills payable

	June 30, 2017	June 30, 2016
Commercial papers			\$100,000
Interest rate $(\%)$	Ξ	$\blacksquare$	0.90%
Due date	۰	$\blacksquare$	2016.07.27

c. Long-term borrowings

	June 30, 2017	December 31, 2016	June 30, 2016
Secured borrowings
Bank loans (1) (Note 31)	\$ 160,977	176,058 \$	185,809 S
Unsecured borrowings
Syndicated bank loans (2) Bank loans (3). Discount on bonds payable Less:	1,600,000 6,120 1,767,097 815,094	2,000,000 7,344 2,183,402 815,317	1,230,000 8,568 1,424,377 281,077
	952,003	1,368,085	1,143,300

• 1) Secured by the Group's debt investments with no active market and property, plant and equipment. The final repayment period of those bank loans will be due in November 2019 to April 2025. As of June 30, 2017, December 31, 2016 and June 30, 2016, the effective interest rate on the bank loans were 0.90%-8.88%, 0.90%-11% and 0.90%-11% per annum, respectively.
• 2) 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, \$530,000 thousand in November 2015 to pay the first part of the third installment and \$770,000 thousand in July 2016 to pay the remaining part of the third installment. The syndicated bank loan will be repaid from March 2017 to March 2018 in three equal semiannual installments (\$400,000 thousand per installment), the remaining \$800,000 thousand will be repaid on the due date, September 3, 2018, and the interest is paid monthly. As of June 30, 2017, December 31, 2016 and June 30, 2016, the interest rate per annum was all 1.58% on a floating basis.
• 3) The bank loan is for the purpose of general operation with due date on December 16, 2019. As of June 30, 2017, December 31, 2016 and June 30, 2016, the interest rate on the bank loan was 1.72%, 1.72% and 1.79% per annum, respectively.

19. BONDS PAYABLE

	June 30, 2017	December 31, 2016	June 30, 2016
Unsecured domestic convertible bonds Current portions Less:	262,400 7,679	\$1,450,500 53,360	\$1,802,100 79,931
	254,721	1,397,140	1,722,169

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 Taipei Exchange at the same date. Except for the period when books are closed for share transaction, bondholders are entitled to convert bonds into the Corporation's common stock at \$74.2 (conversion price) per share from June 24, 2014 to May 13, 2019. Due to earning distribution of cash dividend of NT\$3.3 and NT\$2.4 per share for 2017 and 2016, the conversion price was adjusted to NT\$64.9 and NT\$67.2 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 from one month after the issuance date (June 24, 2014) to 40 days before the maturity date (April 13, 2019).

At the 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 presented in equity under "capital surplus - option" of \$141,487 thousand. The liability components were recognized as embedded-derivative of \$4,989 thousand and nonderivative liability of \$1,849,108 thousand, respectively. The estimated fair value of derivative instrument as of June 30, 2017 resulted in gain of \$700 thousand.

Proceeds from issuance (less transaction costs \$5,320 thousand)	\$1,994,680
Equity component	(141, 487)
Deferred tax assets	904
Derivative financial liability component	(4,989)
Liability component at the date of issue	1,849,108
Interest charged at an effective interest rate of 1.57%	75,621
Conversion of bonds payable	(1,670,008)
Liability component as of June 30, 2017	254,721

20. OTHER PAYABLES

			December 31,
$\gamma$		June 30, 2017	2016		June 30, 2016
Cash dividend payable	S	1,314,425	\$ 4,838	S	910,200
Salaries payable and bonus payable (including employee compensations and remuneration of
directors and supervisors)		755,762	689,305		598,218
Payable for construction and equipment		16,884	3,281		2,642
Other		164,623	155,646		132,084
		2.251,694	853,070		1,643,144

21. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group's defined benefit retirement plans were calculated using the actuarially determined pension cost discount rate as of December 31, 2016 and 2015. The amount were \$1,646 thousand, \$1,679 thousand, \$3,246 thousand and \$3,355 thousand for the three months ended June 30, 2016 and 2015 and for the six months ended June 30, 2016 and 2015, respectively.

22. EQUITY

a. Ordinary share capital

	December 31,
June 30, 2017	2016	June 30, 2016
450,000	450,000	450,000
4,500,000	\$4,500,000	4,500,000
		379,694
		3,796,935
	405,275 4,052,754	389,887 \$3,898,872

The authorized shares include 30,000 thousand shares allocated for the exercise of employee share options.

b. Capital surplus

	June 30, 2017	December 31, 2016	June 30, 2016
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note)
Additional paid-in capital	\$2,277,475 165,059	1,209,905 S. 165,059	829,112 S 160,514
Treasury share transactions From merger	146,976	146,976	146,976
Used to offset a deficit only
Employee share options expired Share of changes in capital surplus of	5,471	5,239	1,640
associates or joint ventures	52,703	52,703	48,329
Not be used for any purpose
Convertible bonds options	18,564	102,614	127,487
Employee share options	113,692	90,459	83,603
Employee restricted shares	200,908	187,204
	2,980,848	1,960,159	.397,661

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

c. Retained earnings and dividend policy

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on June 7, 2016 and, in that meeting, had resolved amendments to the Corporation's Articles of Incorporation (the "Articles"), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees' compensation.

Under the dividend policy as set forth in the amended Articles, where the Corporation made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation's board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders' meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of employees' compensation and remuneration to directors and supervisors after amendment, please refer to d. Employees' compensation and remuneration of directors and supervisors in Note 23.

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.

The appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Corporation's paid-in capital. The legal reserve may be used to offset deficits. If the Corporation has no deficits 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.

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and in the directive titled "Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs" should be appropriated to or reversed from a special reserve by the Corporation.

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 2016 and 2015 have been approved in the annual shareholders' meeting on June 8, 2017 and June 7, 2016, respectively. The appropriations and dividends per share were as follows:

		Appropriation of Earnings	Dividend Per Share (NT\$)
	For Fiscal Year 2016	For Fiscal Year 2015	For Fiscal Year 2016	For Fiscal Year 2015
Legal reserve	171,994	123,656
Cash dividends	1,314,425	910,200	\$3.3	\$2.4

d. Special reserves

At the first-time adoption of IFRSs, a proportionate share of the special reserve relating to exchange differences arising from the translation of the financial statements of foreign operations (including the subsidiaries of the Corporation) will be reversed on the Group's disposal of foreign operations; on the Group's loss of significant influence, however, the entire special reserve will be reversed. An additional special reserve should be appropriated for the amount equal to the difference between the net debit balance of the reserves and the special reserve appropriated at the first-time adoption of IFRSs. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and may thereafter be distributed.

e. Treasury shares

The Corporation's shares held by its subsidiaries at the end of the reporting periods were as follows:

Subsidiaries	Number of Shares Held (In Thousand Shares)	Carrying Amount	Market Price
June 30, 2017
Chroma Investment Co., Ltd.	1,916	35,714	187,727
December 31, 2016
Chroma Investment Co., Ltd.	1,916	35,714	\$144,435
June 30, 2016
Chroma Investment Co., Ltd.	1,916	35,714	147,116

Forfeited employee restricted shares of 12 thousand were returned to the Corporation during this period.

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.

23. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Interest on bank loans Interest on convertible bonds	\$ 8,943 1,515	\$ 9,667 6,793	\$ 18,946 5,228	16,547 \$ 13,641
	10,458	16,460	24,174	30,188
Amount included in the Less: cost of qualifying assets	6,311	4,851	13,713	9,747
	4,147	11,609	10,461	20,441
Capitalized interest	\$ 6,311	\$ 4,851	13,713 \$	9,747 \$
Capitalization rate	1.58%	1.58%-1.60%	1.58%	1.58%-1.60%

b. Depreciation and amortization expense

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Depreciation of property, plant and equipment Amortization of intangible	78,537 \$	S 83,389	156,217 \$	\$ 169,572
assets	781	502	1,563	1,005
	79,318	83,891	157,780 \$	170,577 S
Depreciation by function Operating costs Operating expenses	25,995 S 52,542	S 33,354 50,035	S 52,292 103,925	\$ 69,384 100,188
	78,537	83,389	156,217 S.	\$169,572
Amortization by function Operating expenses	781	\$ 502	1,563	1.005

c. Employee benefits expense

		For the Three Months Ended June 30			For the Six Months Ended June 30
		2017		2016		2017		2016
Short-term benefits Share-based payments	\$	716,287	S	641,097	S.	1,413,073	\$	1,259,535
(Note 26) Post-employment benefits (Note 21)		33,567		16,411		66,667		20,841
Defined contribution plans Defined benefit plans		19,731 1,646		17,174 1,679		39,439 3,246		33,930 3,355
Other employee benefit		14,248		9,847		28,014		27,655
	S	785,479		686,208	s.	1,550,439	S.	1,345,316
Summarized by function Operating costs Operating expenses	\$	145,083 640,396	\$	127,221 558,987	S	277,143 ,273,296	$\mathbb{S}$	253,451 1,091,865
	\$	785,479		686,208		1,550,439		1,345,316

d. Employees' compensation and remuneration of directors and supervisors

In compliance with the Company Act as amended in May 2015 and the amended Articles as resolved in the shareholders' meeting held on June 7, 2016, the Corporation distributed employees' compensation and remuneration of directors and supervisors at the rates of 5%-20% and no higher than 1.5%, respectively, of net profit before income tax, employees' compensation, and remuneration of directors and supervisors. For the three months ended June 30, 2017 and 2016 and six months ended June 30, 2017 and 2016, the accrual rates and accrued amounts were as follows:

			For the Three Months Ended June 30		For the Six Months Ended June 30
	2017		2016		2017		2016
	Amount	Rate %	Amount	Rate %	Amount	Rate %	Amount	Rate %
Employees' compensation	70,000	10.30	71,000	11.83	\$142,000	12.98	\$137,000	13.09
Remuneration of directors and supervisors	2,220	0.33	1.950	0.32	4,170	0.38	3,900	0.37

If there is a change in the 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 of directors and supervisors for 2016 and 2015 have been resolved by the board of directors on February 21, 2017 and February 23, 2016, respectively, were as below:

	For the Years Ended December 31
	2016					2015
		Cash		Share		Cash		Share
Employee's compensation		\$ 300,000	S	۰		\$135,000		$\overline{\phantom{a}}$
Remuneration of directors and supervisors		8,000				8,000

There was no difference between the amounts of the employee's compensation and the remuneration of directors and supervisors and the respective amounts recognized in the consolidated financial statements for the years ended December 31, 2016 and 2015.

Information on the employee's compensation and remuneration of directors and supervisors resolved by the Corporation's board of directors in 2017 and 2016 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

24. INCOME TAXES

a. Major components of income tax expense

	For the Three Months Ended June 30			For the Six Months Ended June 30
		2017		2016		2017		2016
Current tax
In respect of the current period		78,686	S	70,287		\$145,385		\$140,117
Income tax on unappropriated earnings		20,687		17,620		20,687		17,620
Adjustments for prior periods		99,374		199 88,106		166,073		(2,252) 155,485 (Continued)

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Deferred tax
In respect of the current period	21,911 S	18,452 S	23,365 \$	17,349 S
Income tax expense recognized
in profit or loss	121,285	\$106,558	\$189,438	172,834 (Concluded)
Integrated income tax
		June 30, 2017	December 31, 2016	June 30, 2016
Balance of imputation credit account (ICA)		459,242 S	302,877	\$377,115
				For the Years Ended December 31
			2016	2015
Creditable ratio for distribution of earnings			16.28%	17.10%

c. Income tax assessments

b.

The Corporation's tax returns through 2014 had been assessed by the tax authorities.

The tax returns through 2015 of the Group's subsidiaries - Adivic Technology Co., Wei Kuang Automatic Equipment Co., Chroma Investment Co., EVT Technology Co., Ltd. and Wei Da Electric Vehicle Co., Ltd. - had been assessed by the tax authorities.

The tax returns through 2014 of the Group's subsidiaries - Chroma New Material Corp. and Testar Electronic Corp. - had been assessed by the tax authorities.

25. EARNINGS PER SHARE

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

Net Profit for the Period

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Earnings used in the computation of basic earnings per share	516,573 S.	442,835 S	804,250 S.	763,851 S.
Effect of potentially dilutive ordinary shares: Interest on convertible bonds and
valuation gain on conversion option	1,823	4,823	5,638	9,455
Earnings used in the computation of diluted earnings per share	518,396	447,658	809,888	773,306

Shares

(In Thousands of Shares)

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Weighted average number of ordinary shares used in the computation of basic earnings
per share	400,071	377,777	391,386	377,272
Effect of potentially dilutive ordinary shares:
Convertible bonds	5,948	26,821	10,352	27,335
Employees' compensation	3,182	3,248	3,087	3,545
Employee share options	1,449	1,729	2,415	1,649
Employee restricted shares	84		80
Weighted average number of ordinary shares used in the computation of diluted earnings
per share	410,734	409,575	407.320	409,801

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

26. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan of the Corporation

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:

	Grant Date
	March 25, 2016	July 8, 2013
Number of options (in thousands)	7,900	6,000
Exercise prices per share on grant date (market value on grant date)	\$67.8	\$53.5
Exercise prices per share as of the report date (adjusted based on employee share options plan)	\$63.4	\$46.7

1) Information on employee share options was as follows:

			For the Six Months Ended June 30
	2017		2016
	Number of Options (In Thousands)	Weighted- average Exercise Price (NTS)	Number of Options (In Thousands)	Weighted- average Exercise Price (NTS)
Balance, beginning of the period	11,538	\$60.2	5,292	49.9 S
Options granted		۰	7,900	65.7
Options exercised	(312)	48.4	(353)	49.9
Balance, end of the period	1,226	60.6	12,839	59.0
Options exercisable, end of the period	1.630		.534

2) Information about outstanding options as of June 30, 2017 and 2016 was as follows:

June 30
2017		2016
Range of Exercise Price (NT\$)	Weighted-average Remaining Contractual Life (Years)	Range of Exercise Price (NT\$)	Weighted-average Remaining Contractual Life (Years)
\$48.4	2.02	\$49.9	3.02
65.7	4.74	67.8	5.74

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

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

4) Fair value of stock option was used to calculate the compensation costs for employee stock options granted on March 25, 2016 and July 8, 2013, respectively.

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

Compensation costs recognized was \$13,920 thousand, \$16,200 thousand, \$27,840 thousand and \$20,419 thousand for the three months ended June 30, 2017 and 2016 and for the six months ended June 30, 2017 and 2016, respectively.

b. Restricted shares for employees

In the shareholders' meeting on June 7, 2016, the shareholders approved a Restricted Share Unit Plan ("RSU" Plan) for employees with a total amount of \$36,000 thousand, consisting of 3,600 thousand shares with issuance price of \$10 dollars per share. It can be issued at one time or several times depending on the circumstance. The RSU Plan was approved under Rule No. 1050024381 issued by the FSC on June 27, 2016. The Corporation issued 3,100 thousand and 185 thousand shares on July 8, 2016 and June 20, 2017, the subscription date. The details of RSU Plan are as follows:

• 1) Employees who are granted RSUs, upon meeting the Corporation's financial performance and personal performance indicators, are eligible to be vested 10, 20, 30 and 40 percent of the RSUs granted after 1, 2, 3 and 4 years of tenure after the subscription date, respectively.
• 2) The restrictions on the rights of the employees who are granted RSUs but have not met the vesting conditions are as follows:
• a) The employees are not eligible to sell, pledge, transfer, donate or to dispose any RSUs in any form.
• b) The employees holding RSUs are entitled to receive dividends and similar purchasing rights to ordinary shares during capital increase. Cash dividends from RSUs are not restricted during the vesting period. Cash dividends are appropriated to the employees' personal account from trust account after the dividend distribution date.
• c) Before the restricted shares are vested to the employees, the right of attendance, proposal, speech, voting and other rights of shareholders are acted by the custodian.
• d) The RSUs should be delivered to trust custodians upon grant date. The employees cannot request for return in any manner before vesting conditions are met.
• 3) If an employee fails to meet the vesting conditions, the Corporation will recall or buy back and cancel the restricted shares at issued price. If an employee voluntarily resigns, retires, disabled or decease due to occupational hazards, dismissed, be transferred to another post, violates labor contracts or working protocols substantially or abandons restricted shares, related guidelines of RSU Plan will be followed accordingly.

Information relating to outstanding employee restricted shares as of June 30, 2017 was as follows:

	For the Six Months Ended June 30, 2017
Outstanding shares at the beginning of the period	3,100
Shares granted	185
Shares canceled
Outstanding shares at the end of the period	3.285

Compensation costs of share-based payment arising from the RSU Plan were recognized \$19,647 thousand and \$38,827 thousand for the three months and six months ended June 30, 2017, respectively.

c. Employee share option plan of subsidiaries

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:

	Grant Date
	March 12, 2014
Number of options (in thousands)	1,360
Exercise prices per share on grant date (market value on grant date)	\$10
Exercise prices per share as of the report date (adjusted based on employee stock)
option plan)	\$10

1) Information on employee share options was as follows:

	For the Six Months Ended June 30
	2017		2016
	Number of Options (In Thousands)	Weighted- average Exercise Price (NTS)	Number of Options (In Thousands)	Weighted- average Exercise Price (NTS)
Balance, beginning of the period Options forfeited	785	10.0 \$	930 (145)	10.0 S
Balance, end of the period	785	10.0	785	10.0
Options exercisable, end of the period

2) Information about outstanding options as of June 30, 2017 and 2016 was as follows:

		June 30
	2016 2017
Range of Exercise Price (NT\$)	Weighted-average Remaining Contractual Life (Years)	Range of Exercise Price (NT\$)	Weighted-average Remaining Contractual Life (Years)
\$10.0	4.70	\$10.0	5.70

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

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

4) Fair value of stock option was used to calculate the compensation costs for employee stock options granted on March 12, 2014.

	Grant Date
	March 12, 2014
Vested Period	2 Years	3 Years	4 Years
Fair value of options (NTSper unit)	\$2.27	\$2.52	\$2.69

Compensation costs recognized was \$211 thousand and \$422 thousand for the three months and six months ended June 30, 2016, respectively.

27. BUSINESS COMBINATION

a. Subsidiary acquired

The Group bought 60% equity interest of Quantel Private Ltd. ("Quantel") in April 2016 and acquired control over Quantel, which was included in the consolidate financial statement since the day the Group acquired control over it.

$\sim$

b. Assets acquired and liabilities assumed at the date of acquisition

	Uuantel
Current assets
Cash and cash equivalents (net of bank overdrafts of \$16,733
thousand)	\$20,341
Trade receivables (net of allowance for doubtful accounts of
\$1 thousand)	42,177
Debt Investments with no active market	9,567
Inventories	13,736
Other current assets	951
Noncurrent assets
Property, plant and equipment, net	40,129
Refundable deposits	800
Current liabilities
Short-term borrowings	(19,601)
Trade payables	(10,066)
Other payables	(2,359)
Income tax payable	(1, 380)
Current portion of long-term borrowings	(6,259)
Other current liabilities	(20)
Noncurrent liabilities
Long-term borrowings	(11, 494)
Deferred tax liabilities	(223)
	\$76,299

c. Intangible assets recognized on acquisition

	Quantel
Consideration transferred	\$76,590
Non-controlling interests Plus:	30,520
Fair value of identifiable net assets acquired Less:	(76, 299)
	\$30,811
d. Net cash outflow on acquisition of subsidiaries
	Quantel
Consideration paid in cash	\$(76,590)
Cash and cash equivalent balances acquired Less:	20,341

e. Impact of acquisitions on the results of the Group

The results of acquires since the acquisition date included in the consolidated statement of comprehensive income were as follows:

	For the Six Months Ended June 30, 2016
Revenue	\$39,468
Profit	1,795

Had this business combination been in effect at the beginning of the annual reporting period, the Group's revenue from operations would have been \$5,330,567 thousand, and the profit from operations would have been \$741,137 thousand for the six months ended June 30, 2016. This pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on January 1 of the acquisition year, nor is it intended to be a projection of future results.

In determining the pro-forma revenue and profit of the Group had Quantel been acquired at the beginning of the current reporting period, the management performed the following:

• 1) Calculated depreciation of plant and equipment acquired on the basis of the fair values at the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements; and
• 2) Calculated borrowing costs on the funding levels, credit ratings and debt/equity position of the Group after the business combination.

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 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

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

Management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair value could not be assessed reliably.

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

	Level 1	Level 2	Level 3	Total
June 30, 2017
Financial assets at FVTPL Domestic securities Listed equity securities Investment in debt instrument Derivative instruments	S 8,372 998	\$ 314	\$	\$ 8,372 998 314
	9,370	314		9,684
Available-for-sale financial assets Domestic securities Listed equity securities Open-end beneficiary certificate	S 253,753 1,468,860 1,722,613	S	S	253,753 1,468,860 \$1,722,613
December 31, 2016
Financial assets at FVTPL Domestic securities Listed equity securities Investment in debt instrument Derivative instruments	\$ 7,453 983 8,436	\$ 725 725	\$	$\mathcal{S}$ 7,453 983 725 9.161
Available-for-sale financial assets Domestic securities Listed equity securities Open-end beneficiary certificate	314,233 \$ 2,291,504	S	\$	\$ 314,233 2,291,504
	\$2,605,737			\$2,605,737 (Continued)

	Level 1	Level 2	Level 3	Total
June 30, 2016
Financial assets at FVTPL
Domestic securities
Listed equity securities	7,716 \$	\$	\$	\$ 7,716
Investment in debt instrument	972			972
Derivative instruments		2.703		2,703
	8,688	2,703		11,391
Available-for-sale financial assets
Domestic securities
Listed equity securities	310,280 S	S	\$	310,280 S
Open-end beneficiary certificate	2,561,513			2,561,513
	\$2,871,793			\$2,871,793 (Concluded)

There were no transfers between Levels 1 and 2 for the six months ended June 30, 2017 and 2016.

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

	Valuation Techniques and Inputs
Binomial tree valuation model of convertible bonds: The fair Derivatives - convertible bonds 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.

c. Categories of financial instruments

	June 30, 2017		December 31, 2016		June 30, 2016
Financial assets						水平
Fair value through profit or loss Loans and receivables (1) Available-for-sale financial assets (2)	S	9,684 7,467,561 1,940,740	S	9,161 6,701,119 2,804,386	S	11,391 5,928,230 3,070,449
Financial liabilities
Amortized cost (3)		6,492,724		6,677,320		7,035,753

• 1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, notes receivable, trade receivables, other receivables (other current assets), and refundable deposits.
• 2) The balances included the carrying amount of available-for-sale financial assets measured at cost.
• 3) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, short-term bills payable, notes payable, trade payables, other payables, bonds issued, long-term loans (including current portion of long-term borrowings) and guarantee deposits received.

d. Financial risk management objectives and policies

The Group's major financial instruments consist of equity and debts investments, cash and cash equivalents, receivables, long-term and short-term borrowings, short-term bills payable, trade payables and 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.

1) Market risk

The Group's activities expose it primarily to the financial risks of changes in exchange rates (see Item (a) below), interest rates (see Item (b) below) and price (see Item (c) 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.

a) Foreign currency risk

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Group was mainly exposed to USD and RMB.

Had the NTD strengthened/weakened by 5% against the relevant currency, the pre-tax profit would have decreased/increased by \$187,057 thousand and \$140,603 thousand for the six months ended June 30, 2017 and 2016, 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.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds both 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.

The carrying amounts of the financial assets and liabilities with exposure to interest rates at the end of the reporting period were as follows:

		December 31,
	June 30, 2017	2016	June 30, 2016
Fair value interest rate risk
Financial assets	\$1,770,456	753,729	734,657 S
Financial liabilities	850,067	1,709,000	2,269,275
Cash flow interest rate risk
Financial assets	2,647,171	2,768,557	2,347,675
Financial liabilities	1,660,181	2,068,247	1,305,260

Sensitivity analysis

The sensitivity analysis below has 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 was prepared assuming the amount of the liability outstanding at the balance sheet dates was outstanding for the entire period. A 50 basis point increase or decrease was 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 were held constant, the Group's pre-tax profit for the six months ended June 30, 2017 and 2016 would have decreased/increased by \$2,467 thousand and \$2,606 thousand, respectively, which was mainly attributable to the Group's exposure to interest rates on its variable rate deposits and bank loans.

c) Price risk

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

• i. Investment in available-for-sale financial assets (mainly investment in open-end beneficiary certificates and listed stocks in Taiwan), which are held for strategic rather than trading purposes. The Group does not actively trade these investments.
• ii. Financial assets at fair value through profit or loss (mainly investment in open-end beneficiary 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.

Sensitivity analysis

Had equity prices been 5% higher/lower, the pre-tax profit would have increased/decreased by \$468 thousand and \$434 thousand as a result of the changes in fair values of financial assets held by the Group for trading purposes for the six months ended June 30, 2017 and 2016, respectively; and other comprehensive income would have increased/decreased by \$86,131 thousand and \$143,590 thousand because of changes in fair values of available-for-sale financial assets held by the Group for the six months ended June 30, 2017 and 2016, respectively.

2) 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:

• a) The carrying amount of trade receivables from operating activities; and
• b) The amount of bank deposits, fixed-income and other financial instruments from investing activities.

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.

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

The credit risk of bank deposits, fixed-income financial instruments and other financial instruments are evaluated, managed and controlled by the 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.

3) Liquidity risk

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

The Group relies on bank borrowings as a significant source of liquidity. As of June 30, 2017, December 31, 2016 and June 30, 2016, the Group's available unutilized bank loan facilities were \$4,068,010 thousand, \$3,332,475 thousand and \$4,463,532 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.

Bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

		June 30, 2017
	Within 1 Year	1 to 5 Years	More Than 5 Years
Nonderivative financial liabilities
Non-interest bearing Convertible bonds Fixed interest rate instruments Floating interest rate instruments	\$3,981,637 497,396 830,597	\$ 262,400 104,572 848,496	S 3,858 8,829
	\$5,309,630	\$1,215,468	12,687
		December 31, 2016
	Within 1 Year	1 to 5 Years	More Than 5 Years
Nonderivative financial liabilities
Non-interest bearing Convertible bonds	2,899,218 S	\$ 1,450,500	\$
Fixed interest rate instruments Floating interest rate instruments	204,260 837,435	116,998 1,238,436	4,640 35,383
	\$3,940,913	\$2,805,934	40,023
		June 30, 2016
	Within 1 Year	1 to 5 Years	More Than 5 Years
Nonderivative financial liabilities
Non-interest bearing Convertible bonds Fixed interest rate instruments Floating interest rate instruments	3,460,381 S. 522,855 297,982	\$ 1,802,100 124,984 1,028,727	\$ 5,020 31,925
	\$4,281,218	\$2,955,811	$\mathfrak{F}$ 36,945

After considering the financial position of the Group, management does not expect the banks will execute their rights of requiring the Group to repay the bank loans immediately. In addition, management believes the operating funds of the Corporation and subsidiaries are sufficient to meet cash flow demand; thus, liquidity risk is not considered significant.

The Group's operating funds are sufficient to meet its cash flow demand, as a result, the Group does not use its overdraft limit.

30. TRANSACTIONS WITH RELATED PARTES

a. The related parties and relationships with the Group were as follows:

Related Party	Relationship with the Group
Dynascan Technology Corp. ("Dynascan Technology")	Associate
Adlink Technology Inc. ("Adlink")	Associate
Chih Ho Shun Development Co., Ltd. ("Chih Ho Shun")	Joint venture
Dynascan Electronics (Shanghai) Co., Ltd. ("Dynascan Shanghai")	Associate
Dynascan Technology Inc. ("Dynascan USA")	Associate
Dynascan Japan Inc. ("Dynascan Japan")	Associate
Mou Kuan Industry Co., Ltd. ("Mou Kuan")	Other related party
Quantel Global Co., Ltd. (Quantel Thailand)	Other related party
Quantel Global Vietnam Co., Ltd. (Quantel Vietnam)	Other related party
Quantel Technologies India Pvt Ltd. (Quantel India)	Other related party
Quantel Global Sdn Bhd (Quantel Malaysia)	Other related party
Quantel Global Philippines Corporation (Quantel Philippines)	Other related party
PT Quantel (Quantel Indonesia)	Other related party

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.

b. Sales

		For the Three Months Ended June 30	For the Six Months Ended June 30
Related Party Categories	2017	2016	2017	2016
Associates	4,724	5,797	9,502	\$11,382
Other related parties	5,639		13,222
	10,363	$5.79^{6}$	\$22,724	11,382

c. Purchase

		For the Three Months Ended June 30		For the Six Months Ended June 30
Related Party Categories	2017	2016	2017	2016
Associates	6,158	4,669	14,481 S	7,676
Other related parties	2,341 8.499	1,272 5.941	5,992 \$ 20,473	5,677 13.353

d. Receivables from related parties (excluding loans to related parties)

Line Items	Related Party Categories	June 30, 2017	December 31, 2016	June 30, 2016
Trade receivables - related parties	Associates Other related parties	5,320 38,934	7,890	\$10,943
		\$44,254	7,890	10,943

The outstanding trade receivables from related parties were unsecured. For the six months ended June 30, 2017 and 2016, no impairment losses were recognized for trade receivables from related parties.

e. Payables to related parties (excluding loans from related parties)

	Related Party		December 31,
Line Items	Categories	June 30, 2017	2016	June 30, 2016
Notes payable - related parties	Other related parties	6,190	2,595	9,099
Trade payables - related parties	Associates Other related parties	8,026 S 147	\$11,753 60	3,771
		8.173	\$11,813

The outstanding trade payables from related parties were unsecured.

f. Others

	Related Party		For the Three Months Ended June 30	For the Six Months Ended June 30
Line Items	Categories	2017	2016	2017	2016
Rental income	Associates	315	315	630	630
Rental cost	Other related parties	3,150		6,300
Administration expense	Associates Other related parties	\$ $\overline{2}$ 7,756	\$	\$ 13,399	\$
		7,758		13,402

g. Compensation of key management personnel

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Short-term employee benefits Post-employment benefits	\$27,796 554	\$29,343 523	\$56,500 1,103	\$55,910 1,046
	28,350	29,866	\$57,603	56,956

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

31. ASSETS PLEDGED

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

	December 31,
		June 30, 2017		2016	June 30, 2016
Property, plant and equipment, net
Used bank loans	S	341,326		359,796	340,802
Unused bank loans		711,572		715,395	719,217
Debt investments with no active market		7.717		6,078	10,655
		,060,615		1,081,269	1,070,674

32. OTHER SIGNIFICANT EVENTS

On January 17, 2012, the Corporation, Dynapack International Corporation and Heran Tech. 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 and July 2016, the Corporation has paid the first part of the third installments \$536,729 thousand and remaining part of the third installment \$875,716 thousand, respectively.
• 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.

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. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group entities' significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

June 30, 2017

	Foreign Currencies	Exchange Rate	Carrying Amount
Financial assets
Monetary items USD RMB	S 129,919 350,187	30.420 4.486	\$3,952,144 1,570,941 \$5,523,085
Financial liabilities
Monetary items USD RMB	42,400 109,703	30.420 4.486	1,289,814 \$ 492,128 \$1,781,942
December 31, 2016
	Foreign Currencies	Exchange Rate	Carrying Amount
Financial assets
Monetary items USD RMB	$\mathbb{S}$ 103,269 210,140	32.250 4.617	3,330,406 \$ 970,216 4,300,622 \$ (Continued)

	Foreign Currencies	Exchange Rate	Carrying Amount
Financial liabilities
Monetary items USD RMB	$\mathbb{S}$ 45,979 58,617	32.250 4.617	1,482,824 \$ 270,634 \$1,753,458 (Concluded)
June 30, 2016
	Foreign Currencies	Exchange Rate	Carrying Amount
Financial assets
Monetary items USD RMB	$\mathbb{S}$ 104,561 212,557	32.275 4.845	\$3,374,742 1,029,839 \$4,404,581
Financial liabilities
Monetary items USD RMB	42,934 42,686	32.275 4.845	1,385,704 S 206,816 \$1,592,520

For the three months ended June 30, 2017 and 2016, (realized and unrealized) net foreign exchange gains were \$44,361 thousand and \$978 thousand, respectively. For the six months ended June 30, 2017 and 2016, (realized and unrealized) net foreign exchange losses were \$90,897 and \$21,147 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 of the group entities.

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

1) Financing provided to others: Table 1 (attached)

• 2) Endorsements/guarantees provided: Table 2 (attached)
• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities): Table 3 (attached)

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

• 5) Acquisitions of individual real estate at costs of at least NT \$300 million or 20% of the paid-in capital: None.

• 6) Disposal of individual real estate at prices of at least NT\$300 million or 20% of the paid-in capital: None.
• 7) Total purchases from or sales to related parties amounting to at least NT\$100 million or 20% of the paid-in capital: Table 4 (attached)
• 8) Receivables from related parties amounting to at least NT\$100 million or 20% of the paid-in capital: Table 5 (attached)
• 9) Trading in derivative instruments: Note 7 and Note 19.
• 10) Others: Intercompany relationships and significant intercompany transactions: Table 6 (attached)
• 11) Information on investees: Table 7 (attached)
• b. Information on investments in mainland China
• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8 (attached)
• 2) Any of the following 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: Table 4 (attached)
  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 4 (attached)
  • 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.

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on types of products delivered or services provided. The Group's reportable segments are as follows:

• Special materials department. $a.$
• b. Test instrument department.
• c. Automatic equipment department.
• d. Other
• 1) Segment revenues and results

	Special Materials Department	Test Instrument Department	Automatic Equipment Department	Other	Elimination	Total
For the six months ended June 30, 2017
Revenues from external customers Intersegment revenues Segment revenues Consolidated revenues	999,672 s 999.672	4,326,870 S. 3.110.063 7.436,933	S 242,137 30.186 272.323	191,348 S 7,840 199,188	s (3.148.089) \$ (3,148,089)	5,760,027 S 5.760.027 \$5,760,027
Segment income Non-operating income and expenses Profit before tax	18,732	974.096	34,962	(35, 777)	18,310 s	1,010,323 s (28.774) 981.549
For the six months ended June 30, 2016 Revenues from external customers Intersegment revenues Segment revenues	\$1,104,593 \$1.104,593	3,855,597 s 2,833,367 6.688.964	S 137,769 164,417 302.186	S 194,385 5,801 200.186	s (3.003, 585) \$ (3,003,585)	5,292,344 S 5.292.344
Consolidated revenues Segment income Non-operating income and expenses Profit before tax	32.641	881,760	32,435	(59, 743)	6.025	\$5,292,344 s 893,118 23.214 916.332 S.

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 six months ended June 30, 2017 and 2016 had been adjusted and eliminated from the consolidated financial statements.

Segment profit represented profit before tax earned by each segment, excluding remuneration of 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 of property, plant and equipment, gain (loss) on disposal of investment, foreign exchange gain (loss), valuation gain (loss) on financial instrument and finance cost. This was the measure reported to the Group's chief operating decision maker to allocate resources to each segment and evaluate its performance.

2) Segment assets and liabilities

		December 31,
	June 30, 2017	2016	June 30, 2016
Segment assets
Special materials department Test instrument department Automatic equipment department Other Adjustments and eliminations Total segment assets Investments and other unallocated assets	\$ 865,109 17,454,615 1,159,664 517,637 (4,087,291) 15,909,734 3,191,738	S. 1,004,283 15,208,838 956,187 544,420 (3, 154, 573) 14,559,155 4,073,623	S 940,450 13,412,664 1,254,058 621,859 (3, 171, 730) 13,057,301 4,341,719
Consolidated total assets	19,101,472	18,632,778	17,399,020
Segment liabilities
Special material departments Test instrument departments Automatic equipment department Other Adjustments and eliminations Total segment liabilities Borrowings and other unallocated liabilities	S 590,006 6,786,119 604,596 240,324 (3,215,785) 5,005,260 2,729,766	\$ 739,152 5,163,648 448,542 268,292 (2,739,124) 3,880,510 3,964,417	S 650,507 5,471,356 568,980 280,974 (2,791,627) 4,180,190 3,753,255
Consolidated total liabilities	7,735,026	7,844,927	7,933,445

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 equity method, other financial assets, and deferred tax assets. Goodwill was allocated to reportable segments.
• b) All liabilities were allocated to reportable segments other than borrowings and deferred tax liabilities.

SUBSIDIARIES
AND
ΣC.
ATE.
CHROMA

FINANCING PROVIDED TO OTHERS
FOR THE SIX MONTHS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

	Aggregate Financing Limit		\$ 2,232,398 (Note 2) 2,232,398 (Note 2)	88,295 (Note 4)
	Inancing Limit for Each Borrower		$\begin{bmatrix} 3 & 1,116,199 & 5 \ \text{(Note 1)} & 2,2, \ 1,116,199 & 2,2. \ \text{(Note 1)} & 0 \end{bmatrix}$	44,147 (Note 3)
Collateral	Value
	ltem
Howance for	mpairment SSO
Reasons for	Short-term Financing
	Business Transaction Amounts	221,778	51,440	9,340
	Nature of Financing (Note 6)
	Interest Rate	3.25%
	Actual Borrowing Amount	118,229 1	47,386
	Ending Balance	18,229	49,435
	Highest Balance for the Period	$118,229$ \$	49,435	14,987
	Related
	Statement Account Parties Financial		Other receivable
	Borrower	Chroma Systems Solutions Other receivable	Chroma Japan Corp. Inc.	Chroma Ate (Suzhou) Ltd. Other receivable
	Lender	The Corporation		Chroma Electronics (Shenzhen) Co., Ltd.
	Ź.

Note 1: Based on 10% of the net value of the Corporation.

Based on 20% of the net value of the Corporation. Note 2: Based on 10% of the net value calculated on the latest financial statements of borrowing company that have been audited. Note 3:

Note 4: Based on 20% of the net value calculated on the latest financial statements of borrowing company that have been audited.

The amounts listed in the table were translated into New Taiwan dollars at the exchange rate of US\$1=NT\$30,420, RMB1=NT\$4,486 and JPY1=NT\$0,272 as of June 30, 2017. Note 5:

Note 6: Financing provided:

a. For transactions.
b. For short-term financing.

ENDORSEMENT/GUARANTEE PROVIDED
FOR THE SIX MONTHS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

	indorsement Guarantee Given on Behalf of Bahamies of Mainland Mainland
	Guarantee Given by Subsidiaries on Behalf of Parent indorsement
	ndorsement Guarantee Given by Parent on Behalf of Behalf of
	Aggregate andorsemen' Guarantee Limit (Note 2)				3,348,598 3,348,598 3,348,598 3,348,598
Ratio of	Guarantee to Net Equity in Latest Financial Indorsement Accumulater Statements		0.55% 0.31% 0.40% 0.80%
	Guaranteed by Collateral Amount Endorsed/
	sorrowing kmount Actual	50,840 10,880
	Guarantee at the End of the Jutstanding ndorsement Period		0,840 14,200 14,200 89,720
	Maximum Amount Endorsed Cuaranteed During the Period		0,840 0001,100 0014,200 0,720
	Behalf of Each .ndorsement Guarantee Limits on Given on Party (Note 1)	\$1,674,299 1,674,299 1,674,299 1,674,299
	Relationship	Subsidiary	Subsidiary	ubsidiary	Subsidiary
Endorsee/Guarantee	Name	Chroma USA	Chroma Japan Corp.	Quantel Private Ltd.	Chroma Ate (Suzhou) Ltd.
	Guarantor Endorser/	The Corporation
	χō.

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 Corporati

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.

Note 3: The above announts were translated into New Taiwan dollars at the exchange rate of US\$1=NT\$30.420, RMB 1=NT\$4.486, JPY 1=NT\$0.272 as of June 30, 2017.

TABLE₃ $\hat{\mathbf{A}}$

$\overline{\phantom{a}}$

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES)
JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

		Relationship			June 30, 2017
Holding Company Name	Type and Name of Marketable Securities	with the Holding Company	Financial Statement Account	Shares/Units (Thousands)	Carrying Amount	Percentage Ownership ъ	Fair Value	Note
The Corporation	Mega Diamond Money Market Fund Fund		Available for sale financial assets - current	20,373	253,408 S		253,408 S
	The RSIT Enhanced Money Market Fund Yuanta Wan Tai Money Market Fund		Available for sale financial assets - current Available for sale financial assets - current	24,722 18,863	293,696 283,597	$\blacksquare$	293,696 283,597	31
	Fuh Hwa You Li Money Market Fund		Available for sale financial assets - current	7,050	94,340	T.	94,340	$\blacksquare$
	Cathay Taiwan Money Market Fund		Available for sale financial assets - current	21,282	263,155	- 1	263,155	٠
	WI Harper INC Fund VII LP		Financial assets measured at cost - non-current		10,152	$\overline{1}$		×
	DynaColor, Inc. Stocks		Available for sale financial assets - non-current	6,050	208,736		208,736
	Chunghwa Telecom Co., Ltd.		Available for sale financial assets - non-current	412	44,537	6.1 ï	44,537
	China Communications Media Group Co., Ltd.		Available for sale financial assets - non-current	26	480	ï	480	$\overline{\phantom{a}}$
	WK Technology Fund IX Ltd. Twoway Catv Service Inc.		Financial assets measured at cost - non-current Financial assets measured at cost - non-current	4,614 3,561	46,140	4.6 4.4		$\,$
	Tian Zheng International Precision Machinery Co., Ltd.		Financial assets measured at cost - non-current	2,300	39,218 33,000	9.7		٠
	WK Technology Fund IV Ltd.	$\mathbf{r}$	Financial assets measured at cost - non-current	2,560	25,600	$\overline{1.9}$		٠
	WK Technology Fund VI Ltd. TFBS Bioscience Inc.	$\mathbf{r}$	Financial assets measured at cost - non-current Financial assets measured at cost - non-current	1,806 2,000	18,063 20,000	1.4 15.7		$\mathbf{r}_i$
Chroma New Material Corp.	Fund
	The RSIT Enhanced Money Market Fund Fuh Hwa You Li Money Market Fund	$\ddot{\phantom{1}}$	Available-for-sale financial assets - current Available-for-sale financial assets - current	6,829 3,426	91,377 40,697	ï ×	91,377 40,697	$\lambda$ 1.
Chroma Investment Co., Ltd.	Hua Nan Kirin Money Market Fund Fund		Available-for-sale financial assets - current	5,768	68,557		68,557	ï
	Bond ICHIA Tech. 2nd Unsecured Convertible Bond		Financial assets at fair value through profit or loss	$\overline{a}$	998		998	J.
			- current
	Adlink Technology Inc. Stocks	٠	Financial assets at fair value through profit or loss	68	4,170		4,170	ï
			- current
	Greatek Electronics Inc.		Financial assets at fair value through profit or loss - current	85	4,202		4,202	ï
	Chroma Ate Inc.	The Corporation	Available for sale financial assets - non-current	1,916	187,727		187,727	٠
	Fei Hong Industrial Co., Ltd.		Financial assets measured at cost - non-current	4,174	17,175	$\frac{0.5}{0.3}$
	Cosmactive Broadband Networks Co., Ltd.		Financial assets measured at cost - non-current	26 111	110	1.5
	Prance System Technology Co., Ltd.		Financial assets measured at cost - non-current

$-54-$

		Relationship			June 30, 2017
Holding Company Name	Type and Name of Marketable Securities	with the Holding Company	Financial Statement Account	Shares/Units Thousands)	Carrying Amount	Percentage Ownership	Fair Value	Note
Adivic Technology Co.	Cathay Taiwan Money Market Fund Fund		Available for sale financial assets - current	6,473	80,033		80,033
Chen Hwa Technology Inc.	Hangzhou New Material Chroma Co., Ltd. Stocks		Financial assets measured at cost - non-current
					8,669	19.0

Note: The fair value of open-end beneficiary certificate and listed market securities based on the net asset value and closing price as of June 30, 2017, respectively.

(Concluded)

×.

$\overline{t}$

$\overline{\phantom{a}}$

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
FOR THE SIX MONTHS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

					Transaction Details			Abnormal Transaction	Receivable (Payable) Notes/Accounts
Company Name	Related Party	Relationship	urchase (Sale) ٩	Amount	$\frac{6}{6}$ to Total	Payment Terms	Unit Price	Payment Terms	Balance Ending	$\frac{9}{6}$ to Total	Note
The Corporation	Neworld Electronics Ltd.	Subsidiary	(Sale)	(828, 228) S	(22)	Net 90 days after delivery			620,401 S	22
Neworld Electronics Ltd.	The Corporation	Parent company	Purchase	828,228	100	Net 90 days after delivery			(620, 401)	(100)
The Corporation	Chroma USA	Subsidiary	(Sale)	(503, 306)	(14)	Net 180 days after delivery		Note 1	376,652	14
Chroma USA	The Corporation	Parent company	Purchase	503,306	$\overline{00}$	Net 180 days after delivery		Note	(376, 652)	(100)	1
The Corporation	Chroma Ate Europe B.V.	Subsidiary	(Sale)	(195, 473)	$\overline{5}$	Net 90 days after delivery	ï	ï	178,353	G
Chroma Ate Europe B.V.	The Corporation	Parent company	Purchase	195,473	100	Net 90 days after delivery	٠		(178, 353)	(100)
The Corporation	Chroma Electronics (Shenzhen) Co., Subsidiary Ltd.		(Sale)	(308, 032)	$\circledS$	Net 90 days after monthly closing			189,718	1
Chroma Electronics (Shenzhen) Co., Ltd.	The Corporation	Parent company	Purchase	308,032	100	Net 90 days after monthly closing			(189,718)	(100)	í
The Corporation	Chroma Systems Solutions Inc.	Subsidiary	(Sale)	(221, 778)	$\circledcirc$	Net 90 days after delivery	١	$\mathbf{I}$	146,985	5	ï
Chroma Systems Solutions Inc.	The Corporation	Parent company	Purchase	221,778	100	Net 90 days after delivery	٠	x	(146, 985)	(100)	۱
The Corporation	Chroma Ate (Suzhou) Ltd.	Subsidiary	(Sale)	(129, 512)	$\widehat{f}$	Net 120 days after delivery			160,230	G
Chroma Ate (Suzhou) Ltd.	The Corporation	Parent company	Purchase	129,512	100	Net 120 days after delivery		٠	(160, 230)	(100)	ï
Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Subsidiary Ltd.		(Sale)	(421, 538)	(45)	Net 90 days			375,059	54	ï
Chroma Electronics (Shenzhen) Co., Ltd.	Neworld Electronics Ltd.	Parent company	Purchase	421,538	64	Net 90 days	۱	ŧ	(375,059)	(67)	٠

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

CHROMA ATE INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST \$100 MILLION OR 20% OF THE PAID-IN CAPITAL
JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

							Overduc	Amount Received in
Company Name	Related Party	Relationship	Ending Balance		Turnover Rate	Amount	Action Taken	Subsequent Period (Note)	Impairment Loss Allowance for
The Corporation	Neworld Electronics Ltd.	Subsidiary	Trade receivables
	Chroma USA	Subsidiary	Trade receivables	\$ 620,401 376,652				\$ 271,164 191,127 191,127
	Testar Electronic Corporation	Subsidiary	Trade receivables	127,014
	Chroma System Solutions Inc.	Subsidiary	Trade receivables	146,985				31,552
			Other receivable - financing provided	118,229
	Chroma Electronics (Shenzhen) Co., Ltd.	Subsidiary	Trade receivables	89,718	$3454$ $33$ $3454$ $33$			20,647
	Chroma Japan Corp.	Subsidiary	Trade receivables	111,780				16,674
			financing provided Other receivable -	47,386				Ĵ
	Chroma Ate Europe B.V	Subsidiary	Trade receivables	178,353	$0.89$ $0.60$ $2.05$			21,795 27,089
	Chroma Ate (Suzhou) Ltd.	Subsidiary	Trade receivables	160,230
Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Ltd.	Subsidiary	Other receivable	116,316

Note: As of July 31, 2017.

u)

$\ddot{\mathrm{o}}$

į.

CHROMA ATE INC. AND SUBSIDIARIES

$\ddot{\ddot{\phantom{1}}}$

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Counterparty Chroma Systems Solutions Inc. Chroma Ate (Suzhou) Ltd. Neworld Electronics Ltd. Neworld Electronics Ltd. Testar Electronic Co. Quantel Private Ltd. Chroma Europe Chroma Japan Chroma USA Chroma USA Company Name The Corporation ż. $\circ$	Transactions Flow of
	(Note 1)	Account	Amount	Transaction Terms	Total Operating Consolidated Revenues or Total Assets
		Operating revenue	828,228 S	Note 2	4
		Operating revenue	503,306	Note 2	Q
		Operating revenue	308,032	Note 2	5
		Operating revenue	221,778	Note 2	4
	$\mathfrak{r}$	Operating revenue	195,473	Note 2	$\overline{\phantom{a}}$
	æ	Operating revenue	129,512	Note 2	$\mathbf{z}$
	$\mathfrak{a}$	Operating revenue	62,070	Note 2
	$\sigma$	Operating revenue	51,440	Note 2
	ಡ	Operating revenue	50,194	Note 2
	a	Operating revenue	38,070	Note 2
	ಡ	Operating costs	52,391	Based on regular terms
	$\mathfrak{a}$	Trade receivables	620,401	Based on regular terms
Chroma USA	ದ	Trade receivables	376,652	Based on regular terms	$\mathbf{C}$
Chroma Electronics (Shenzhen) Co., Ltd.	ಡ	Trade receivables	189,718	Based on regular terms
Chroma Europe	$\overline{\mathbf{u}}$	Trade receivables	178,353	Based on regular terms
Chroma Ate (Suzhou) Ltd.	$\overline{\phantom{a}}$	Trade receivables	160,230	Based on regular terms
Chroma Systems Solutions Inc.	π	Trade receivables	46,985	Based on regular terms
Testar Electronic Co.	α	Trade receivables	127,014	Note 3
Chroma Japan	a	Trade receivables	111,780	Based on regular terms
Chroma Electronics (Shanghai) Co., Ltd.	$\mathfrak{a}$	Trade receivables	42,938	Based on regular terms
Quantel Private Ltd.	$\mathfrak{m}$	Trade receivables	31,081	Based on regular terms
Chroma Systems Solutions Inc.	$\mathfrak{a}$	Other receivable - financing provided	118,229	Based on regular terms
Chroma Japan	$\approx$	Other receivable - financing provided	47,386	Based on regular terms
Testar Electronic Co.	$\pi$	Other receivable	51,190	Based on regular terms
Wei Kuang Automatic Equipment Co.,	Ltd.	Trade receivables	44,140	Based on regular terms
Chroma Japan Chroma USA		Operating revenue	19,929	Based on regular terms	٠
Chroma Japan	م م	Trade receivables	23,341	Based on regular terms
Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. $\mathbf{a}$		Operating revenue	421,538	Based on regular terms
Chroma Ate (Suzhou) Ltd.	a b	Operating revenue	44,570	Based on regular terms
Chroma Electronics (Shanghai) Co., Ltd.		Operating revenue	25,446	Based on regular terms
Chroma Ate (Suzhou) Ltd.		Commissions expense	18,880	Based on regular terms
Chroma Electronics (Shenzhen) Co., Ltd.	dodd	Commissions expense	13,682	Based on regular terms
Chroma Electronics (Shenzhen) Co., Ltd.		Trade receivables	375,059	Based on regular terms	$\mathbf{z}$
Chroma Ate (Suzhou) Ltd.	$\Delta$	Trade receivables	27,730	Based on regular terms
					(Continued)

$-58-$

				Transaction Details		Percentage to
Company Name	Counterparty	Transactions (Note 1) Flow of	Account	Amount	Transaction Terms	Total Operating Consolidated Total Assets Revenues or
	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd.		Receipts in advance Other receivable Prepayments	\$116,316 118,190 118,430	Based on regular terms Based on regular terms Based on regular terms
Chroma Electronics (Shenzhen) Co., Ltd.	Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd Chroma Ate (Suzhou) Ltd. Chroma Ate (Suzhou) Ltd. Chroma Ate (Suzhou) Ltd.		Operating revenue Operating revenue Trade receivables Trade receivables Trade payables	24,628 79,994 71,153 11,153 48,592	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms
Chroma Electronics (Shanghai) Co., Ltd.	Chroma Ate (Suzhou) Ltd.		Operating costs	12,228	Based on regular terms
Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.		Receipts in advance Operating costs	18,019 15,746	Based on regular terms 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)

$\overline{\phantom{a}}$

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES
FOR THE SIX MONTIIS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

				Original Investment Amount			Balance as of June 30, 2017		Net Income
Investor	Investee	Location	Main Businesses and Products	June 30, 2017	December 31, 2016	Thousands) Shares	Percentage of Ownership	Carrying Amount	(Loss) of the Investee	Gain (Loss) Investment	Note
The Corporation	Neworld Electronics Ltd.	Hong Kong	Sale and maintenance of electronic test instruments, etc.	271,873 S	271,873 in,	64,013 2,050	0.00	667,145 in	66,415	66,415 S	Subsidiary
	San Eagle Development Corp.	British Virgin Islands	Investment.	186,514	186,514		100.0	566,480	31,398	31,398	Subsidiary
	Adlink Technology Inc.	New Taipei, Taiwan	Manufacturing, processing and retailing of software/hardware of computers and peripherals.	165,146	165,146	24,502	11.3	538,274	131,080	14,883	Associate
	Chroma New Material Corporation	Taoyuan, Taiwan	Sale and processing of gold wire.	480,715	480,715	25,000	0.00	406,927	10,908	10,908	Subsidiary
	Wei Kuang Automatic Equipment Co., Ltd. Hsinchu, Taiwan		Design, manufacturing, installment and testing of automated	533,000	533,000	10,000	100.0	318,178	2,184	2,184	Subsidiary
			factory conveyor systems.
	CHI Incorporation Ltd.	British Virgin Islands	Test of inductance, capacitance and resistance, and sale of parts.	122,884	22,884	3,830	0.00	128,996	8,769 8,769 8,821	8,671	Subsidiary
	Quantel Private Ltd.	Singapore	Sale and maintenance of test instruments, etc.	112,328			60.0	113,079		4,702	Subsidiary
	Chen Hwa Technology Inc.	British Virgin Islands	Test of inductance, capacitance and resistance, and sale of parts	98,217 80,000	112,328 98,217 80,000	1,914	100.0	99,613		(802)	Subsidiary
	Chroma Investment Co., Ltd.	New Taipei, Taiwan	Investment.			4,000	100.0	107,108		784	Subsidiary
	Chroma Ate Europe B.V.	The Netherlands	Sale and maintenance of electronic test instruments etc.	54,026	54,026		100.0	54,183	15,109	15,103	Subsidiary
	DynaScan Technology Corp.	Taoyuan, Taiwan	Research and manufacture of LED generators	238,746		9,841	27.3	89,790	5,024 12,233	1,372	Associate
	Chroma USA	USA	Sale and maintenance of electronic test instruments, etc.	29,895		1,000	100.0	84,709		11,931	Subsidiary
	Sensational Holding Ltd.	British Virgin Islands	Investment	38,301	238,746 29,895 38,301	1,200 12,240	100.0	50,758	$\overline{43}$	431	Subsidiary
	Adivic Technology Co.	Taipei, Taiwan	Sale and research of RF device.	93,800	142,800		51.0	71,118	(28, 806)	(15, 696)	Subsidiary
	Chroma Japan Corp.	Japan	Sale and maintenance of electronic test instruments, etc.	47,125	147,125		100.0	(50, 580)	(13, 727)	(13, 727)	Subsidiary
	Chroma Systems Solutions, Inc.	USA	Sale and maintenance of electronic test instruments, etc.	29,628	29,628	120	25.0	(38,093)	16,056	4,014 9,823	Subsidiary
	Deep Red Holding Co., Ltd	Mauritius	Investment	12,217		215	100.0	55,981	9,823		Subsidiary
	Chih Ho Shun Development Co., Ltd.	Taoyuan, Taiwan	Construction and development of residence, buildings and	17,500	12,217 17,500	,750	35.0	17,616	S	23	oint venture
			specialized field; construction and investment of public works.
	Testar Electronic Corporation	Taoyuan, Taiwan	Testing of LED products	247,096	247,096	20,160	67.2	(12,060)	$(9,406)$ $(5,331)$	$(6,321)$ $(2,834)$	Subsidiary
	EVT Technology Co., Ltd.	Taoyuan, Taiwan	Manufacturing of motorcycles and its parts	27,623	27,623	2,658	53.2	(429)			Subsidiary
Chroma USA	Chroma Systems Solutions Inc.	USA	Sale and maintenance of electronic test instruments, etc.	उ	उ	240	50.0	129,853	16,056	MA	Subsidiary
San Eagle Development Corp. Wei Kuang Mech Eng Inc.		Mauritius	Investments	185,686	185,686	4,475	0.00	559,019	31,393	MÁ	Subsidiary
EVT Technology Co., Ltd.	Wei Da Electric Vehicle Co., Ltd.	Pingtung, Taiwan	Sale and lease of motorcycles	3,750	3,750	375	75.0	(3, 866)	$\boldsymbol{z}$	z	Subsidiary
Advic Technology Co., Ltd.	Advic Holding Corporation	Samoa	device Sale and research of RF	42,245	15,223	1,000	100.0	13,353	(3, 893)	MA	Subsidiary

TABLE₈

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA
FOR THE SIX MONTHS ENDED JUNE 30, 2017
(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

						Accumulated	Remittance of Funds			Accumulated
Investee Company	Main Businesses and Products		(Note 2)	Paid-in Capital Method of Investment (Note 1)		Investment from January 1, 2017 Remittance for Taiwan as of Outward (Note 3)	Outward	Inward		Investment from Remittance for Taiwan as of June 30, 2017 Outward (Note 3)	(Loss) of the Net Income Investee	Percentage of Ownership in Investment	(Notes 4 and 5) Gain (Loss) Investment	Amount as of June 30, 2017 Carrying (Note 2)	Remittance of Earnings as of June 30, 2017 Accumulated Inward
Chroma Electronics (Shenzhen) Co., Ltd.	signal generators, DC electronic load, color Sale of power supplies automatic test systems, analyzer, uninterruptible power supply, switching mode rectifier and etc.	(HKS S	30,000) 116,910	Electronics Ltd. Subsidiary of Neworld ڟ	(HKS USS S	3,853) 132,178 1,200	ï SA	٠ n	(HKS USS S,	3,853) 1,200 132,178	38,911 v9	100	38,911 s	480,458 S	S
Chroma Electronics (Shanghai) Co., Ltd.	Sale of power supplies automatic test systems, uninterruptible power supply, switching signal generators, DC electronic load, mode rectifier and etc.	(US\$	91,260 3,000)	Electronics Ltd. b. Subsidiary of Neworld	COSS	3,000) 101,993	ä		(USS	3,000) 101,993	9,127	100	9,127	75,144
Chroma (Shanghai) Trading Co., Ltd.	International and transit trading, commercial simple processing and commercial consulting service and etc.	(US\$	2,700) 82,134	b. Subsidiary of Chen Hwa Technology Inc.	COSS	2,700) 84,988	٠	ï	(USS	2,700) 84,988	(742)	100	(742)	84,196
Co., Ltd.	Hangzhou New Material Chroma Production and sale of semiconductor connecting materials	(US\$	1,500) 45,630	b. Subsidiary of Chen Hwa Technology Inc.	US\$	285) 9,091	ï		CUSS	285) 9,091	1,893	$\overline{9}$	ř,	8,670
Chroma Ate (Suzhou) Ltd.	Sale of power supplies automatic test systems, uninterruptible power supply, switching signal generators, DC electronic load, mode rectifier and etc.	(US\$	3,800) 115,596	b. Subsidiary of CHI Incorporation Ltd	CUSS	3,800) 121,115	ï		(USS	3,800) 121,115	8,682	100	8,682	170,948
(Nanjin) Co., Ltd.	Wei Kuang Automatic Equipment Sale and maintenance of electronic equipment and factory conveyor systems	(RMB	$\frac{53,253}{11,871}$	b. Subsidiary of We Kuang Mech Eng Inc.	(USS	1,338) 43,751			USS	1,338) 13,751	856	100	856	206,130
(Xiamen) Co., Ltd.	Wei Kuang Automatic Equipment Sale and maintenance of electronic equipment and factory conveyor systems	CRMB	$\frac{51,217}{11,417}$	b. Subsidiary of Wei Kuang Mech Eng Inc.	(USS	1,500) 49,935			(USS	1,500) 19,935	29,796	100	29,796	268,464
Co., Ltd.	conveyors and related systems and renders Mou Kuan Technologies (Nanjin) Assembly, sale and maintenance of factory related after-sales services	(RMB	7,792 1,737)	b. Subsidiary of Wei Kuang Mech Eng Inc.	CUSS	2,836) 92,000			CUSS	2,836) 92,000	228	100	228	44,850
Sajet System Technology (Suzhou) Co., Ltd.	computer network security systems and Research, development and design of information management	(RMB	7,788	b. Subsidiary of Deep Red Holding Co., Ltd.		(Note 9)				(Note 9)	9,821	100	9,821	55,970
Accumulated Outward Remittance for

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

Investment Amounts Authorized by the Supper Limit on the Amount of Investment
Investment Commission, MOEA Supulated by Investment Commission, MOEA \$6,697,195 (Note 7) 5695,162
(HK\$1,400, US\$21,086) (Note 6) Investments in Mainland China as of June 30,
$\frac{30}{4}$ 5635,051
(HK\$1,200, US\$19,312)

$-61 -$

(Continued)

Note 1: Methods of investment have following type:

$\circ$

Direct investment in Mainland China.
Indirect investment in the Company of Mainland China through a thrid place.
Other ن
ما هـ اه

Note 2: The amounts of paid-in capital and carrying value as of June 30, 2017 were translated into New Taiwan dollars at the rates of HK\$1=NT\$3.897, US\$1=NT\$3.0420, RMB1=NT\$4.486 prevailing on June 30, 2017.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2017 and June 30, 2017 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 HKS1=NT\$3.946, US\$1=NT\$30.675 and RMB1=NT\$4.470 for the six months ended June 30, 2017.

Note 6:
	Approval Letter			Approved Amount
	Letter (1998) II-87710585 of Investment Commission of MOEA			HKS	₹.
	etter (2000) II-89014726 and 89037430 of Investment Commission of MOEA	Ę	63,180		ă
	Letter (2001) II-89037430 of Investment Commission of MOEA	Ę	33,160	USS	ভ্
	Letter II-91048640 of Investment Commission of MOEA	ËN	63,984	USS	$\frac{8}{3}$
	etter 11-90025170 of Investment Commission of MOEA	ES	60,240	USS	Ĕ
	Letter II-092020235 of Investment Commission of MOEA	KIN	19,230
	Letter II-092043358 of Investment Commission of MOEA	ËN	6,748		$\frac{5}{2}$
	Letter II-093004076 of Investment Commission of MOEA	Ě	3,158
	Letter II-094006092 of Investment Commission of MOEA	XTS	6,896		ಷ
	Letter 11-09500052120 of Investment Commission of MOEA	KIN	81,528	888888
	Letter 11-09600175700 of Investment Commission of MOEA	KIN	20,000		2,50
	Letter II-096000006020 of Investment Commission of MOEA	ES	66,580	(USS	2,00
	Letter 11-09600310110 of Investment Commission of MOEA	ES	33,160	uss	$\leq$
	Letter 11-09700186010 of Investment Commission of MOEA	ELN	46,110	uss	$\frac{5}{5}$
	Letter 11-09700403210 of Investment Commission of MOEA	KIN	7,096	uss	$\overline{a}$
	Letter II-10400042770 of Investment Commission of MOEA	KLN	78,240	USS	2.50

$\begin{bmatrix} 4.600\ 2.000\ 1.450\ 1.500\ 1.500\ 1.500\ 1.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.500\ 2.5$

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

Note 8: The Corporation 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)