CHROMA - Interim / Quarterly Report 2018

Chroma ATE Inc. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2018 and 2017 and Independent Auditors’ Review Report

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INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Chroma ATE Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Chroma ATE Inc. and its subsidiaries (the “Group”) as of June 30, 2018 and 2017, the related consolidated statements of comprehensive income for the three months ended June 30, 2018 and 2017 and for the six months ended June 30, 2018 and 2017, the consolidated statements of changes in equity and cash flows for the six months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

The financial statements of some non-significant subsidiaries included in the consolidated financial statements were unreviewed. As of June 30, 2018 and 2017, the unreviewed assets were 19.35% (NT$5,014,479 thousand) and 21.32% (NT$4,072,668 thousand), respectively, of the consolidated assets, and the unreviewed liabilities were 11.34% (NT$1,394,850 thousand) and 14.98% (NT$1,158,968 thousand), respectively, of the consolidated liabilities. The unreviewed comprehensive income for the three months ended June 30, 2018 and 2017 were 23.40% (NT$283,070 thousand) and 10.20% (NT$52,029 thousand), respectively, of the consolidated comprehensive income; and those of the unreviewed comprehensive income (loss) for the six months ended June 30, 2018 and 2017 were 18.69% (NT$309,259 thousand) and (4.16%) (NT$$(25,520) thousand), respectively, of the consolidated comprehensive income. In addition, as disclosed in Note 17 to the financial statements, the carrying values of some investments accounted for using equity method were 2.44% (NT$632,954 thousand) and 0.56% (NT$107,406 thousand) of the consolidated assets as of June 30, 2018 and 2017, respectively; and the related shares of comprehensive income of associates and joint ventures for the three months ended June 30, 2018 and 2017 were 1.73% (NT$20,896 thousand) and 0.64% (NT$3,254 thousand), respectively, of the consolidated comprehensive income; and those for the related shares of comprehensive income (loss) of associates and joint ventures for the six months ended June 30, 2018 and

2017 were 1.73% (NT$28,651 thousand) and 0.23% (NT$1,399 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 37 to the consolidated financial statements, other information on the Corporation’s non-significant subsidiaries and other investees accounted for using 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.

Qualified Conclusion

Based on our reviews, with the exception of the matter described in the preceding paragraph, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Chroma ATE Inc. and its subsidiaries as of June 30, 2018 and 2017, its consolidated financial performance for the three months ended June 30, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2018 and 2017 then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”.

The engagement partners on the review resulting in this independent auditors’ review report are Cheng-Ming Lee and Wen-Chi Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China July 31, 2018

Notice to Readers

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

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

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Available-for-sale financial assets - current (Note 10) Financial assets at amortized cost - current (Notes 9 and 34) Contract assets - current (Note 26) Debt investments with no active market - current (Notes 12 and 34) Notes receivable (Note 13) Trade receivables - unrelated parties (Note 13) Trade receivables - related parties (Notes 13 and 33) Construction contracts receivable (Note 14) Inventories (Note 15) Prepayments Other current assets (Note 33) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Available-for-sale financial assets - non-current (Note 10) Financial assets measured at cost - non-current (Note 11) Investments accounted for using equity method (Note 17) Property, plant and equipment (Notes 18 and 34) Goodwill (Note 19) Other intangible assets (Note 20) Deferred tax assets Prepayments for land and equipment (Note 35) Refundable deposits Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 21 and 34) Contract liabilities - current (Note 26) Notes payable - unrelated parties Notes payable - related parties (Note 33) Trade payables - unrelated parties Trade payables - related parties (Note 33) Construction contracts payable (Note 14) Other payables (Note 23) Current tax liabilities Receipts in advance (Note 14) Current portion of long-term borrowings and bonds payable (Notes 21, 22 and 34) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Bonds payable (Note 22) Long-term borrowings (Notes 21 and 34) Deferred tax liabilities Net defined benefit liabilities (Note 24) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 25) Ordinary share capital Advance receipts for share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS Total equity TOTAL		June 30, 2018 (Reviewed) Amount % $ 4,749,145 18 2,118,985 8 - - 549,043 2 495,701 2 - - 94,863 - 4,867,777 19 55,100 - - - 2,559,380 10 399,987 2 251,654 1 16,141,635 62 6,874 - 773,863 3 - - - - 632,954 3 2,669,956 10 227,279 1 49,132 - 241,816 1 4,600,170 18 465,594 2 104,030 - 9,771,668 38 $ 25,913,303 100 $ 470,586 2 1,430,148 6 379,662 1 17,433 - 3,146,375 12 24,575 - - - 3,149,232 12 511,021 2 379 - 912,640 4 33,920 - 10,075,971 39 - - 1,656,353 6 401,576 1 160,420 1 967 - 2,219,316 8 12,295,287 47 4,129,532 16 86,310 - 3,259,812 13 2,152,411 8 86,888 - 3,468,870 14 5,708,169 22 196,270 1 (35,804) - 13,344,289 52 273,727 1 13,618,016 53 $ 25,913,303 100		December 31, 2017 (Audited) Amount % $ 5,076,411 23 8,794 - 1,043,387 5 - - - - 899,368 4 249,785 1 3,717,254 17 47,702 - 202,535 1 2,431,074 11 265,944 1 163,530 1 14,105,784 64 - - - - 268,582 1 193,571 1 641,567 3 2,664,584 12 225,408 1 52,628 - 230,408 1 3,505,669 16 27,439 - 101,972 1 7,911,828 36 $ 22,017,612 100 $ 471,638 2 - - 298,289 1 17,502 - 2,575,261 12 39,434 - 552,527 3 1,166,453 5 308,357 2 247,122 1 1,216,042 6 30,276 - 6,922,901 32 99,703 - 1,061,693 5 303,822 1 165,826 1 838 - 1,631,882 7 8,554,783 39 4,118,942 19 - - 3,187,289 14 1,896,570 9 86,888 - 3,988,838 18 5,972,296 27 (12,134) - (35,714) - 13,230,679 60 232,150 1 13,462,829 61 $ 22,017,612 100		June 30, 2017 (Reviewed)
						Amount % $ 4,066,790 21 9,684 - 1,468,860 8 - - - - 357,072 2 79,985 - 2,830,992 15 44,254 - 208,495 1 2,341,090 12 171,932 1 83,098 1 11,662,252 61 - - - - 253,753 1 218,127 1 645,680 4 2,648,846 14 216,942 1 5,704 - 222,685 1 3,153,235 17 25,036 - 49,212 - 7,439,220 39 $ 19,101,472 100 $ 488,430 3 - - 77,436 - 6,190 - 1,638,144 9 8,173 - 348,192 2 2,251,694 12 244,195 1 235,532 1 815,094 4 31,383 - 6,144,463 32 254,721 1 952,003 5 219,518 1 163,482 1 839 - 1,590,563 8 7,735,026 40 4,052,754 21 30,774 - 2,980,848 16 1,896,570 10 86,888 - 2,241,893 12 4,225,351 22 (91,898) - (35,837) - 11,161,992 59 204,454 1 11,366,446 60 $ 19,101,472 100

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

(With Deloitte & Touche review report dated July 31, 2018)

CHROMA ATE INC. AND SUBSIDIARIES

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

NET OPERATING REVENUE (Notes 14, 26 and 33) OPERATING COSTS (Notes 15, 27 and 33) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES REALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 27 and 33) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Finance costs (Note 27) Share of profit of associates and joint ventures (Note 17) Interest income Dividend income Other income (Note 33) Gain (loss) on disposal of property, plant and equipment, net Gain on disposal of investments, net Exchange gain (loss), net (Note 36) Valuation gain on financial assets (liabilities) at fair value through profit or loss, net Other expenses Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 28) NET PROFIT FOR THE PERIOD		For the Three Months Ended June 30	For the Three Months Ended June 30	For the Three Months Ended June 30		For the Six Months	For the Six Months	Ended June 30
		2018		2017		2018		2017
		Amount % $ 5,631,688 100 3,234,965 57 2,396,723 43 (97 ) - - - 2,396,626 43 516,526 9 351,011 6 316,744 6 1,184,281 21 1,212,345 22 (7,133 ) - 20,281 - 14,222 - 8,629 - 10,824 - (51 ) - 2,733 - 137,267 3 (90 ) - (321) - 186,361 3 1,398,706 25 372,980 7 1,025,726 18		Amount % $ 2,984,321 100 1,534,668 52 1,449,653 48 (43 ) - - - 1,449,610 48 450,164 15 164,834 5 292,033 10 907,031 30 542,579 18 (4,147 ) - 16,276 1 6,006 - 6,736 - 14,201 - 1,738 - 4,387 - 44,361 2 83 - (550) - 89,091 3 631,670 21 121,285 4 510,385 17		Amount % $ 9,097,842 100 5,137,278 56 3,960,564 44 (13 ) - - - 3,960,551 44 995,399 11 574,326 6 618,462 7 2,188,187 24 1,772,364 20 (13,484 ) - 30,831 - 23,455 - 8,895 - 23,569 - (448 ) - 2,806 - 127,416 2 1,687 - (1,857) - 202,870 2 1,975,234 22 527,379 6 1,447,855 16		Amount % $ 5,760,027 100 2,943,958 51 2,816,069 49 - - 118 - 2,816,187 49 870,846 15 363,675 6 571,343 10 1,805,864 31 1,010,323 18 (10,461 ) - 16,278 - 12,582 - 7,046 - 26,048 1 1,587 - 8,457 - (90,897 ) (2 ) 1,633 - (1,047) - (28,774) (1) 981,549 17 189,438 3 792,111 14 (Continued)

CHROMA ATE INC. AND SUBSIDIARIES

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 Three Months Ended June 30	For the Six Months	Ended June 30
2018	2017	2018	2017
Amount % $ 106,657 2 (93 ) - 76,516 1 - - 708 - 183,788 3 $ 1,209,514 21 $ 1,024,722 18 1,004 - $ 1,025,726 18 $ 1,204,648 21 4,866 - $ 1,209,514 21 $ 2.51 $ 2.46	Amount % $ - - - - 24,978 1 (13,626 ) (1 ) (11,436) - (84) - $ 510,301 17 $ 516,573 17 (6,188) - $ 510,385 17 $ 515,090 17 (4,789) - $ 510,301 17 $ 1.29 $ 1.26	Amount % $ 161,034 2 (729 ) - 47,526 - - - (1,451) - 206,380 2 $ 1,654,235 18 $ 1,455,896 16 (8,041) - $ 1,447,855 16 $ 1,660,131 18 (5,896) - $ 1,654,235 18 $ 3.57 $ 3.49	Amount % $ - - 251 - (100,113 ) (2 ) (66,042 ) (1 ) (12,464) - (178,368) (3) $ 613,743 11 $ 804,250 14 (12,139) - $ 792,111 14 $ 629,513 11 (15,770) - $ 613,743 11 $ 2.05 $ 1.99

$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$

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

(With Deloitte & Touche review report dated July 31, 2018)

(Concluded)

CHROMA ATE INC. AND SUBSIDIARIES

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

		Equity A	ttributable to O	wners of the Corporation
Ordinary Share Capital $ 3,898,872 - - - - - 149,582 4,300 - - $ 4,052,754 $ 4,118,942 - 4,118,942 - - - - - - 216 - (540 ) 10,914 - $ 4,129,532	Advance Receipts for Share Capital Capital Surplus $ - $ 1,960,159 - - - - - - - - - - 27,217 969,737 3,557 50,952 - - - - $ 30,774 $ 2,980,848 $ - $ 3,187,289 - - - 3,187,289 - - - - - 1,761 - - - - - - 77 1,573 - - - - 86,233 69,189 - - $ 86,310 $ 3,259,812	Retained Earnings	Total $ 4,735,275 - (1,314,425 ) 804,250 251 804,501 - - - - $ 4,225,351 $ 5,972,296 135,130 6,107,426 - (1,854,424 ) - 1,455,896 (729) 1,455,167 - - - - - $ 5,708,169		Other Equity		Total $ 58,035 - - - (174,988) (174,988) - 25,055 - - $ (91,898) $ (12,134 ) (27,484) (39,618 ) - - - - 204,964 204,964 - - - 30,924 - $ 196,270	Treasury Shares $ (35,714 ) - - - - - - - (123 ) - $ (35,837) $ (35,714 ) - (35,714 ) - - - - - - - (630 ) 540 - - $ (35,804)
				Exchange Differences on Translating the Financial Unrealized Gain (Loss) on Financial Assets at Fair Value through Statements of Other Foreign Operations Comprehensive Income $ (24,914 ) $ - - - - - - - (108,930) - (108,930) - - - - - - - - - $ (133,844) $ - $ (97,633 ) $ - - 151,864 (97,633 ) 151,864 - - - - - - - - 43,930 161,034 43,930 161,034 - - - - - - - - - - $ (53,703) $ 312,898	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 232,901 - - - (66,058) (66,058) - - - - $ 166,843 $ 179,348 (179,348) - - - - - - - - - - - - $ -	Unearned Employee Benefit $ (149,952 ) - - - - - - 25,055 - - $ (124,897) $ (93,849 ) - (93,849 ) - - - - - - - - - 30,924 - $ (62,925)
		Legal Reserve Special Reserve Unappropriated Earnings $ 1,724,576 $ 86,888 $ 2,923,811 171,994 - (171,994 ) - - (1,314,425 ) - - 804,250 - - 251 - - 804,501 - - - - - - - - - - - - $ 1,896,570 $ 86,888 $ 2,241,893 $ 1,896,570 $ 86,888 $ 3,988,838 - - 135,130 1,896,570 86,888 4,123,968 255,841 - (255,841 ) - - (1,854,424 ) - - - - - 1,455,896 - - (729) - - 1,455,167 - - - - - - - - - - - - - - - $ 2,152,411 $ 86,888 $ 3,468,870

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

(With Deloitte & Touche review report dated July 31, 2018)

CHROMA ATE INC. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation Amortization Expected credit loss recognized on trade receivables (provision for bad debt expense) Net gain on fair value changes of financial assets (liabilities) at fair value through profit or loss Finance costs Interest income Dividend income Compensation costs of share-based payment Share of profit of associates and joint ventures accounted for using equity method Loss (gain) on disposal of property, plant and equipment, net Gain on disposal of investments, net Impairment loss (reversal of impairment) on non-financial assets Unrealized gain on transactions with associates and joint ventures Realized gain on transactions with associates and joint ventures Net (gain) loss on foreign currency exchange Net changes in operating assets and liabilities Contract assets Notes receivable Trade receivables Construction contracts receivable Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Construction contracts payable Other payables Receipts in advance Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 1,975,234 152,195 3,497 8,247 (1,687) 13,484 (23,455) (8,895) 45,249 (30,831) 448 (2,806) 19,899 13 - (81,956) (293,166) 154,922 (1,117,001) - (209,609) (134,043) (44,891) 877,621 81,304 548,612 - 138,665 (246,743) 3,644 (5,406) 1,822,545 (249,854) 1,572,691	2017 $ 981,549 156,217 1,563 8,578 (1,633) 10,461 (12,582) (7,046) 66,667 (16,278) (1,587) (8,457) (34,881) - (118) 75,178 - (18,216) 38,419 6,321 (441,754) (95,856) 59,881 - 25,520 (330,425) 118,334 75,828 (55,242) 4,305 (4,784) 599,962 (196,955) 403,007 (Continued)

CHROMA ATE INC. AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire financial assets designated as at fair value through other comprehensive income Decrease in financial assets at amortized cost Payments to acquire financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Payments to acquire available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Proceeds from disposal of debt investments with no active market Decrease (Increase) in prepayments for investments Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Payments for intangible assets Increase in other non-current assets Increase in prepayments for equipment Interest received Dividends received Net cash (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits Cash dividends paid Exercise of employee stock options Payments for buy-back of ordinary shares Interest paid Increase in non-controlling interests Proceeds from issuance of employee restricted shares Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ (48,600) 353,329 (1,494,000) 430,827 - - - 6,489 (85,888) 9,802 (438,155) (2,425) (7,005) (1,096,136) 28,447 8,895 (2,334,420) (3,213) 600,000 (411,359) 129 (5,952) 152,004 (630) (20,350) 49,500 - 360,129 74,334	2017 $ - - - - (80,000) 905,535 8,781 (15,877) (76,968) 20,749 (4,991) - (4,521) (108,915) 14,303 7,046 665,142 296,580 - (407,359) - (4,838) 15,415 (123) (19,407) 49,000 1,850 (68,882) (82,447) (Continued)

CHROMA ATE INC. AND SUBSIDIARIES

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

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ (327,266) 5,076,411 $ 4,749,145	2017 $ 916,820 3,149,970 $ 4,066,790

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 31, 2018) (Concluded)

CHROMA ATE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (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, 2018.

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, 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) IFRS 9 “Financial Instruments” and related amendment

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as at January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

10 -

The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Group’s financial assets and financial liabilities as at January 1, 2018.

Financial Assets
Cash and cash equivalents

Derivatives

Domestic listed equity

securities

Domestic unlisted equity
securities

Foreign unlisted equity
securities

Domestic open-end
beneficiary certificates

Foreign open-end
beneficiary certificates

Time deposit with original
maturity of more than 3
months

Notes receivable, trade
receivables and other
receivables

Refundable deposits

Financial Assets
I
J
FVTPL

Add: Reclassification from
available-for-sale (IAS 39)
required reclassification

FVTOCI
Equity instruments
Add: Reclassification from
available-for-sale (IAS 39)

Measurement Category
Carrying Amount
IAS 39
IFRS 9
IAS 39
IFRS 9
Remark
Loans and receivables
Amortized cost
$ 5,076,411 $ 5,076,411
-
Held‑for‑trading
Mandatorily at fair value
through profit or loss (i.e.
FVTPL)
31
31
-
Held‑for‑trading
Mandatorily at FVTPL
8,763
8,763
-
Available‑for‑sale
Fair value through other
comprehensive income
(i.e. FVTOCI) - equity
instrument
268,582
268,582
a)
Available‑for‑sale
FVTOCI - equity instrument
157,762
265,884
a)
Available‑for‑sale
FVTOCI - equity instrument
25,657
29,565
a)
Available‑for‑sale
Mandatorily at FVTPL
1,043,387
1,043,387
b)
Available‑for‑sale
Mandatorily at FVTPL
10,152
6,013
b)
Loans and receivables
Amortized cost
899,368
899,368
c)
Loans and receivables
Amortized cost
4,146,995
4,146,995
d)
Loans and receivables
Amortized cost
27,439
27,439
-
AS 39 Carrying
Amount as of
anuary 1, 2018
Reclassifications Remeasurements
IFRS 9 Carrying
Amount as of
January 1, 2018
Retained
Earnings
Effect on
January 1, 2018
Other
Equity
Effect on
January 1, 2018
Remark
$ 8,794
-

$ 1,053,539

$ (4,139 )

b)

8,794

1,053,539

(4,139)
$ 1,058,194
$ 10,662
$ (14,801)
-
-
-
-

452,001

112,030

a)

-

452,001

112,030

564,031

123,376

(11,346)
$ 8,794
$ 1,505,540
$ 107,891
$ 1,622,225
$ 134,038
$ (26,147)

a) The Group elected to designated all its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTOCI under IFRS 9, because these investments are not held for trading. As a result, the related other equity - unrealized gain (loss) on available-for-sale financial assets of $158,625 thousand was reclassified to other equity - unrealized gain (loss) on financial assets at FVTOCI.

Investments in unlisted shares previously measured at cost under IAS 39 have been designated as at FVTOCI under IFRS 9 and were remeasured at fair value. Consequently, an increase of $112,030 thousand was recognized in both financial assets at FVTOCI and other equity - unrealized gain (loss) on financial assets at FVTOCI on January 1, 2018, respectively.

The Group recognized under IAS 39 impairment loss on certain investments in equity securities previously classified as measured at cost and the loss was accumulated in retained earnings. Since those investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is required, an adjustment was made that resulted in a decrease of $123,376 thousand in other equity - unrealized gain (loss) on financial assets at FVTOCI and an increase of the same amount in retained earnings on January 1, 2018, respectively.

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b) Mutual funds previously classified as available-for-sale under IAS 39 were classified mandatorily as at FVTPL under IFRS 9, because the contractual cash flows are not solely payments of principal and interest on the principal outstanding and they are not equity instruments. The retrospective adjustment resulted in a decrease of $14,801 thousand in other equity - unrealized gain (loss) on available-for-sale financial assets and an increase of the same amount in retained earnings on January 1, 2018. Mutual funds previously measured at cost under IAS 39 were classified as at FVTPL under IFRS 9 and were measured at fair value. Consequently, a decrease of $4,139 thousand was recognized in both financial assets at FVTPL and retained earnings.
c) Debt investments previously classified as debt investments with no active market and measured at amortized cost under IAS 39 were classified as measured at amortized cost with an assessment of expected credit losses under IFRS 9, because on January 1, 2018, the contractual cash flows were solely payments of principal and interest on the principal outstanding and these investments were held within a business model whose objective is to collect contractual cash flows.
d) Notes receivable, trade receivables and other receivables that were previously classified as loans and receivables under IAS 39 were classified as measured at amortized cost with an assessment of expected credit losses under IFRS 9. The Group had assessed that the effect of retrospective application would not have any material impact.
e) As result of the retrospective application of IFRS 9 by associates and joint ventures accounted for using equity method, there was a decrease in other equity - unrealized gain (loss) on available-for-sale financial assets of $5,922 thousand and was reclassified to other equity - unrealized gain (loss) on financial assets at FVTOCI, a decrease in other equity - unrealized gain (loss) on financial assets at FVTOCI of $1,337 thousand, an increase in retained earnings of $1,092 thousand on January 1, 2018.
2) IFRS 15 “Revenue from Contracts with Customers” and related amendment.

Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is recognized as a contract asset or a contract liability. Prior to the application of IFRS 15, the net effect of the progress billings, cost incurred and recognized profit (loss) of a construction contract was recognized as amount due from (to) customer for construction contract under IAS 11.

b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the “IFRSs” endorsed by the FSC for application starting from 2019

New IFRSs Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

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 FSC permits the election for early adoption of the amendments starting from 2018.

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Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

IFRS 16 “Leases”

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

Definition of a lease

Upon initial application of IFRS 16, the Group will elect to apply IFRS 16 only to contracts entered into (or changed) on or after January 1, 2019 in order to determine whether those contracts are, or contain, a lease. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right-of-use assets, or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within financing activities. Currently, payments under operating lease contracts, including property interest qualified as investment properties, are recognized as expenses on a straight-line basis. Prepaid lease payments are recognized as prepayments for leases. The difference between the actual payments and the expenses, as adjusted for lease incentives, is recognized as accrued expenses. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables are recognized for contracts classified as finance leases.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

The Group expects to apply the following practical expedients:

1) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Group will adjust the right-of-use assets on January 1, 2019 by the amount of any provisions for onerous leases recognized as of December 31, 2018.
3) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
4) The Group will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.
5) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.
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For leases currently classified as finance leases under IAS 17, the carrying amount of right-of-use assets and lease liabilities on January 1, 2019 will be determined as the carrying amount of the leased assets and finance lease payables as of December 31, 2018.

The Group as lessor

The Group will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

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

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2021

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

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, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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 an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
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3) Level 3 inputs are unobservable inputs for an 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, 2017.

Refer to Note 16, Table 9 and Table 10 for the detailed information of subsidiaries, including the percentage of ownership and main business.

d. Other significant accounting policies

Except for financial instruments, accounting policies of revenue recognition and 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, 2017. For the summary of other significant accounting policies, please refer to the Group’s consolidated financial statements for the year ended December 31, 2017.

1) Financial instruments

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

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

a) Financial assets

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

i. Measurement category

2018

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at FVTOCI.

i) Financial asset at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 32.

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ii) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, financial assets at amortized cost, trade receivables at amortized cost and refundable deposits, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset; and
Financial asset that has subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii) Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2017

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.

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i) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when such financial assets are held for trading and are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on the financial asset. Fair value is determined in the manner described in Note 32.

ii) Available-for-sale financial assets

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

Available-for-sale financial assets are measured at fair value. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

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

iii) Loans and receivables

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

Cash equivalents includes time deposits with original maturities within 3 months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

ii. Impairment of financial assets

2018

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), as well as contract assets.

The Group always recognizes lifetime Expected Credit Loss (i.e. ECL) for trade receivables and contract assets. For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment gain or loss in profit or loss for financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

2017

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

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

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

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

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

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period. In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss is not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.

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

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

iii. Derecognition of financial assets

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

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

b) Equity instruments

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

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

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

c) Financial liabilities
i. Subsequent measurement

Except for financial liabilities at fair value through profit or loss, all the financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest or dividend paid on the financial liability. Fair value is determined in the manner described in Note 32.

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ii. Derecognition of financial liabilities

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

d) Convertible bonds

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

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

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

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

2) Revenue recognition

2018

The Group identifies the contract with the customers, allocates the transaction price to the performance obligations, and recognizes revenue when performance obligations are satisfied.

a) Revenue from sale of goods

Revenue from sale of goods comes from sales of test instruments. Revenue are recognized when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and bears the risks of obsolescence. Trade receivable is recognized concurrently. The transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

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b) Construction contract revenue

The customer controls the property as it is constructed in progress and, thus, the Group recognizes revenue over time. The Group measures the progress on the basis of costs incurred relative to the total expected costs as there is a direct relationship between the costs incurred and the progress of satisfying the performance obligation. A contract asset is recognized during the construction and is reclassified to trade receivables at the point at which it is invoiced to the customer. If the milestone payment exceeds the revenue recognized to date, then the Group recognizes a contract liability for the difference. Certain payment retained by the customer as specified in the contract is intended to ensure that the Group adequately completes all its contractual obligations. Such retention receivables are recognized as contract assets until the Group satisfies its performance.

2017

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

a) Sale of goods

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

i. The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
ii. The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

iii. The amount of revenue can be measured reliably;

iv. It is probable that the economic benefits associated with the transaction will flow to the Group; and
v. The costs incurred or to be incurred in respect of the transaction can be measured reliably.

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

b) Dividend and interest income

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

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

3) 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.

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4) Taxation

Income tax expense represent the sum of the tax currently 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. The effect of a change in tax rate resulting from a change in tax law is recognized consistent with the accounting for the transaction itself which gives rise to the tax consequence, and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

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, 2017.

6. CASH AND CASH EQUIVALENTS

			December 31,	December 31,
	June 30, 2018			2017	June 30, 2017
Cash on hand	$	4,653	$	5,439	$	5,269
Checking accounts and demand deposits		3,174,607		4,251,592		2,648,137
Cash equivalents - time deposits		1,569,885		819,380		1,333,470
Cash equivalents - repurchase agreements
collateralized by bonds		-		-		79,914
	$	4,749,145	$	5,076,411	$	4,066,790

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

			December	31,
	June 30, 2018		2017		June 30, 2017
Mandatorily at FVTPL
Derivative instruments (Note 22)
Call and put option of convertible bonds
payable	$	30	$	-	$	-
Non-derivative financial assets
Domestic listed stocks		4,602		-		-
Open-end beneficiary certificates		2,114,353		-		-
		2,118,985		-		-
						(Continued)

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			December	December	31,
	June 30, 2018			2017		June 30, 2017
Held for trading
Derivative instruments (Note 22)
Call and put option of convertible bonds
payable	$	-	$		31	$	314
Non-derivative financial assets
Domestic listed stocks		-		8,763			8,372
Investment in debt instrument		-			-		998
		-		8,794			9,684
Financial assets - current	$ 2,118,985		$	8,794		$	9,684
Mandatorily at FVTPL-non-current
Non-derivative financial assets
Open-end beneficiary certificates	$	6,874	$		-	$	-
							(Concluded)

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

	June 30, 2018
Investments in equity instruments - non-current
Domestic listed common stocks	$ 271,073
Domestic unlisted common stocks	476,430
Foreign unlisted common stocks	26,360
	$ 773,863

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Refer to Table 3 for the detailed information. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. These investments in equity instruments were classified as available-for-sale financial assets and financial assets measured at amortized cost under IAS 39. Refer to Note 3, Note 10 and Note 11 for information relating to their reclassification and comparative information for 2017.

9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST - CURRENT - 2018

	June 30, 2018
Time deposits with maturities more than 3 months	$ 423,030
Pledge deposits (Note 34)	126,013
	$ 549,043

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10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

11.

December 31,
2017
June 30, 2017
Current
Domestic open-end beneficiary certificates
$ 1,043,387
$ 1,468,860
Non-current
Domestic listed stocks
$ 268,582
$ 253,753
FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT - 2017
December 31,
2017
June 30, 2017
Domestic unlisted common stocks
$ 157,762
$ 182,131
Foreign unlisted common stocks
25,657
25,844
Foreign open-end beneficiary certificates

10,152

10,152
$ 193,571
$ 218,127
Classification by measurement of financial instruments
Available-for-sale financial assets
$ 193,571
$ 218,127

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.

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - CURRENT - 2017

			December 31,
			2017	June 30, 2017
Time deposits with maturities more than 3 months			$ 407,921	$ 349,355
Pledge deposits (Note 34)			491,447	7,717
			$ 899,368	$ 357,072
NOTES RECEIVABLE AND TRADE RECEIVABLES
			December 31,
	June 30, 2018		2017	June 30, 2017
Gross carrying amount at amortized cost	$ 5,088,995		$ 4,094,746	$ 3,066,413
Less: Allowance for impairment loss	(126,355)		(127,707)	(155,436)
	4,962,640		3,967,039	2,910,977
Gross carrying amount at amortized cost - related
parties		55,100	47,702	44,254
	$ 5,017,740		$ 4,014,741	$ 2,955,231

13. NOTES RECEIVABLE AND TRADE RECEIVABLES

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For the six months ended June 30, 2018

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. 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 Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate. As the Group’s historical credit loss experience does not show a single factor that matters significantly, the provision for loss allowance is based on expected credit loss rate of trade receivables as a whole.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The aging schedule of notes receivable and trade receivables based on the past due days was as follows:

	June 30, 2018
Less than 60 days	$ 4,407,108
61-180 days	304,593
Over 180 days	377,294
	$ 5,088,995

The movements of the loss allowance of notes receivable and trade receivables were as follows:

	For the Six
	Months Ended
	June 30, 2018
Balance at January 1, 2018 per IAS 39	$ 127,707
Adjustment on initial application of IFRS 9	-
Balance at January 1, 2018 per IFRS 9	127,707
Add: Impairment loss recognized on receivables	8,247
Less: Amounts written off	(10,046)
Foreign exchange gains and losses	447
Balance at June 30, 2018	$ 126,355

For the six months ended June 30, 2017

The Group applied the same credit policy in 2018 and 2017. 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.

25 -

Past due but not impaired trade receivables are trade receivables balances that were past due at the end of the reporting period but allowance for impairment loss was not recognized because their credit quality remained satisfactory and the amounts were still considered recoverable. The Group does not hold any collateral or other credit enhancements for these balances.

The aging of notes receivable and trade receivables was as follows:

	December 31,
	2017	June 30, 2017
Less than 60 days	$ 3,333,066	$ 2,544,921
61-180 days	429,499	226,932
Over 180 days	332,181	294,560
	$ 4,094,746	$ 3,066,413

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

The aging of notes receivable and trade receivables that were past due but not impaired was as follows:

	December 31,	December 31,
		2017	June	30, 2017
Less than 60 days	$	447,305	$	314,565
61-180 days		415,515		212,586
Over 180 days		231,913		212,145
	$	1,094,733	$	739,296

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

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

Individually
Assessed for
Impairment
Collectively
Assessed for
Impairment
Balance at January 1, 2017
$ 135,696
$ 34,665

Add: Impairment losses recognized on
receivables
1,662
6,916
Less: Amounts written off during the period as
uncollectible
(20,570)
(227)
Reclassification of impairment loss from
collective assessment to individual assessment
5,554
(5,554)
Foreign exchange translation gains

(1,539)

(1,167)

Balance at June 30, 2017
$ 120,803
$ 34,633

Total
$ 170,361
8,578
(20,797)
-
(2,706)
$ 155,436

The allowance for impairment loss individually assessed due to customers were in liquidation or in severe financial difficulties were $84,779 thousand and $120,803 thousand as of December 31, 2017 and June 30, 2017, respectively. The Group did not hold any collateral over these balances.

26 -

14. CONSTRUCTION CONTRACTS RECEIVABLE (PAYABLE)

	December 31,	December 31,
		2017	June 30, 2017
Construction contracts receivable
Construction costs incurred plus recognized profits (less recognized
losses) to date	$	316,677	$	221,921
Less: Progress billings		(114,142)		(13,426)
Due from customers for construction contracts	$	202,535	$	208,495
Construction contracts payable
Progress billings	$	1,149,807	$	482,889
Less: Construction costs incurred plus recognized profits less
recognized losses to date		(597,280)		(134,697)
Due to customers for construction contracts	$	552,527	$	348,192
Receipts in advance	$	10,434	$	-

The Group recognized construction contract revenues of $162,232 thousand and $242,137 thousand for the three months and six months ended June 30, 2017 under IAS 11, respectively.

15. INVENTORIES

			December 31,	December 31,
	June 30, 2018			2017	June 30, 2017
Finished goods	$	406,937	$	482,724	$	613,564
Semi-finished products		382,780		390,533		345,739
Work in process		721,252		686,539		638,476
Raw materials		1,027,073		842,094		740,550
Inventory in transit		21,338		29,184		2,761
	$	2,559,380	$	2,431,074	$ 2,341,090

The cost of goods sold for the three months and six months ended June 30, 2018 included inventory write-downs of $11,822 thousand and $19,899 thousand, respectively.

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.

27 -

16. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Investor
Investee
Business
The Corporation
Neworld Electronics Ltd.
Sale and maintenance of electronic test
instruments, etc.
Chroma Investment Co., Ltd.
Investment
Sensational Holding Ltd.
Investment
Chroma ATE Europe B.V.
Sale and maintenance of electronic test
instruments, etc.
Chroma ATE Inc. (“Chroma USA”)
Sale and maintenance of electronic test
instruments, etc.
Chen Hwa Technology Inc.
Test of inductance, capacitance and
resistance equipment and sale of parts
CHI Incorporation Ltd.
Test of inductance, capacitance and
resistance equipment and sale of parts
Chroma New Material Corporation
Processing and sale of gold wire
San Eagle Development Corp.
Investment
Wei Kuang Automatic Equipment Co.,
Ltd.
Design, manufacturing, installment and
testing of automated factory conveyor
systems
Testar Electronics Corporation
Testing of LED products
Deep Red Holding Co., Ltd.
Investment
Chroma Japan Corp.
Sale and maintenance of electronic test
instruments, etc.
Chroma Systems Solutions, Inc.
Sale and maintenance of electronic test
instruments, etc.
Adivic Technology Co.
Sale and research of RF device
EVT Technology Co., Ltd.
Manufacturing of motorcycles and its parts
Quantel Private Ltd.
Sale and maintenance of test instruments,
etc.
Innovative Nanotech Incorporated
Monitoring instruments of nanoparticles
Touch Cloud Incorporation
Development of could platform and Internet
of Things systems
Neworld Electronics Ltd.
Chroma Electronics (Shenzhen) Co.,
Ltd.
Sale of computerized automatic test
systems, peripherals and electronic test
instruments
Chroma Electronics (Shanghai) Co.,
Ltd.
Sale of computerized automatic test
systems, peripherals and electronic test
instruments
Chroma ATE Inc. (“Chroma
USA”)
Chroma Systems Solutions, Inc.
Sale and maintenance of electronic test
instruments, etc.
Chen Hwa Technology Inc.
Chroma (Shanghai) Trading Co., Ltd.
International and transit trading, simple
commercial processing, commercial
consulting services, etc.
CHI Incorporation Ltd.
Chroma ATE (Suzhou) Co., Ltd.
Sale of computerized automatic test
systems, peripherals and electronic test
instruments
San Eagle Development Corp.
Wei Kuang Mech. Eng. Inc.
Investment
Wei Kuang Mech. Eng. Inc.
Mou Kuan Technologies (Nanjin) Co.,
Ltd.
Assembly, sale and maintenance of factory
conveyors and related systems and
rendering after-sales services
Wei Kuang Automatic Equipment
(Nanjin) Co., Ltd.
Sale and maintenance of electronic
equipment and factory conveyor systems
Wei Kuang Automatic Equipment
(Xiamen) Co., Ltd.
Sale and maintenance of electronic
equipment and factory conveyor systems
Deep Red Holding Co., Ltd.
Saject System Technology (Suzhou)
Co., Ltd.
Research, development and design of
computer network security systems and
information management
EVT Technology Co., Ltd.
Wei Da Electric Vehicle Co., Ltd.
Sale and lease of motorcycles
Adivic Technology Co.
Adivic Holding Corporation
Sale and research of RF device
Quantel Private Ltd.
Quantel Technologies India Private
Ltd.
Sale and maintenance of test instruments,
etc.
Quantel Global Vietnam Co., Ltd.
Sale and maintenance of test instruments,
etc.
Quantel Global Sdn. Bhd.
Sale and maintenance of test instruments,
etc.
Quantel Global Philippines Corporation
Sale and maintenance of test instruments,
etc.
Chroma ATE Europe B.V.
Chroma Germany GmbH
Sale and maintenance of electronic test
instruments, etc.

Percentage of Ownership as of
June 30, 2018
December 31,
2017
June 30, 2017
Remark
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
67.2
67.2
67.2
100.0
100.0
100.0
100.0
100.0
100.0
25.0
25.0
25.0
Note 1
51.0
51.0
51.0
Note 2
73.8
73.8
53.2
Note 3
60.0
60.0
60.0
71.1
89.3
-
Note 4
78.1
78.1
-
Note 5
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
50.0
Note 1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
75.0
75.0
100.0
100.0
100.0
100.0
100.0
-
Note 6
100.0
100.0
-
Note 6
100.0
-
-
Note 6
100.0
-
-
Note 6
100.0
100.0
-
Note 7

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, Adivic 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 resolved to participate in the capital injection at the same percentage as originally owned. The Corporation’s equity interest in Adivic remained the same.
28 -
Note 3: In December 2017, EVT Technology Co., Ltd. (“EVT”) increased its capital by cash injection of $40,000 thousand to strengthen its financial structure. The Corporation’s board of directors participated in the capital injection. The Corporation’s equity interest in EVT rose to 73.8% after the cash injection.
Note 4: In response to the demand of new-generation solutions and to provide customers with most advanced electronic test service, the Corporation’s board of directors resolved in July 2017 to invest in Innovative Nanotech Incorporated. In December 2017 and May 2018, Innovative Nanotech Incorporated increased its capital. The Corporation participated in the cash injection and held 71.1% equity after the capital increases.
Note 5: To strengthen and integrate the software research capability of product lines and raise marketing opportunities, the Corporation’s board of directors resolved to participate in the cash injection of Touch Cloud Incorporation and acquired equity interest of 78.1% in 2017.
Note 6: To lay out sales network in Southeast Asia, Quantel Private Ltd. resolved to set up Quantel Technologies India Private Ltd., Quantel Global Vietnam Co., Ltd. in the fourth quarter of 2017, Quantel Global Sdn. Bhd. and Quantel Global Philippines Corporation in the first and second quarter of 2018, respectively, to be engaged in the sale of test instruments.
Note 7: Chroma ATE Europe B.V. resolved to set up Chroma Germany GmbH in the fourth quarter of 2017 to be engaged in the sale and maintenance of electronic instruments.

17. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates Investments in joint ventures a. Investments in associates Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp.		June 30, 2018 December 31, 2017 June 30, 2017 $ 615,307 $ 623,941 $ 628,064 17,647 17,626 17,616 $ 632,954 $ 641,567 $ 645,680 June 30, 2018 December 31, 2017 June 30, 2017 Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) $ 498,386 11.3 $ 529,538 11.3 $ 538,274 11.3 116,921 27.3 94,403 27.3 89,790 27.3 $ 615,307 $ 623,941 $ 628,064	June 30, 2018 December 31, 2017 June 30, 2017 $ 615,307 $ 623,941 $ 628,064 17,647 17,626 17,616 $ 632,954 $ 641,567 $ 645,680 June 30, 2018 December 31, 2017 June 30, 2017 Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) $ 498,386 11.3 $ 529,538 11.3 $ 538,274 11.3 116,921 27.3 94,403 27.3 89,790 27.3 $ 615,307 $ 623,941 $ 628,064	June 30, 2018 December 31, 2017 June 30, 2017 $ 615,307 $ 623,941 $ 628,064 17,647 17,626 17,616 $ 632,954 $ 641,567 $ 645,680 June 30, 2018 December 31, 2017 June 30, 2017 Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) Amount Percentage of Equity Interest (%) $ 498,386 11.3 $ 529,538 11.3 $ 538,274 11.3 116,921 27.3 94,403 27.3 89,790 27.3 $ 615,307 $ 623,941 $ 628,064

				Amount Percentage of Equity Interest (%) $ 538,274 11.3 89,790 27.3 $ 628,064

Refer to Table 9 “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.

29 -

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

		December 31,
Name of Associate	June 30, 2018	2017	June 30, 2017
Adlink Technology Inc.	$ 1,325,572	$ 1,568,144	$ 1,509,339

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, 2018 was based on the associate’s financial statements that have not been reviewed. Except for Adlink Technology Inc., investments 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 was based on the financial statements that have not been reviewed. Management believes there is no material impact on the equity method accounting or the calculation of the share of profit or loss and comprehensive income from the financial statements that have not been reviewed.

b. Investments in joint ventures

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		June 30, 2018 Amount Percentage of Equity Interest (%) $ 17,647 35.0		December 31, 2017 Amount Percentage of Equity Interest (%) $ 17,626 35.0		June 30, 2017
						Amount Percentage of Equity Interest (%) $ 17,616 35.0

Refer to Table 9 “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 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 the investments for the six months ended June 30, 2018 and 2017 was based on the joint ventures’ financial statements that have not been reviewed. Management believes there is no material impact on the equity method accounting or the calculation of the share of profit or loss and comprehensive income from financial statements that have not been reviewed.

18. PROPERTY, PLANT AND EQUIPMENT

			December 31,	December 31,
	June 30, 2018			2017	June 30, 2017
Land	$	522,258	$	520,347	$	522,015
Buildings		1,425,452		1,452,967		1,493,602
Machinery		125,614		147,217		160,841
Miscellaneous equipment		596,632		544,053		472,388
	$	2,669,956	$	2,664,584	$	2,648,846

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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, 2018 and 2017 and six months ended June 30, 2018 and 2017. 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 2-50 years Machinery 2-6 years Miscellaneous equipment 2-16 years

Refer to Note 34 for property, plant and equipment have been pledged to secure borrowings of the Group.

19. GOODWILL

Cost Balance, beginning of the period Net effect of exchange differences Balance, end of the period		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 225,408 (1,871) $ 227,279	2017 $ 220,236 (3,294) $ 216,942

Refer to Note 17 in the consolidated financial statements for the year ended December 31, 2017 for goodwill impairment assessment. There was no significant evidence indicating impairment of goodwill as of June 30, 2018.

20. OTHER INTANGIBLE ASSETS

		December 31,
	June 30, 2018	2017	June	30, 2017
Patents	$ 14,211	$ 15,820	$	-
Licenses and franchises	31,709	32,526		-
Core technology	-	503		1,509
Customer relationships	3,077	3,635		4,195
Computer software	135	144		-
	$ 49,132	$ 52,628	$	5,704

The Group signed an agreement with Industrial Technology Research Institute in 2017 and obtained technique licenses and patents.

31 -

Other intangible assets were amortized on a straight-line basis over their estimated useful lives as follows:

Patents 5 years Licenses and franchises 20 years Core technology 5 years Customer relationships 5 years Computer software 10 years

21. BORROWINGS

a. Short-term borrowings

			December	December	31,
	June 30, 2018			2017		June 30, 2017
Secured borrowings
Bank loans (1)	$	-	$		-	$	25,000
Unsecured borrowings
Bank loans (2)		470,586		471,638			463,430
	$	470,586	$	471,638		$	488,430

1) Secured by the Group’s property, plant and equipment (refer to Note 34). As of June 30, 2017, the interest rate on the bank loans was 1.29% per annum.
2) As of June 30, 2018, December 31, 2017 and June 30, 2017, the interest rate on the bank loans was 0.86%-5.00%, 0.85%-4.50% and 0.99%-4.25% per annum, respectively.
b. Long-term borrowings

			December 31,	December 31,
	June 30, 2018			2017	June 30, 2017
Secured borrowings
Bank loans (1) (Note 34)	$	470,385	$	177,735	$	160,977
Unsecured borrowings
Syndicated bank loans (2)		800,000		1,200,000		1,600,000
Bank loans (3)		1,200,000		900,000		6,120
		2,470,385		2,277,735		1,767,097
Less: Current portions		814,032		1,216,042		815,094
	$	1,656,353	$	1,061,693	$	952,003

1) Secured by the Group’s financial assets amortized at cost, 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, 2018, December 31, 2017 and June 30, 2017, the effective interest rate on the bank loans were 1.10%-8.88%, 0.90%-8.88% and 0.90%-8.88% per annum, respectively.
32 -
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 35). 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, 2018, December 31, 2017 and June 30, 2017, the interest rate per annum was all 1.58% on a floating basis.
3) The bank loans are for the purpose of general operation with due date on June 8, 2023. As of June 30, 2018, December 31, 2017 and June 30, 2017, the interest rate on the bank loans was 1.17%-1.20%, 1.17%-1.20% and 1.72% per annum, respectively.

22. BONDS PAYABLE

			December 31,	December 31,
	June	30, 2018		2017	June 30, 2017
Unsecured domestic convertible bonds	$	98,608	$	99,703	$ 254,721
Less: Current portions		98,608		-	-
	$	-	$	99,703	$ 254,721

On May 23, 2014, the Corporation issued its second domestic unsecured 0% convertible bonds with aggregate par value of $2,000,000 thousand and face value of $100 thousand. These bonds were listed on the 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 from June 24, 2014 to May 13, 2019. The conversion price would be adjusted when earning distribution of cash dividends was resolved by shareholders’ meeting.

If the closing price of the Corporation’s common share exceeds 30% of the conversion price of the bonds payable for 30 consecutive days or the aggregate outstanding amounts of bonds payable is less than 10% of the amounts of original issuance, the Corporation has the right to redeem all of the outstanding bonds payable at face value during the period 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 Corporation 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”. The liability components were recognized into derivative and non-derivative liabilities, separately.

Proceeds from issuance (less transaction costs $5,320 thousand) Equity component Deferred tax assets Financial liability component Liability component at the date of issue Interest charged at an effective interest rate of 1.57% Conversion of bonds payable Liability component as of June 30, 2018	$ 1,994,680 (141,487) 904 (4,989) 1,849,108 77,929 (1,828,429) $ 98,608

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23. OTHER PAYABLES

		December 31,	December 31,
	June 30, 2018		2017	June 30, 2017
Cash dividends	$ 1,854,424	$	5,952	$ 1,314,425
Salaries and bonus (including employee’s
compensations and remuneration of directors)	851,660		872,526	755,762
Others	443,148		287,975	181,507
	$ 3,149,232	$	1,166,453	$ 2,251,694

24. 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, 2017 and 2016. The amount were $1,575 thousand, $1,646 thousand, $3,150 thousand and $3,246 thousand for the three months ended June 30, 2018 and 2017 and for the six months ended June 30, 2018 and 2017, respectively.

25. EQUITY

a. Ordinary share capital

		December 31,
	June 30, 2018	2017	June 30, 2017
Number of shares authorized (in thousands)	450,000	450,000	450,000
Shares authorized	$ 4,500,000	$ 4,500,000	$ 4,500,000
Number of shares issued and fully received
(in thousands)	412,953	411,894	405,275
Shares issued	$ 4,129,532	$ 4,118,942	$ 4,052,754

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

b. Capital surplus

		December 31,
	June 30, 2018	2017	June 30, 2017
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital (Note)
Additional paid-in capital	$ 2,611,041	$ 2,514,454	$ 2,277,475
Treasury share transactions	171,229	171,229	165,059
From merger	146,976	146,976	146,976
			(Continued)

34 -

			December 31,	December 31,
	June 30, 2018			2017	June 30, 2017
Used to offset a deficit only
Employee share options expired	$	10,384	$	5,874	$	5,471
Share of changes in capital surplus of
associates or joint ventures		46,138		44,377		52,703
Not be used for any purpose
Convertible bonds options		7,074		7,209		18,564
Employee share options		91,322		116,389		113,692
Employee restricted shares		175,648		180,781		200,908
	$ 3,259,812		$	3,187,289	$ 2,980,848

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

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Corporation’s Articles of Incorporation (“the 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 after amendment, please refer to d. employees’ compensation and remuneration of directors in Note 27.

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.

35 -

The appropriations of earnings for 2017 and 2016 have been approved in the annual shareholders’ meeting on June 8, 2018 and 2017, respectively. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2017 For Fiscal Year 2016 $ 255,841 $ 171,994 1,854,424 1,314,425	Dividend Per Share (NT$)
		For Fiscal Year 2017 For Fiscal Year 2016 $ 4.5 $ 3.3

d. Special reserves

If a special reserve appropriated on the first-time adoption of IFRSs relates to exchange differences on translation of the financial statements of foreign operations (including the subsidiaries of the Corporation), the special reserve will be reversed on a proportionate basis according to the Corporation’s disposal of foreign operations; on the Corporation’s loss of significant influence, however, the entire special reserve will be reversed. Additional special reserve should be appropriated for the amount equal to the difference between net debit balance reserves and the special reserve appropriated on the first-time adoption of IFRSs. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and, thereafter, distributed.

e. Other equity

Exchange
Differences on
Translating
Foreign
Operations
Unrealized Gain
(Loss) on
Financial Assets
at Fair Value
through Other
Comprehensive
Income
Unrealized Gain
(Loss) on
Available-for-
sale Financial
Assets
For the six months ended June 30, 2018
Balance at January 1, 2018 (IAS 39)
$ (97,633)
$ -
$ 179,348

Effect of retrospective application of IFRS 9

-

151,864
(179,348)

Balance at January 1, 2018 (IFRS 9)
(97,633)
151,864
-
Exchange differences on translating
foreign operations
45,381
-
Unrealized gain (loss) arising from equity
investment
-
164,437
-
Share of other comprehensive gain (loss)
of associates and joint ventures
accounted for using equity method
(1,451)
(3,403)
-
Share-based payment transaction

-

-

-

Balance at June 30, 2018
$ (53,703)
$ 312,898
$ -

For the six months ended June 30, 2017
Balance at January 1, 2017
$ (24,914)
$ -
$ 232,901

Exchange differences on translating
foreign operations
(96,466)
-
-
Unrealized gain (loss) on available-for-sale
financial assets
-
-
(66,058)
Share of other comprehensive gain (loss)
of associates and joint ventures
accounted for using equity method
(12,464)
-
-
Issuance of shares
-
-
-
Share-based payment transaction

-

-

-

Balance at June 30, 2017
$ (133,844)
$ -
$ 166,843

Unearned
Employee
Benefit
$ (93,849)

-
(93,849)
-
-
-

30,924
$ (62,925)
$ (149,952)
-
-
-
(13,772)

38,827
$ (124,897)

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In the shareholders’ meeting on June 7, 2016, the shareholders approved a restricted share unit plan (“RSU” plan), please refer to Note 30.

f. Non-controlling interests

Balance, beginning of the period Share of non-controlling interests Net loss Exchange differences on the translation of foreign financial statements Unrealized gain on available-for-sale financial assets Capital increase of subsidiaries Effect of changes in equity interest Balance, end of the period		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 232,150 (8,041) 2,145 - 49,500 (2,027) $ 273,727	2017 $ 171,224 (12,139) (3,647) 16 49,000 - $ 204,454

g. 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) June 30, 2018 Chroma Investment Co., Ltd. 1,916 December 31, 2017 Chroma Investment Co., Ltd. 1,916 June 30, 2017 Chroma Investment Co., Ltd. 1,916	Carrying Amount Market Price $ 35,714 $ 314,155 $ 35,714 $ 310,324 $ 35,714 $ 187,727

Forfeited employee restricted shares of 63 thousand were returned to the Corporation and 54 thousand shares were canceled for the six months ended June 30, 2018. Forfeited employee restricted shares of 12 thousand were returned to the Corporation and canceled during 2017.

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.

37 -

26. REVENUE

For the Three Months Ended June 30 2017 2016 Revenue from contracts with customers Revenue from sale of goods $ 3,187,248 $ 2,822,089 Construction contract revenue 2,444,440 162,232 $ 5,631,688 $ 2,984,321 a. Contact balances Contract assets - properties construction Contract liabilities - sale of goods Contract liabilities - properties construction		For the Six Months Ended June 30
		2017 2016 $ 6,049,001 $ 5,517,890 3,048,841 242,137 $ 9,097,842 $ 5,760,027 June 30, 2018 $ 495,701 $ 345,571 1,084,577 $ 1,430,148

b. Disaggregation of revenue

Refer to Note 38 for the information about disaggregation of revenue.

27. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

Interest on borrowings Interest on convertible bonds Less: Amount included in the cost of qualifying assets Capitalized interest Capitalization rate	For the Three Months Ended June 30 2018 2017 $ 9,902 $ 8,943 387 1,515 10,289 10,458 3,156 6,311 $ 7,133 $ 4,147 $ 3,156 $ 6,311 1.58% 1.58%	For the Three Months Ended June 30 2018 2017 $ 9,902 $ 8,943 387 1,515 10,289 10,458 3,156 6,311 $ 7,133 $ 4,147 $ 3,156 $ 6,311 1.58% 1.58%		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 9,902 387 10,289 3,156 $ 7,133 $ 3,156 1.58%		2018 $ 20,145 773 20,918 7,434 $ 13,484 $ 7,434 1.58%	2017 $ 18,946 5,228 24,174 13,713 $ 10,461 $ 13,713 1.58%

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b. Depreciation and amortization expense

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses c. Employee benefits expense Short-term benefits Share-based payments Post-employment benefits Defined contribution plans Defined benefit plans (Note 24) Other employee benefit Summarized by function Operating costs Operating expenses		For the Three Months Ended June 30 2018 2017 $ 18,542 $ 25,995 57,926 52,542 $ 76,468 $ 78,537 $ 1,497 $ 781 For the Three Months Ended June 30 2018 2017 $ 856,457 $ 716,287 17,745 33,567 19,604 19,731 1,575 1,646 16,157 14,248 $ 911,538 $ 785,479 $ 166,360 $ 145,083 745,178 640,396 $ 911,538 $ 785,479			For the Six Months Ended June 30	For the Six Months Ended June 30
					2018 2017 $ 38,615 $ 52,292 113,580 103,925 $ 152,195 $ 156,217 $ 3,497 $ 1,563 For the Six Months Ended June 30
		2018 $ 856,457 17,745 19,604 1,575 16,157 $ 911,538 $ 166,360 745,178 $ 911,538		2018 $ 1,643,572 45,249 40,671 3,150 32,436 $ 1,765,078 $ 318,971 1,446,107 $ 1,765,078		2017 $ 1,413,073 66,667 39,439 3,246 28,014 $ 1,550,439 $ 277,143 1,273,296 $ 1,550,439

d. Employees’ compensation and remuneration of directors

The Corporation accrued its appropriation of employees’ compensation and remuneration of directors 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. For the three months ended June 30, 2018 and 2017 and six months ended June 30, 2018 and 2017, the accrual rates and accrued amounts were as follows:

Employees’ compensation Remuneration of directors and supervisors		For the Three Months Ended June 30	For the Three Months Ended June 30	For the Three Months Ended June 30		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 Amount $ 73,000 $ 2,400		2017		2018 Amount Rate % $ 146,000 7.78 $ 4,800 0.26		2017
				Amount $ 70,000 $ 2,220				Amount Rate % $ 142,000 12.98 $ 4,170 0.38

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If there is a change in the proposed amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.

The appropriations for employees’ compensation and remuneration of directors for 2017 and 2016 have been resolved by the board of directors on February 22, 2018 and February 21, 2017, respectively, were as below:

as below:
Employees’ compensation - cash Remuneration of directors - cash	For the Years Ended December 31
	2017 2016 $ 310,000 $ 300,000 9,600 8,000

There was no difference between the amounts of the employees’ compensation and the remuneration of directors and the respective amounts recognized in the consolidated financial statements for the years ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors resolved by the Corporation’s board of directors in 2018 and 2017 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

28. INCOME TAXES

a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current period Income tax on unappropriated earnings Adjustments for prior periods Deferred tax In respect of the current period Adjustments to deferred tax attributable to change in tax rates and laws Income tax expense recognized in profit or loss	For the Three Months Ended June 30 2018 2017 $ 291,237 $ 78,686 44,118 20,687 1,150 1 336,505 99,374 36,475 21,911 - - 36,475 21,911 $ 372,980 $ 121,285	For the Three Months Ended June 30 2018 2017 $ 291,237 $ 78,686 44,118 20,687 1,150 1 336,505 99,374 36,475 21,911 - - 36,475 21,911 $ 372,980 $ 121,285		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 291,237 44,118 1,150 336,505 36,475 - 36,475 $ 372,980		2018 $ 395,702 44,118 2,697 442,517 57,244 27,618 84,862 $ 527,379	2017 $ 145,385 20,687 1 166,073 23,365 - 23,365 $ 189,438

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income and expense to be recognized in profit or loss is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to 5%.

b. Income tax assessments

The Corporation’s tax returns through 2015 had been assessed by the tax authorities.

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The tax returns through 2016 of the Group’s subsidiaries - Adivic Technology Co., Chroma Investment Co., Testar Electronics Corp., EVT Technology Co., Ltd. and Wei Da Electric Vehicle Co., Ltd. - had been assessed by the tax authorities.

The tax returns through 2015 of the Group’s subsidiaries - Chroma New Material Corp. and Wei Kuang Automatic Equipment Co., had been assessed by the tax authorities.

29. EARNINGS PER SHARE

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Interest on convertible bonds and valuation gain on conversion option Earnings used in the computation of diluted earnings per share	For the Three Months Ended June 30 2018 2017 $ 1,024,722 $ 516,573 387 1,823 $ 1,025,109 $ 518,396	For the Six Months Ended June 30	For the Six Months Ended June 30
	2018 $ 1,024,722 387 $ 1,025,109	2018 $ 1,455,896 773 $ 1,456,669	2017 $ 804,250 5,638 $ 809,888

(In Thousands of Shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share options Employee restricted shares Convertible bonds Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended June 30 2018 2017 408,090 400,071 4,516 1,449 2,325 84 1,547 5,948 890 3,182 417,368 410,734	For the Three Months Ended June 30 2018 2017 408,090 400,071 4,516 1,449 2,325 84 1,547 5,948 890 3,182 417,368 410,734		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 408,090 4,516 2,325 1,547 890 417,368		2018 407,547 4,468 2,334 1,557 1,454 417,360	2017 391,386 2,415 80 10,352 3,087 407,320

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

41 -

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.

30. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan of the Corporation

The Corporation had not granted employee share options for the six months ended June 30, 2018 and 2017.

Information on employee share options was as follows:

Balance, beginning of the period Options exercised Balance, end of the period Options exercisable, end of the period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2018 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 9,463 $ 60.1 (2,498) 60.8 6,965 59.7 2,435	2017
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 11,538 $ 60.2 (312) 48.4 11,226 60.6 1,630

b. Employee share option plan of subsidiaries

Adivic Technology Co. granted its employees stock options of 1,360 thousand units in March 12, 2014, with each option eligible to subscribe for one common share of Adivic Technology Co. when exercised. The options are valid for 8 years and exercisable at certain percentages subsequent to the second year of the grant date.

Information on employee share options was as follows:

Balance, beginning of the period Options forfeited Balance, end of the period Options exercisable, end of the period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2018 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 785 $ 10.0 - - 785 10.0 -	2017
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 785 $ 10.0 - - 785 10.0 -

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c. 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. Dividends from RSUs are not restricted during the vesting period and 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 was as follows:

Restricted shares at the beginning of the period Shares granted Shares vested Shares canceled Restricted shares at the end of the period		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 2,975 - (19) (63) 2,893	2017 3,100 185 - - 3,285

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31. 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.

32. 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

June 30, 2018 Financial assets at FVTPL Derivative instruments Domestic listed equity securities Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed equity securities Domestic unlisted equity securities Foreign unlisted equity securities December 31, 2017 Financial assets at FVTPL Domestic listed equity securities Derivative instruments	Level 1 $ - 4,602 2,114,353 $ 2,118,955 $ 271,073 - - $ 271,073 $ 8,763 - $ 8,763	Level 2 $ 30 - - $ 30 $ - - - $ - $ - 31 $ 31	Level 3 $ - - 6,874 $ 6,874 $ - 476,430 26,360 $ 502,790 $ - - $ -	Total $ 30 4,602 2,121,227 $ 2,125,859 $ 271,073 476,430 26,360 $ 773,863 $ 8,763 31 $ 8,794 (Continued)

44 -

Available-for-sale financial assets Domestic listed equity securities Open-end beneficiary certificates June 30, 2017 Financial assets at FVTPL Domestic listed equity securities Investment in debt instrument Derivative instruments Available-for-sale financial assets Domestic listed equity securities Open-end beneficiary certificates	Level 1 $ 268,582 1,043,387 $ 1,311,969 $ 8,372 998 - $ 9,370 $ 253,753 1,468,860 $ 1,722,613	Level 2 $ - - $ - $ - - 314 $ 314 $ - - $ -	Level 3 $ - - $ - $ - - - $ - $ - - $ -	Total $ 268,582 1,043,387 $ 1,311,969 $ 8,372 998 314 $ 9,684 $ 253,753 1,468,860 $ 1,722,613 (Concluded)

There were no transfers between Levels 1 and 2 for the six months ended June 30, 2018 and 2017.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the six months ended June 30, 2018

Financial Assets Balance at January 1, 2018 Recognized in profit or loss (included in valuation gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Purchases Balance at June 30, 2018	Financial Assets at Fair Value Through Profit or Loss Equity Instruments $ 6,013 861 - - $ 6,874	Financial Assets at Fair Value Through Other Comprehensive Income Equity Instruments $ 295,449 - 158,741 48,600 $ 502,790	Total $ 301,462 861 158,741 48,600 $ 509,664

45 -
3) Valuation techniques and inputs applied for Level 2 fair value measurement

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

4) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair value of domestic unlisted equity securities and open-end beneficiary certificates are determined by using the asset approach and the market approach. Asset approach is a manner evaluating the total market value of individual asset and liability covered by evaluated target, taking into account the risk factors (lack of marketability, etc.) to estimate its fair value. Market approach is a manner referring to the transaction prices of the listed companies engaging in similar business in active market, related price multiplier, transaction and information implied by the transaction price, to arrive at their fair value.

c. Categories of financial instruments

			December	December	31,
	June 30, 2018			2017		June 30, 2017
Financial assets
FVTPL
Held for trading	$	-	$	8,794		$	9,684
Mandatorily at FVTPL		2,125,859			-		-
Loans and receivables (1)		-		10,150,213			7,467,561
Available-for-sale financial assets (2)		-		1,505,540			1,940,740
Financial assets at amortized cost (3)		10,893,599			-		-
Financial assets at FVTOCI
Equity instruments		773,863			-		-
Financial liabilities
Financial liabilities at amortized cost (4)		9,757,823		6,946,853			6,492,724

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 include financial assets measured at amortized cost, which comprise cash and cash equivalents, financial assets measured at amortized cost, notes receivable, trade receivables, other receivables (other current assets), and refundable deposits.
4) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, notes payable, trade payables, other payables, bonds issued, long-term loans (including current portion of long-term borrowings) and guarantee deposits received.
46 -

d. Financial risk management objectives and policies

The Group’s major financial instruments consist of equity 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 36.

Sensitivity analysis

The Group was mainly exposed to USD and RMB.

If the NTD had been strengthened/weakened by 5% against the relevant currency, the pre-tax profit would have decreased/increased by $336,781 thousand and $183,620 thousand for the six months ended June 30, 2018 and 2017, 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.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds both at fixed 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, 2018	2017	June 30, 2017
Fair value interest rate risk
Financial assets	$ 2,118,928	$ 1,718,748	$ 1,770,456
Financial liabilities	371,893	673,710	850,067
Cash flow interest rate risk
Financial assets	3,173,372	4,250,952	2,647,171
Financial liabilities	2,667,686	2,175,366	1,660,181

47 -

Sensitivity analysis

The sensitivity analysis below has been determined on the basis of the exposure to interest rates for both derivative and non-derivative 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, 2018 and 2017 would have increased/decreased by $1,264 thousand and $2,467 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 financial assets at fair value through other comprehensive income (mainly investment in domestic/foreign and listed/unlisted stocks), 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 domestic/foreign open-end beneficiary certificates and listed stocks in Taiwan)

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

Sensitivity analysis

If equity prices had been 5% higher/lower, the pre-tax profit for the six months ended June 30, 2018 would have increased/decreased by $106,291 thousand as a result of the changes in fair values of financial assets at FVTPL, and the pre-tax other comprehensive income for the six months ended June 30, 2018 would have increased/decreased by $38,693 thousand as a result of the changes in fair values of financial assets at FVTOCI.

If equity prices had been 5% higher/lower, the pre-tax profit for the six months ended June 30, 2017 would have increased/decreased by $468 thousand as a result of the changes in fair values of held-for-trading investments, and the pre-tax other comprehensive income for the six months ended June 30, 2017 would have increased/decreased by $86,131 thousand as a result of the changes in fair values of available-for-sale financial assets held by the Group.

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, 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.
48 -

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 trade receivables, 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, 2018, December 31, 2017 and June 30, 2017, the Group’s available unutilized bank loan facilities were $4,407,174 thousand, $3,036,639 thousand and $4,068,010 thousand, respectively.

Liquidity and interest risk tables for non-derivative financial liabilities

The following tables detail the Group’s remaining contractual maturity for its non-derivative 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.

Non-derivative financial liabilities Non-interest bearing Convertible bonds Fixed interest rate instruments Floating interest rate instruments	June 30, 2018	June 30, 2018
	Within 1 Year $ 6,717,277 100,000 179,346 1,131,662 $ 8,128,285	1 to 5 Years More Than 5 Years $ - $ - - - 97,678 2,477 1,604,341 - $ 1,702,019 $ 2,477

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Non-derivative financial liabilities Non-interest bearing Convertible bonds Fixed interest rate instruments Floating interest rate instruments Non-derivative financial liabilities Non-interest bearing Convertible bonds Fixed interest rate instruments Floating interest rate instruments	December 31, 2017	December 31, 2017
	Within 1 Year 1 to 5 Years More Than 5 Years $ 4,096,939 $ - $ - - 101,900 - 482,332 98,794 3,057 1,233,271 981,261 7,462 $ 5,812,542 $ 1,181,955 $ 10,519 June 30, 2017
	Within 1 Year $ 3,981,637 - 497,396 830,597 $ 5,309,630	1 to 5 Years More Than 5 Years $ - $ - 262,400 - 104,572 3,858 848,496 8,829 $ 1,215,468 $ 12,687

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.

33. TRANSACTIONS WITH RELATED PARTIES

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 Technologies Co., Ltd. (“Mou Kuan”) Other related party Quantel Co., Ltd. (“Quantel Thailand”) Other related party Quantel Pte Ltd Representative Office In Hanoi (“Quantel Vietnam”) Other related party Quantel Electronics (India) Private Limited (“Quantel India”) Other related party Quantel Sdn. Bhd. (“Quantel Malaysia”) Other related party Quantel Philippines Inc. (“Quantel Philippines”) Other related party PT Quantel (“Quantel Indonesia”) Other related party

50 -

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

Related Party Categories Associates Other related parties	For the Three Months Ended June 30 2018 2017 $ 14,955 $ 4,724 14,570 5,639 $ 29,525 $ 10,363	For the Three Months Ended June 30 2018 2017 $ 14,955 $ 4,724 14,570 5,639 $ 29,525 $ 10,363		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 14,955 14,570 $ 29,525		2018 $ 30,547 28,752 $ 59,299	2017 $ 9,502 13,222 $ 22,724

c. Purchase

Related Party Categories Associates Other related parties	For the Three Months Ended June 30 2018 2017 $ 5,152 $ 6,158 31,747 2,341 $ 36,899 $ 8,499	For the Three Months Ended June 30 2018 2017 $ 5,152 $ 6,158 31,747 2,341 $ 36,899 $ 8,499		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 5,152 31,747 $ 36,899		2018 $ 8,665 44,630 $ 53,295	2017 $ 14,481 5,992 $ 20,473

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

	Related Party			December 31,	December 31,
Line Items	Categories	June	30, 2018		2017	June	30, 2017
Trade receivables -	Associates	$	8,517	$	4,075	$	5,320
related parties	Other related parties		46,583		43,627		38,934
		$	55,100	$	47,702	$	44,254

Outstanding trade receivables from related parties were unsecured.

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

	Related Party			December 31,	December 31,
Line Items	Categories	June	30, 2018		2017	June	30, 2017
Notes payable -	Other related parties	$	17,433	$	17,502	$	6,190
related parties
Trade payables -	Associates	$	7,489	$	7,201	$	8,026
related parties	Other related parties		17,086		32,233		147
		$	24,575	$	39,434	$	8,173

51 -

f. Others

			For	the Three Months Ended	the Three Months Ended	the Three Months Ended	For the Six	For the Six	Months Ended	Months Ended
		Related Party		June 30				June 30
Line Items		Categories		2018		2017		2018		2017
Rental income	Associates		$	315	$	315	$	630	$	630
Rental expense	Other related		$	3,150	$	3,150	$	6,300	$	6,300
		parties
Administration	Associates		$	-	$	2	$	2	$	3
expense	Other related			8,156		7,756		13,311		13,399
		parties
			$	8,156	$	7,758	$	13,313	$	13,402
		Related	Party			December 31,
Line Items		Categories		June 30, 2018			2017		June	30, 2017
Other current assets		Associates		$	3,498		$	912	$	482

g. Compensation of key management personnel

Related Party Categories Short-term employee benefits Post-employment benefits	For the Three Months Ended June 30 2018 2017 $ 32,967 $ 27,796 541 554 $ 33,508 $ 28,350	For the Three Months Ended June 30 2018 2017 $ 32,967 $ 27,796 541 554 $ 33,508 $ 28,350		For the Six Months Ended June 30	For the Six Months Ended June 30
		2018 $ 32,967 541 $ 33,508		2018 $ 64,152 1,083 $ 65,235	2017 $ 56,500 1,103 $ 57,603

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

34. ASSETS PLEDGED

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

			December 31,
	June 30, 2018		2017	June 30, 2017
Property, plant and equipment, net	$	958,590	$ 1,030,465	$ 1,052,898
Pledge deposits - (classified as financial assets
measured at amortized cost)		126,013	-	-
Pledge deposits - (classified as debt investments
with no active market)		-	491,447	7,717
	$ 1,084,603		$ 1,521,912	$ 1,060,615

52 -

35. OTHER SIGNIFICANT EVENTS

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

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

a. The first installment of the bid amount (10% of the total bid amount, or $353,111 thousand) should be paid within 10 days from the contract date. The Corporation paid the first installment by bid deposit $353,040 thousand and 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 Corporation has paid the fourth installment $716,362 thousand in June 2018, and is awaiting the MOI to issue the property registration 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.

53 -

36. 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, 2018

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 185,930
30.460 (USD:NTD)
USD

18,607
7.848 (USD:HKD)
USD

4,353
1.363 (USD:SGD)
RMB

306,821
4.593 (RMB:NTD)
RMB

173,006
1.183 (RMB:HKD)
RMB

37,074
0.151 (RMB:USD)

Financial liabilities

Monetary items

USD

32,039
30.460 (USD:NTD)
USD

18,828
7.848 (USD:HKD)
USD

3,992
110.764 (USD:JPY)
RMB

71,911
1.183 (RMB:HKD)

December 31, 2017
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 143,081
29.760 (USD:NTD)
USD

18,885
7.817 (USD:HKD)
USD

4,348
1.337 (USD:SGD)
RMB

479,401
4.565 (RMB:NTD)
RMB

176,964
1.199 (RMB:HKD)

Financial liabilities

Monetary items

USD

33,786
29.760 (USD:NTD)
USD

19,711
7.817 (USD:HKD)
RMB

30,206
4.565 (RMB:NTD)
RMB

91,165
1.199 (RMB:HKD)

Carrying
Amount
$ 5,663,424

566,768

132,585

1,409,227

794,615

170,281
$ 8,736,900
$ 975,911

573,489

121,604

330,286
$ 2,001,290
Carrying
Amount
$ 4,258,102

562,031

129,370

2,188,466

807,841
$ 7,945,810

1,005,481

586,585

137,891

416,167
$ 2,146,124

54 -

June 30, 2017

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 108,896 30.420 (USD:NTD) USD 14,460 7.806 (USD:HKD) USD 3,534 1.376 (USD:SGD) RMB 226,319 4.486 (RMB:NTD) RMB 122,155 1.151 (RMB:HKD) Financial liabilities Monetary items USD 28,319 30.420 (USD:NTD) USD 13,059 7.806 (USD:HKD) RMB 60,143 4.486 (RMB:NTD) RMB 49,560 1.151 (RMB:HKD)	Carrying Amount $ 3,312,612 439,872 107,505 1,015,266 547,987 $ 5,423,242 $ 861,454 397,261 269,804 222,325 $ 1,750,844

For the three months ended June 30, 2018 and 2017, (realized and unrealized) net foreign exchange gains were $137,267 thousand and $44,361 thousand, respectively. For the six months ended June 30, 2018 and 2017, (realized and unrealized) net foreign exchange gains (losses) were $127,416 and $(90,897) 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.

37. 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: Table 4 (attached)
5) Acquisitions of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital: Table 5 (attached)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
55 -
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7 (attached)
9) Trading in derivative instruments: Note 7 and Note 22.
10) Others: Intercompany relationships and significant intercompany transactions: Table 8 (attached)
11) Information on investees: Table 9 (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 10 (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 6 (attached)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 6 (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: Table 2 (attached).
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1 (attached).
- 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.

38. SEGMENT INFORMATION

Information reported to the Group’s 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:

a. Special materials department.
b. Test instrument department.
c. Automatic equipment department.
56 -

d. Other

1) Segment revenues and results

For the six months ended June 30, 2018 Revenue from external customers Inter-segment revenue Segment revenue Consolidated revenue Segment income Non-operating income and expenses Profit before tax For the six months ended June 30, 2017 Revenue from external customers Inter-segment revenue Segment revenue Consolidated revenue Segment income Non-operating income and expenses Profit before tax	Special Materials Department $ 943,916 - $ 943,916 $ 25,546 $ 999,672 - $ 999,672 $ 18,732	Test Instrument Department $ 4,940,081 3,697,331 $ 8,637,412 $ 977,732 $ 4,356,007 3,117,897 $ 7,473,904 $ 954,973	Automatic Equipment Department $ 3,048,841 611,330 $ 3,660,171 $ 874,064 $ 242,137 30,186 $ 272,323 $ 34,962	Other $ 165,004 - $ 165,004 $ (20,329) $ 162,211 6 $ 162,217 $ (16,654)	Elimination $ - (4,308,661) $ (4,308,661) $ (84,649) $ - (3,148,089) $ (3,148,089) $ 18,310	Total $ 9,097,842 - 9,097,842 $ 9,097,842 $ 1,772,364 202,870 $ 1,975,234 $ 5,760,027 - 5,760,027 $ 5,760,027 $ 1,010,323 (28,774) $ 981,549

The sales between segments are based on fair value.

The above revenue were generated through transactions with external customers and among segments. The inter-segment revenue for the six months ended June 30, 2018 and 2017 had been adjusted and eliminated from the consolidated financial statements.

Segment operating income refers to profit earned by each segment, excluding remuneration of directors, share of profits or loss of associates and joint ventures, rental income, interest income, gain (loss) on disposal of property, plant and equipment, gain (loss) on disposal of investments, foreign exchange gain (loss), valuation gain (loss) on financial instruments, finance costs and income tax expense. 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

Segment assets Special materials department Test instrument department Automatic equipment department Other Adjustments and eliminations Total segment assets Investments and other unallocated assets Consolidated total assets	June 30, 2018 $ 925,974 19,735,412 5,112,640 222,347 (4,406,605) 21,589,768 4,323,535 $ 25,913,303	December 31, 2017 $ 935,074 19,209,748 2,703,688 599,309 (4,722,373) 18,725,446 3,292,166 $ 22,017,612	June 30, 2017 $ 865,109 17,454,615 1,159,664 517,637 (4,087,291) 15,909,734 3,191,738 $ 19,101,472 (Continued)

57 -

Segment liabilities Special materials department Test instrument department Automatic equipment department Other Adjustments and eliminations Total segment liabilities Borrowings and other unallocated liabilities Consolidated total liabilities	June 30, 2018 $ 655,066 10,360,090 1,493,938 135,851 (3,790,813) 8,854,132 3,441,155 $ 12,295,287	December 31, 2017 $ 614,525 6,330,287 2,001,270 277,289 (3,821,486) 5,401,885 3,152,898 $ 8,554,783	June 30, 2017 $ 590,006 6,786,119 604,596 240,324 (3,215,785) 5,005,260 2,729,766 $ 7,735,026

(Concluded)

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, investments in stocks and funds, prepayments for investment 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.
58 -

TABLE 1

CHROMA ATE INC. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE SIX MONTHS ENDED JUNE 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing (Note 5)	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limit
													Item	Value
0	The Corporation	Chroma Systems Solutions, Inc. Chroma Japan Corp.	Other receivables Other receivables	Y Y	$ 118,384 46,321	$ 118,384 41,194	$ 118,384 30,312	3.25% -	a a	$ 255,135 146,361	- -	$ - -	- -	$ - -	$ 1,334,429 (Note 1) 1,334,429 (Note 1)	$ 2,668,858 (Note 2) 2,668,858 (Note 2)
1	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	45,930	45,930	-	2.50%	b	-	Operation	-	-	-	433,460 (Note 3)	433,460 (Note 3)
2	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	45,930	45,930	-	2.50%	b	-	Operation	-	-	-	225,434 (Note 3)	225,434 (Note 3)

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

Note 2: Based on 20% of the net value of the Corporation.

Note 3: Based on 70% of the net value from the latest financial statements of borrowing company that have been audited or reviewed.

Note 4: The amounts listed in the table were translated into New Taiwan dollars at the exchange rate of US$1=NT$30.460, JPY1=NT$0.275, RMB1=NT$4.593 as of June 29, 2018.

Note 5: Financing provided:

a. For transactions.

b. For short-term financing.

59 -

TABLE 2

CHROMA ATE INC. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 2018

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

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/Gua ranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/Gua ranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements	Aggregate Endorsement Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Corporation	Chroma Japan Corp. Chroma ATE Europe B.V. Chroma USA Sajet System Technology (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Quantel Private Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,001,643 2,001,643 2,001,643 2,001,643 2,001,643 2,001,643 2,001,643 2,001,643	$ 34,100 53,100 60,920 22,965 45,930 45,930 91,860 44,680	$ 34,100 53,100 60,920 22,965 45,930 45,930 91,860 44,680	$ 5,500 - 60,920 - - - 1,993 -	$ - - - - - - - -	0.26% 0.40% 0.46% 0.17% 0.34% 0.34% 0.69% 0.33%	$ 4,003,287 4,003,287 4,003,287 4,003,287 4,003,287 4,003,287 4,003,287 4,003,287	Y Y Y Y Y Y Y Y	- - - - - - - -	- - - Y Y Y Y -

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

Note 2: According to Regulation of the “Procedures for Endorsement/Guarantee and Lending of Funds”, the Corporation limits the endorsement/guarantee amount within the 30% of the net value of the Corporation.

Note 3: The amounts listed in columns were translated into New Taiwan dollars at the exchange rate of US$1=NT$30.460, JPY1=NT$0.275, SGD1=NT$22.340, RMB1=NT$4.593, EUR1=NT$35.400 as of June 29, 2018.

60 -

TABLE 3

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) JUNE 30, 2018

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		June 30, 2018	June 30, 2018		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
The Corporation Chroma New Material Corp. Chroma Investment Co., Ltd.	Fund Mega Diamond Money Market Fund Jih Sun Money Market Fund The RSIT Enhanced Money Market Fund Yuanta Wan Tai Money Market Fund Prudential Financial Money Market Fund Taishin 1699 Money Market Fund WI Harper INC Fund VII LP Stocks DynaColor, Inc. Chunghwa Telecom Co., Ltd. China Communications Media Group Co., Ltd. WK Technology Fund IX Ltd. Twoway Catv Service Inc. Tian Zheng International Precision Machinery Co., Ltd. WK Technology Fund IV Ltd. WK Technology Fund VI Ltd. TFBS Bioscience Inc. Taiwan Advanced Nanotech Inc. Fund Fuh Hwa You Li Money Market Fund The RSIT Enhanced Money Market Fund Taishin 1699 Money Market Fund Fund Hua Nan Kirin Money Market Fund Stocks Greatek Electronics Inc. Chroma ATE Inc. Fei Hong Industrial Co., Ltd. Cosmactive Broadband Networks Co., Ltd. Prance System Technology Co., Ltd.	- - - - - - - - - - - - - - - - - - - - - - The Corporation - - -	Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income - non-current `〃` `〃` `〃`	44,427 27,146 24,722 18,863 10,811 7,425 - 6,050 412 26 4,614 3,561 2,220 1,152 903 2,000 2,700 6,829 734 3,712 5,768 85 1,916 4,174 26 111	$ 555,064 400,650 294,821 284,676 170,346 100,056 6,874 225,375 45,362 336 42,029 47,391 289,443 4,757 2,345 46,320 44,145 91,696 8,749 50,020 68,815 4,602 314,155 21,543 - -	- - - - - - - 6.1 - - 4.6 4.4 9.4 1.9 1.4 15.7 15.0 - - - - - 0.5 7.6 1.5 5.1	$ 555,064 400,650 294,821 284,676 170,346 100,056 6,874 225,375 45,362 336 42,029 47,391 289,443 4,757 2,345 46,320 44,145 91,696 8,749 50,020 68,815 4,602 314,155 21,543 - -	- - - - - - - - - - - - - - - - - - - - - - - - - -
								(Continued)

61 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		June 30, 2018	June 30, 2018		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
Chen Hwa Technology Inc. Innovative Nanotech Incorporated Touch Cloud Incorporation	Stocks Hangzhou New Material Chroma Co., Ltd. Fund Mega Diamond Money Market Fund Fund Mega Diamond Money Market Fund	- - -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss -current `〃`	- 3,608 3,552	$ 4,817 45,079 44,381	19.0 - -	$ 4,817 45,079 44,381	- - -

Note 1: Marketable securities refer to stocks, bonds, beneficiary certificates and marketable securities derived from above items under IFRS 9 “Financial Instruments”.

Note 2: The fair value of open-end beneficiary certificates and listed market securities was calculated based on the net asset value and closing price as of balance sheet date.

(Concluded)

62 -

TABLE 4

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2018

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares (Thousands)	Amount (Note)	Number of Shares (Thousands)	Amount	Number of Shares (Thousands)	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares (Thousands)	Amount (Note)
Chroma ATE Inc. (the “Corporation”)	Fund Mega Diamond Money Market Fund Jih Sun Money Market Fund	Financial assets at fair value through profit or loss - current `〃`	- -	- -	20,372 -	$ 253,960 -	24,055 27,146	$ 300,000 400,000	- -	$ - -	$ - -	$ - -	44,427 27,146	$ 555,064 400,650

Note: The beginning and ending balances included adjustments for financial assets valuation gain or loss.

63 -

TABLE 5

CHROMA ATE INC. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2018

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

Company Name	Type of Property	Transaction Date	Transaction Amount	Payment Term	Counter-party	Nature of Relationship	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Price Reference	Purpose of Acquisition	Other Terms
							Owner	Relationship	Transfer Date	Amount
Chroma ATE Inc.	Construction in progress and prepayments for equipment.	2018.06.05	$ 716,362	Based on a contract; fourth installment had been paid.	Ministry of the Interior, Republic of China	-	-	-	-	$ -	Public bidding	Manufacturing, R&D, operating and building employee dormitories	Note

Note: Please see Note 35 to the financial statements for related information.

64 -

TABLE 6

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, 2018

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

Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Corporation Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma USA The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. Neworld Electronics Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd.	Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma USA The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Same parent company	(Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale)	$ (1,018,612) 1,018,612 (106,156) 106,156 (138,251) 138,251 (146,361) 146,361 (301,012) 301,012 (255,135) 255,135 (196,037) 196,037 (367,387) 367,387 (255,451)	(26) 100 (3) 100 (4) 100 (4) 100 (8) 100 (7) 100 (5) 100 (21) 71 (15)	Net 90 days after delivery Net 90 days after delivery Net 120 days after delivery Net 120 days after delivery Net 90 days after monthly closing Net 90 days after monthly closing Net 90 days after delivery Net 90 days after delivery Net 180 days after delivery Net 180 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days Net 90 days Net 90 days	- - - - - - - - - - - - - - - - -	- - - - - - Note 1 Note 1 Note 1 Note 1 - - Note 1 Note 1 Note 1 Note 1 -	$ 694,922 (694,922) 71,478 (71,478) 91,199 (91,199) 265,409 (265,409) 355,696 (355,696) 195,503 (195,503) 216,958 (216,958) 479,747 (479,747) 98,879	23 (100) 2 (100) 3 (100) 9 (100) 12 (100) 7 (100) 7 (100) 40 (84) 8	- - - - - - - - - - - - - - - - -
										(Continued)

65 -

Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Neworld Electronics Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd. Neworld Electronics Ltd.	Neworld Electronics Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Neworld Electronics Ltd. Neworld Electronics Ltd. Wei Kuang Automatic Equipment Co., Ltd.	Same parent company Same parent company Same parent company Same parent company Same parent company	Purchase (Sale) Purchase (Sale) Purchase	$ 255,451 (336,633) 336,633 (504,825) 504,825	88 (20) 90 (20) 34	Net 90 days Net 90 days Net 90 days Net 180 days after delivery Net 180 days after delivery	- - - - -	- - - - -	$ (98,879) 126,215 (126,215) 189,634 (189,634)	(40) 11 (50) 11 (82)	- - - - -

Note: The actual credit period is longer than other customers, the recovery of receivables depends on the related parties’ financial position.

(Concluded)

66 -

TABLE 7

CHROMA ATE INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 2018

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note)	Allowance for Impairment Loss
					Amount	Action Taken
The Corporation Neworld Electronics Ltd. Wei Kuang Automatic Equipment Co., Ltd Chroma Electronics (Shenzhen) Co., Ltd.	Neworld Electronics Ltd. Chroma USA Chroma ATE Europe B.V. Chroma System Solutions, Inc. Chroma Japan Corp. Chroma Electronics (Shenzhen) Co, Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Neworld Electronics Ltd. Chroma ATE (Suzhou) Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Same parent company Same parent company Same parent company	Trade receivables $ 694,922 Trade receivables 355,696 Trade receivables 216,958 Trade receivables 195,503 Other receivables - financing provided 118,384 Trade receivables 265,409 Trade receivables 479,747 Trade receivables 126,215 Trade receivables 189,634 Trade receivables 104,503	2.60 1.67 1.95 3.34 - 1.36 1.56 10.40 7.60 0.47	$ - - - - - - - - - -	- - - - - - - - - -	$ 187,234 61,843 62,445 47,552 - 26,759 59,155 102,028 154,086 21,556	$ - - - - - - - - - -

Note: As of July 31, 2018.

67 -

TABLE 8

CHROMA ATE INC. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
0	The Corporation	Neworld Electronics Ltd. Chroma USA Chroma Systems Solutions, Inc. Chroma Europe Chroma Japan Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Quantel Private Ltd. Chroma ATE (Suzhou) Co., Ltd. Testar Electronics Co. Wei Kuang Automatic Equipment Co., Ltd. Chroma USA Neworld Electronics Ltd. Chroma USA Chroma Japan Chroma Europe Chroma Systems Solutions, Inc. Chroma Electronics (Shenzhen) Co., Ltd. Testar Electronics Co. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Quantel Private Ltd. Chroma Systems Solutions, Inc. Chroma Japan Chroma New Material Corporation Testar Electronics Co.	a a a a a a a a a a a a a a a a a a a a a a a a a a	Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Purchase Purchase Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Other receivables - financing provided Other receivables - financing provided Other receivables Other receivables	$ 1,018,612 301,012 255,135 196,037 146,361 138,251 106,156 89,718 76,842 13,843 26,235 25,896 694,922 355,696 265,409 216,958 195,503 91,199 79,779 76,713 71,478 41,327 118,384 30,312 23,781 18,795	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Note 3 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	11 3 3 2 2 2 1 1 1 - - - 3 1 1 1 1 - - - - - - - - -
1	Chroma USA	Chroma Japan Chroma Japan	b b	Purchase Trade payables	69,801 55,073	Based on regular terms Based on regular terms	1 -
2	Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd.	a b b b a	Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue	367,387 336,633 255,451 73,293 24,538	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	4 4 3 1 -
							(Continued)

68 -

No.	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
		Wei Kuang Automatic Equipment Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd.	b a a b a b b b a a b	Purchase Commissions expense Commissions expense Commissions expense Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Other receivables Trade payables	$ 504,825 21,918 17,081 16,062 479,747 126,215 98,879 82,541 15,701 86,389 189,634	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	6 - - - 2 - - - - - 1
3	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd.	b b b b b b	Operating revenue Operating revenue Purchase Trade receivables Trade receivables Trade payables	27,537 18,762 10,513 104,503 70,384 12,116	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - - - - -
4	Chroma Electronics (Shanghai) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd.	b b	Purchase Trade payables	10,015 20,738	Based on regular terms Based on regular terms	- -
5	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd.	b b b b b b	Operating revenue Purchase Purchase Trade receivables Trade payables Trade payables	14,416 21,318 16,491 20,031 16,691 11,596	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - - - - -
6	Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.	Wei Kuang Automatic Equipment Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd.	b b	Purchase Trade payables	17,697 17,697	Based on regular terms Based on regular terms	- -
7	Chroma Europe	Chroma Germany GmbH Chroma Germany GmbH Chroma Germany GmbH	b b b	Operating revenue Trade receivables Other receivables	17,984 14,584 38,430	Based on regular terms 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)

69 -

TABLE 9

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE SIX MONTHS ENDED JUNE 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor	Investee	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as of June 30, 2018	Balance as of June 30, 2018	Balance as of June 30, 2018	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				June 30, 2018	December 31, 2017	Shares (Thousands)	Percentage of Ownership	Carrying Amount
The Corporation Chroma USA San Eagle Development Corp. EVT Technology Co., Ltd. Adivic Technology Co., Ltd. Quantel Private Ltd Chroma ATE Europe B.V.	Neworld Electronics Ltd. San Eagle Development Corp. Adlink Technology Inc. Chroma New Material Corporation Wei Kuang Automatic Equipment Co., Ltd. CHI Incorporation Ltd. Quantel Private Ltd. Chen Hwa Technology Inc. Chroma Investment Co., Ltd. Chroma ATE Europe B.V. DynaScan Technology Corp. Chroma USA Sensational Holding Ltd. Adivic Technology Co. Chroma Japan Corp. Chroma Systems Solutions, Inc. Deep Red Holding Co., Ltd. Chih Ho Shun Development Co., Ltd. Testar Electronics Corporation EVT Technology Co., Ltd. Innovative Nanotech Incorporated Touch Cloud Incorporation Chroma Systems Solutions, Inc. Wei Kuang Mech. Eng. Inc. Wei Da Electric Vehicle Co., Ltd. Adivic Holding Corporation Quantel Technologies India Private Ltd. Quantel Global Vietnam Co., Ltd. Quantel Global Sdn. Bhd. Quantel Global Philippines Corporation Chroma Germany GmbH	Hong Kong British Virgin Islands New Taipei, Taiwan Taoyuan, Taiwan Hsinchu, Taiwan British Virgin Islands Singapore British Virgin Islands New Taipei, Taiwan The Netherlands Taoyuan, Taiwan USA British Virgin Islands Taipei, Taiwan Japan USA Mauritius Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taipei, Taiwan USA Mauritius Pingtung, Taiwan Samoa India Vietnam Malaysia Philippines Germany	Sale and maintenance of electronic test instruments, etc. Investment Manufacturing, processing and retailing of software/hardware of computers and peripherals Sale and processing of gold wire Design, manufacturing, installment and testing of automated factory conveyor systems Test of inductance, capacitance and resistance, and sale of parts Sale and maintenance of test instruments, etc. Test of inductance, capacitance and resistance, and sale of parts Investment Sale and maintenance of electronic test instruments etc. Research and manufacture of LED generators Sale and maintenance of electronic test instruments, etc. Investment Sale and research of RF device Sale and maintenance of electronic test instruments, etc. Sale and maintenance of electronic test instruments, etc. Investment Construction and development of residence, buildings and specialized field; construction and investment of public works Testing of LED products Manufacturing of motorcycles and its parts Monitoring instruments of nanoparticles Development of cloud platform and Internet of Things Systems Sale and maintenance of electronic test instruments, etc. Investments Sale and lease of motorcycles Sale and research of RF device Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of electronic test instruments, etc.	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 193,800 147,125 29,628 12,217 17,500 247,096 67,481 142,140 57,000 64 185,686 3,750 42,245 3,056 6,219 4,199 610 1,073	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 193,800 147,125 29,628 12,217 17,500 247,096 67,481 70,000 57,000 64 185,686 3,750 42,245 3,056 6,219 - - 1,073	64,013 2,050 24,502 25,000 10,000 3,830 1,914 3,085 14,000 1 9,841 1,000 1,200 12,240 9 120 215 1,750 20,160 6,644 14,214 5,700 240 4,475 375 1,000 65 - 600 99 30	100.0 100.0 11.3 100.0 100.0 100.0 60.0 100.0 100.0 100.0 27.3 100.0 100.0 51.0 100.0 25.0 100.0 35.0 67.2 73.8 71.1 78.1 50.0 100.0 75.0 100.0 100.0 100.0 100.0 100.0 100.0	$ 957,715 752,890 498,386 421,654 1,421,470 156,910 116,600 104,855 117,988 70,206 116,921 123,707 52,484 41,085 (50,280) (55,162) 77,005 17,647 19,515 19,302 131,192 49,499 151,440 843,745 (3,906) 10,400 2,704 2,133 4,333 5,537 (8,906)	$ 92,980 160,627 70,477 23,049 560,966 4,148 14,838 318 (335) 16,043 83,382 5,469 851 (28,977) (15,213) 29,739 14,355 61 (6,810) (4,485) (12,917) (7,483) 29,739 160,616 - (990) (134) (1,805) (22) 3 (4,712)	$ 92,970 62,370 8,047 23,049 560,804 4,148 8,344 318 (335) 15,909 22,763 5,210 851 (15,319) (15,226) 7,435 14,355 21 (4,576) (3,311) (10,752) (5,843) NA NA NA NA NA NA NA NA NA	Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

70 -

TABLE 10

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2018

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

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 2)	Method of Investment (Note 1)	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2018 (Note 3)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of June 30, 2018 (Note 3)	Net Income (Loss) of the Investee	Percentage of Ownership in Investment	Investment Gain (Loss) (Notes 4 and 5)	Carrying Amount as of June 30, 2018 (Note 2)	Accumulated Inward Remittance of Earnings as of June 30, 2018
							Outward	Inward
Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma (Shanghai) Trading Co., Ltd. Hangzhou New Material Chroma Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments Sale of computerized automatic test systems, peripherals and electronic test instruments International and transit trading, commercial simple processing and commercial consulting service and etc. Production and sale of semiconductor connecting materials Sale of computerized automatic test systems, peripherals and electronic test instruments Sale and maintenance of electronic equipment and factory conveyor systems Sale and maintenance of electronic equipment and factory conveyor systems Assembly, sale and maintenance of factory conveyors and related systems and renders related after-sales services Research, development and design of computer network security systems and information management		$ 116,430 (HK$ 30,000) 91,380 (US$ 3,000) 82,242 (US$ 2,700) 45,690 (US$ 1,500) 115,748 (US$ 3,800) 54,524 (RMB 11,871) 52,438 (RMB 11,417) 7,978 (RMB 1,737) 38,462 (RMB 8,374)	b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of CHI Incorporation Ltd. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Deep Red Holding Co., Ltd.		$ 132,178 (HK$ 1,200) (US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ - - - - - - - - -	$ - - - - - - - - -	$ 132,178 (HK$ 1,200) (US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ 35,127 12,068 359 7,288 4,089 75,317 86,377 3,202 14,214	100 100 100 19 100 100 100 100 100	$ 35,127 12,068 359 - 4,089 75,317 86,377 3,202 14,214	$ 618,988 118,269 90,502 4,817 211,561 175,580 414,322 49,888 77,000	$ - - - - - - - - -

Accumulated Outward Remittance for Investments in Mainland China as of June 30, 2018		Investment Amounts Authorized by the Investment Commission, MOEA			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$635,051 (HK$1,200, US$19,312)		$725,060 (HK$1,400, US$22,076) (Note 6)			$8,006,573 (Note 7)

(Continued)

71 -

Note 1: Methods of investment have following type:

a. Direct investment in Mainland China.

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

Note 2: The amounts of paid-in capital and carrying value as of June 29, 2018 were translated into New Taiwan dollars at the rates of HK$1=NT$3.881, US$1=NT$30.460, RMB1=NT$4.593 prevailing on June 29, 2018.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2018 and June 30, 2018 were translated into New Taiwan dollars on the original outflow day.

Note 4: Based on unreviewed financial statements.

Note 5: Investment income (loss) was translated into New Taiwan dollars at the average rate of HK$1=NT$3.768, US$1=NT$29.537 and RMB1=NT$4.640 for the six months ended June 29, 2018.

Note 6:

	Approval Letter		Approved Amount	Approved Amount	Approved Amount
a.	Letter (1998) II-87710585 of Investment Commission of MOEA	NT$	5,852	(HK$	1,400)
b.	Letter (2000) II-89014726 and 89037430 of Investment Commission of MOEA	NT$	63,180	(US$	2,000)
c.	Letter (2001) II-89037430 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
d.	Letter II-91048640 of Investment Commission of MOEA	NT$	63,984	(US$	1,853) (Note 8)
e.	Letter II-90025170 of Investment Commission of MOEA	NT$	60,240	(US$	1,750)
f.	Letter II-092020235 of Investment Commission of MOEA	NT$	19,230	(US$	560)
g.	Letter II-092043358 of Investment Commission of MOEA	NT$	6,748	(US$	200)
h.	Letter II-093004076 of Investment Commission of MOEA	NT$	3,158	(US$	95)
i.	Letter II-094006092 of Investment Commission of MOEA	NT$	6,896	(US$	219)
j.	Letter II-09500052120 of Investment Commission of MOEA	NT$	81,528	(US$	2,500)
k.	Letter II-09600175700 of Investment Commission of MOEA	NT$	120,000	(US$	3,699)
l.	Letter II-096000006020 of Investment Commission of MOEA	NT$	66,580	(US$	2,000)
m.	Letter II-09600310110 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
n.	Letter II-09700186010 of Investment Commission of MOEA	NT$	46,110	(US$	1,500)
o.	Letter II-09700403210 of Investment Commission of MOEA	NT$	7,096	(US$	210) (Note 9)
p.	Letter II-10400042770 of Investment Commission of MOEA	NT$	78,240	(US$	2,500)
q.	Letter II-10600164500 of Investment Commission of MOEA	NT$	29,898	(US$	990)

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

Note 8: 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)

72 -

AI assistant

CHROMA — Interim / Quarterly Report 2018

52029_rns_2018-12-13_85e51b9c-0b22-4b57-82e0-90b6f959f9b3.pdf

Chroma ATE Inc. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

CHROMA ATE INC. AND SUBSIDIARIES

CHROMA ATE INC. AND SUBSIDIARIES

CHROMA ATE INC. AND SUBSIDIARIES

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

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

CHROMA ATE INC. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) IFRS 9 “Financial Instruments” and related amendment

Classification, measurement and impairment of financial assets

IFRS 16 “Leases”

Definition of a lease

The Group as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2017

ii) Available-for-sale financial assets

iii) Loans and receivables

2017

iii. Derecognition of financial assets

b) Equity instruments

ii. Derecognition of financial liabilities

d) Convertible bonds

2) Revenue recognition

2018

a) Revenue from sale of goods

2017

4) Taxation

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST - CURRENT - 2018

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - CURRENT - 2017

13. NOTES RECEIVABLE AND TRADE RECEIVABLES

For the six months ended June 30, 2018

14. CONSTRUCTION CONTRACTS RECEIVABLE (PAYABLE)

15. INVENTORIES

16. SUBSIDIARIES

17. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

18. PROPERTY, PLANT AND EQUIPMENT

19. GOODWILL

20. OTHER INTANGIBLE ASSETS

21. BORROWINGS

22. BONDS PAYABLE

23. OTHER PAYABLES

24. RETIREMENT BENEFIT PLANS

25. EQUITY

a. Ordinary share capital

b. Capital surplus

c. Retained earnings and dividend policy

d. Special reserves

e. Other equity

f. Non-controlling interests

g. Treasury shares

26. REVENUE

b. Disaggregation of revenue

27. ADDITIONAL INFORMATION ON EXPENSES

b. Depreciation and amortization expense

28. INCOME TAXES

b. Income tax assessments

CHROMA Interim / Quarterly Report 2018