China Steel Corporation and Subsidiaries

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

ASSETS	% June 30, 2017 (Reviewed) Amount	December 31, 2016 (Audited) Amount	%	June 30, 2016 (Reviewed) Amount	%	LIABILITIES AND EQUITY	% June 30, 2017 (Reviewed) Amount	December 31, 2016 (Audited) Amount	%	June 30, 2016 (Reviewed) Amount
Cash and cash equivalents (Note 6) CURRENT ASSETS	2 \$ 13,290,204	\$ 15,467,768	2	\$ 16,018,237	2	Short-term borrowings and bank overdraft (Notes 19 and 33) CURRENT LIABILITIES	\$ 36,890,105	\$ 35,905,740 5	5	\$ 26,364,279
Financial assets at fair value through profit or loss - current						Short-term bills payable (Note 19)	46,539,013	16,632,100 7	2	43,040,338
Available-for-sale financial assets - current (Note 8) (Note 7)	1 - 4,404,536 2,980,679	3,288,349 2,806,737	1 -	4,041,242 2,841,827	1 -	Financial liabilities at fair value through profit or loss - current (Note 7)	5,147	4,941 -	-	1,756
Derivative financial assets for hedging - current (Note 10) Notes receivable (Note 11)	- - 47,213 1,389,326	36,784 1,233,769	- -	40,009 1,136,166	- -	Derivative financial liabilities for hedging - current (Note 10) Notes payable	48,536 598,747	37,609 851,631 - -	- -	16,730 608,954
Notes receivable - related parties (Notes 11 and 32)	- 213,398	384,078	-	234,166	-	Accounts payable (Note 21)	14,435,594	12,484,269 2	2	9,632,444
Accounts receivable - related parties (Notes 11 and 32) Accounts receivable, net (Note 11)	2 - 11,028,883 464,828	11,463,575 499,185	2 -	10,394,116 766,970	2 -	Amounts due to customers for construction contracts (Note 12) Accounts payable - related parties (Notes 21 and 32)	44,618 3,196,670	536,544 3,853,724 - 1	- 1	433,451 2,951,725
Amounts due from customers for construction contracts (Note 12)	2 10,246,299	8,472,037	1	9,075,099	1	Other payables (Notes 22 and 32)	36,883,118	21,437,649 5	3	29,027,160
Other receivables (Note 32) Current tax assets	- - 2,922,331 188,153	1,382,410 139,482	- -	1,284,721 218,971	- -	Provisions - current (Note 23) Current tax liabilities	1,758,549 3,069,511	2,129,043 4,324,106 - -	- 1	902,777 3,984,659
Non-current assets held for sale (Note 4) Inventories (Note 13)	13 - 90,202,785 212,780	79,489,138 -	12 -	- 64,435,054	10 -	Current portion of long-term bank borrowings (Notes 19 and 33) Current portion of bonds payable (Note 20)	8,713,285 11,076,441	5,212,668 16,210,014 1 2	1 2	4,712,230 14,821,127
Other financial assets - current (Notes 16 and 33) Other current assets	3 1 19,854,636 3,839,376	11,833,708 3,558,170	2 1	14,070,469 3,727,244	2 1	Current portion of long-term bills payable (Note 19) Other current liabilities	500,000 3,579,820	- 3,530,170 - 1	- 1	- 3,100,712
Total current assets	24 161,285,427	140,055,190	21	128,284,291	19	Total current liabilities	167,339,154	123,150,208 24	18	139,598,342
NONCURRENT ASSETS						NONCURRENT LIABILITIES
Available-for-sale financial assets - noncurrent (Note 8)	4 28,029,526	26,306,913	4	25,462,319	4	Derivative financial liabilities for hedging - noncurrent (Note 10)	43,873	36,065 -	-	60,812
Derivative financial assets for hedging - noncurrent (Note 10) Held-to-maturity financial assets - noncurrent (Note 9)	- - 210,820 21,713	222,669 3,354	- -	275,358 39,280	- -	Long-term bank borrowings (Notes 19 and 33) Bonds payable (Note 20)	91,544,390 60,548,598	95,037,294 70,329,355 14 9	14 10	100,229,152 72,693,801
Debt investments with no active market - noncurrent (Notes 14 and 19)	- 1,902,476	1,932,814	-	2,295,846	-	Long-term bills payable (Note 19) Provisions - noncurrent (Note 23)	22,593,504 816,242	36,626,165 815,694 3 -	6 -	21,383,112 815,492
Investments accounted for using equity method (Note 15)	7 45,881,810	49,528,952	7	50,003,428	8	Deferred tax liabilities	12,289,310	12,261,289 2	2	12,246,743
Property, plant and equipment (Notes 17 and 33)	61 421,287,134	430,849,587	64	437,708,622	65	Net defined benefit liabilities (Note 4)	6,891,737	6,901,619 1	1	5,813,562
Investment properties (Notes 18 and 33) Intangible assets	2 - 10,526,808 2,051,336	10,316,142 2,488,714	2 -	10,717,429 2,282,053	2 -	Other noncurrent liabilities	1,352,820	1,384,411 -	-	1,339,464
Deferred tax assets	1 5,930,602	5,372,981	1	5,229,594	1	Total noncurrent liabilities	196,080,474	223,391,892 29	33	214,582,138
Other financial assets - noncurrent (Notes 16 and 33) Refundable deposits	- - 624,052 2,772,927	566,022 3,393,174	- -	565,974 2,582,819	- -	Total liabilities	363,419,628	346,542,100 53	51	354,180,480
Other noncurrent assets	1 5,429,632	5,085,281	1	6,177,382	1	EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION
Total noncurrent assets	76 524,668,836	536,066,603	79	543,340,104	81	(Note 25)
						Ordinary shares Share capital	157,348,610	157,348,610 23	23	157,348,610
						Total share capital Preference shares	382,680 157,731,290	382,680 157,731,290 - 23	- 23	382,680 157,731,290
						Capital surplus	37,853,104	37,807,466 5	6	37,639,612
						Retained earnings Legal reserve	61,538,216	59,934,379 9	9	59,934,379
						Special reserve	27,656,121	29,786,846 4	4	29,786,866
						Total retained earnings Unappropriated earnings	11,381,906 100,576,243	17,196,041 106,917,266 2 15	3 16	7,763,794 97,485,039
						Treasury shares Other equity	(8,512,794) 8,749,139	(8,576,842) 8,680,706 (1) 1	(1) 1	(8,576,842) 7,343,961
						Total equity attributable to owners of the Corporation	296,396,982	302,559,886 43	45	291,623,060

						NON-CONTROLLING INTERESTS	26,137,653	27,019,807 4	4	25,820,855
						Total equity	322,534,635	329,579,693 47	49	317,443,915
TOTAL	100 \$ 685,954,263	\$ 676,121,793	100	\$ 671,624,395	100	TOTAL	100 \$ 685,954,263	\$ 676,121,793	100	\$ 671,624,395

(With Deloitte & Touche review report dated August 9, 2017)

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

			For the Three Months Ended June 30				For the Six Months Ended June 30
	2017 Amount	%	2016 Amount	%	2017 Amount	%	2016 Amount	%
OPERATING REVENUES (Notes 26 and 32)	\$ 84,864,916	100	\$ 72,332,708	100	\$ 167,849,265	100	\$ 137,291,251	100
OPERATING COSTS (Notes 13 and 32)	76,084,850	90	60,618,424	84	149,117,677	89	121,405,752	88
GROSS PROFIT	8,780,066	10	11,714,284	16	18,731,588	11	15,885,499	12
OPERATING EXPENSES Selling and marketing expenses	1,320,548	1	1,159,591	2	2,683,121	1	2,316,673	2
General and administrative expenses	1,725,048	2	1,766,214	2	3,383,088	2	3,328,477	2
Research and development expenses	530,637	1	525,716	1	1,027,842	1	1,038,067	1
Total operating expenses	3,576,233	4	3,451,521	5	7,094,051	4	6,683,217	5
PROFIT FROM OPERATIONS	5,203,833	6	8,262,763	11	11,637,537	7	9,202,282	7
NON-OPERATING INCOME AND EXPENSES Other income (Notes 27 and 32) Other gains and losses (Notes 27 and 32) Finance costs (Note 27) Share of the loss of associates	408,330 49,509 (918,938) (318,634)	- - (1) -	377,717 (141,455) (949,532) (531,545)	1 - (1) (1)	646,756 30,965 (1,857,115) (644,323)	- - (1) -	599,198 486,202 (1,935,887) (502,908)	- - (1) -
Total non-operating income and expenses	(779,733)	(1)	(1,244,815)	(1)	(1,823,717)	(1)	(1,353,395)	(1)
PROFIT BEFORE INCOME TAX	4,424,100	5	7,017,948	10	9,813,820	6	7,848,887	6
INCOME TAX (Notes 4 and 28)	418,995	-	667,323	1	1,127,916	1	767,915	1
NET PROFIT FOR THE PERIOD	4,005,105	5	6,350,625	9	8,685,904	5	7,080,972	5
OTHER COMPREHENSIVE INCOME (Notes 25 and 28) Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Unrealized gains and losses on	372,971	-	(604,424)	(1)	(1,674,227)	(1)	(567,857)	(1)
available-for-sale financial assets	1,346,504	2	(113,990)	-	1,820,918	1	(128,298)	-

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

			For the Three Months Ended June 30				For the Six Months Ended June 30
	2017		2016		2017		2016
	Amount	%	Amount	%	Amount	%	Amount	%
The effective portion of gains and losses on hedging instruments in
a cash flow hedge Share of the other comprehensive income	\$ 143,096	-	\$ (2,227)	-	\$ (78,594)	-	\$ (53,269)	-
(loss) of associates Income tax benefit (expense) relating to items that may be reclassified subsequently to profit	(25,569)	-	219,849	-	(610,074)	-	(267,755)	-
or loss	(25,320)	-	(6,586)	-	54,812	-	46,323	-
Other comprehensive income (loss) for the period, net of income tax	1,811,682	2	(507,378)	(1)	(487,165)	-	(970,856)	(1)
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD	\$ 5,816,787	7	\$ 5,843,247	8	\$ 8,198,739	5	\$ 6,110,116	4
NET PROFIT ATTRIBUTABLE TO:
Owners of the Corporation Non-controlling interests	\$ 3,382,573 622,532	4 1	\$ 5,280,179 1,070,446	7 2	\$ 7,087,184 1,598,720	4 1	\$ 5,762,325 1,318,647	4 1

	\$ 4,005,105	5	\$ 6,350,625	9	\$ 8,685,904	5	\$ 7,080,972	5
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Corporation	\$ 5,167,606	6	\$ 4,971,418	7	\$ 7,155,617	4	\$ 5,181,878	4
Non-controlling interests	649,181	1	871,829	1	1,043,122	1	928,238	-
	\$ 5,816,787	7	\$ 5,843,247	8	\$ 8,198,739	5	\$ 6,110,116	4
EARNINGS PER SHARE (Note 29)
Basic	\$ 0.22 \$ 0.22		\$ 0.34 \$ 0.34		\$ 0.46 \$ 0.46		\$ 0.37 \$ 0.37
Diluted

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

(With Deloitte & Touche review report dated August 9, 2017)

CHINA STEEL CORPORATION AND SUBSIDIARIES

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

Equity Attributable to Owners of the Corporation

		Total Equity	\$ 329,579,693	- -	(13,374,632)	(53,575) -	8,685,904	(487,165)	8,198,739	(1,947,181) 114,019 17,572	\$ 322,534,635	\$ 320,724,833	- -	(7,867,430)	(53,575) -	7,080,972	(970,856)	(1,511,397) 6,110,116 41,368	\$ 317,443,915
	Non-controlling	Interests	\$ 27,019,807	- -	-	- -	1,598,720	(555,598)	1,043,122	(1,947,181) 21,905 -	\$ 26,137,653	\$ 26,404,014	- -	-	- -	1,318,647	(390,409)	(1,511,397) 928,238 -	\$ 25,820,855
	Attributable to Owners of the Total Equity	Corporation	\$ 302,559,886	- -	(13,374,632)	(53,575) -	7,087,184	68,433	7,155,617	92,114 - 17,572	\$ 296,396,982	\$ 294,320,819	- -	(7,867,430)	(53,575) -	5,762,325	(580,447)	5,181,878 - 41,368	\$ 291,623,060
		Treasury Shares	\$ (8,576,842)	- -	-	- -	-	-	-	64,048 - -	\$ (8,512,794)	\$ (8,577,644)	- -	-	- -	-	-	- - 802	\$ (8,576,842)
	Total Other	Equity	8,680,706 \$	- -	-	- -	-	68,433	68,433	- - -	8,749,139 \$	7,924,408 \$	- -	-	- -	-	(580,447)	(580,447) - -	7,343,961 \$
Other Equity	Portion of Gains Instruments in and Losses on The Effective a Cash Flow Hedging	Hedge	62,181 \$	- -	-	- -	-	(90,517)	(90,517)	- - -	(28,336) \$	152,264 \$	- -	-	- -	-	(18,709)	(18,709) - -	133,555 \$
	Gains and Losses on Available-for- sale Financial Unrealized	Assets	8,650,573 \$	- -	-	- -	-	1,787,075	1,787,075	- - -	\$ 10,437,648	6,573,348 \$	- -	-	- -	-	36,984	36,984 - -	6,610,332 \$
	Differences on Translating Exchange Foreign	Operations	(32,048) \$	- -	-	- -	-	(1,628,125)	(1,628,125)	- - -	\$ (1,660,173)	1,198,796 \$	- -	-	- -	-	(598,722)	(598,722) - -	600,074 \$
	Unappropriated	Earnings	\$ 17,196,041	(1,603,837) 2,130,614	(13,374,632)	(53,575) 111	7,087,184	-	7,087,184	- - -	\$ 11,381,906	\$ 13,323,848	(760,472) (2,654,116)	(7,867,430)	(53,575) 233	5,762,325	-	5,762,325 - 12,981	7,763,794 \$
	Retained Earnings	Special Reserve	\$ 29,786,846	(2,130,614) -	-	(111) -	-	-	-	- - -	\$ 27,656,121	\$ 27,132,983	- 2,654,116	-	(233) -	-	-	- - -	\$ 29,786,866
		Legal Reserve	\$ 59,934,379	1,603,837 -	-	- -	-	-	-	- - -	\$ 61,538,216	\$ 59,173,907	760,472 -	-	- -	-	-	- - -	\$ 59,934,379
		Capital Surplus	\$ 37,807,466	- -	-	- -	-	-	-	28,066 - 17,572	\$ 37,853,104	\$ 37,612,027	- -	-	- -	-	-	- - 27,585	\$ 37,639,612
	Preference Share Capital	Shares	382,680 \$	- -	-	- -	-	-	-	- - -	382,680 \$	382,680 \$	- -	-	- -	-	-	- - -	382,680 \$
		Ordinary Shares	\$ 157,348,610	- -	-	- -	-	-	-	- - -	\$ 157,348,610	\$ 157,348,610	- -	-	- -	-	-	- - -	\$ 157,348,610
			BALANCE AT JANUARY 1, 2017	Appropriation of 2016 earnings (Note 25) Special reserve (reversal) Legal reserve	Cash dividends to ordinary shareholders - NT\$0.85 per share	shareholders - NT\$1.4 per share Cash dividends to preference Reversal of special reserve	Net profit for the six months ended June Other comprehensive income for the six 30, 2017	months ended June 30, 2017, net of income tax	Disposal of the Corporation's shares held Total comprehensive income for the six months ended June 30, 2017	Adjustment of non-controlling interests Adjustment of other equity by subsidiaries	BALANCE AT JUNE 30, 2017	BALANCE AT JANUARY 1, 2016	Appropriation of 2015 earnings (Note 25) Special reserve Legal reserve	Cash dividends to ordinary shareholders Cash dividends to preference - NT\$0.5 per share	Net profit for the six months ended June shareholders - NT\$1.4 per share Reversal of special reserve	Other comprehensive income for the six 30, 2016	months ended June 30, 2016, net of income tax	Total comprehensive income for the six Adjustment of non-controlling interests months ended June 30, 2016 Adjustment of other equity	BALANCE AT JUNE 30, 2016

	Appropriation of 2016 earnings (Note 25)	Cash dividends to ordinary shareholders	Cash dividends to preference	Net profit for the six months ended June	Other comprehensive income for the six months ended June 30, 2017, net of	Disposal of the Corporation's shares held Total comprehensive income for the six		Appropriation of 2015 earnings (Note 25)	Cash dividends to ordinary shareholders	Cash dividends to preference	Net profit for the six months ended June	Other comprehensive income for the six months ended June 30, 2016, net of	Total comprehensive income for the six

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

(With Deloitte & Touche review report dated August 9, 2017)

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

	For the Six Months Ended June 30
		2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax	\$	9,813,820	\$	7,848,887
Adjustments for:
Depreciation expense		17,453,083		17,915,806
Amortization expense		176,461		185,234
Net gain on financial assets and liabilities at fair value through profit
or loss		(195,908)		(32,997)
Finance costs		1,857,115		1,935,887
Interest income		(138,320)		(160,652)
Dividend income		(171,656)		(132,941)
Share of the loss of associates		604,370		474,077
Loss (gain) on disposal of property, plant and equipment		14,274		(556,209)
Gain on disposal of investments		(125,828)		(871,788)
Impairment loss recognized on (reversal of) financial assets		(4,081)		22,585
Impairment loss on non-financial assets		122,278		-
Write-down (reversal of) of inventories		2,432,564		(2,699,490)
Recognition of provisions		4,744,803		4,790,108
Others Changes in operating assets and liabilities		40,863		16,672
Financial instruments held for trading		(347,720)		(562,234)
Notes receivable		(155,557)		70,620
Notes receivable - related parties		170,680		23,839
Accounts receivable		452,097		166,937
Accounts receivable - related parties		34,357		(318,773)
Amounts due from customers for construction contracts		(1,774,262)		(307,756)
Other receivables		(1,282,428)		226,021
Inventories		(13,139,681)		7,172,376
Other current assets		(281,206)		(230,538)
Notes payable		(252,884)		53,468
Accounts payable		1,951,325		1,733,984
Accounts payable - related parties		(491,926)		177,320
Amounts due to customers for construction contracts		(657,054)		(1,163,445)
Other payables		2,190,448		1,437,012
Provisions		(5,978,250)		(3,980,699)
Other current liabilities		50,632		(589,951)
Net defined benefit liabilities		(9,882)		(154,425)
Cash generated from operations		17,102,527		32,488,935
Income taxes paid		(2,021,869)		(1,451,204)
Net cash generated from operating activities		15,080,658		31,037,731

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

	For the Six	Months Ended June 30
	2017	2016
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets designated as at fair value through profit
or loss	\$ (2,352,648)	\$ (1,827,678)
Proceeds from disposal of financial assets designated as at fair value
through profit or loss	1,639,006	1,941,253
Acquisition of available-for-sale financial assets	(829,608)	(1,367,299)
Proceeds from disposal of available-for-sale financial assets	798,376	2,407,174
Purchases of debt investments with no active market	(18,597)	(24,654)
Proceeds from disposal of debt investments with no active market	20,000	20,742
Acquisition of held-to-maturity financial assets	-	(19,480)
Proceeds from disposal of held-to-maturity financial assets	-	25,784
Acquisition of investments accounted for using equity method	(56,420)	(11,096,350)
Proceeds from disposal of investments accounted for using equity
method	38,788	177,058
Acquisition of property, plant and equipment	(10,572,077)	(8,608,573)
Proceeds from disposal of property, plant and equipment	16,264	838,032
Increase in refundable deposits	(58,030)	(86,687)
Acquisition of intangible assets	(18,450)	(16,417)
Acquisition of investment properties	(265,026)	(101,275)
Increase in other financial assets	(7,318,062)	(1,744,800)
Decrease in other noncurrent assets	500,328	147,055
Interest received	129,125	182,118
Dividends received from associates	188,460	161,684
Dividends received from others	140,089	111,023
Net cash used in investing activities	(18,018,482)	(18,881,290)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	125,634,915	114,912,012
Repayments of short-term borrowings	(127,503,918)	(120,403,930)
Proceeds from short-term bills payable	126,816,746	161,092,949
Repayments of short-term bills payable	(96,909,833)	(149,693,897)
Issuance of bonds payable	-	5,400,000
Proceeds from long-term bank borrowings	9,840,100	33,737,175
Repayments of long-term bank borrowings	(22,124,558)	(52,362,990)
Proceeds from long-term bill payable	1,207,339	92,680,601
Repayments of long-term bill payable	(14,740,000)	(95,757,368)
Decrease in other noncurrent liabilities	(28,052)	(2,581)
Dividends paid to owners of the Corporation	(2,699)	(1,404)
Disposal of the Corporation's shares held by subsidiaries	114,019	-

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

	For the Six	Months Ended June 30
	2017	2016
Interest paid Decrease in non-controlling interests	\$ (2,025,645) (1,947,181)	\$ (2,049,194) (1,511,397)
Net cash used in financing activities	(1,668,767)	(13,960,024)
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES	(835,503)	(309,455)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(5,442,094)	(2,113,038)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	13,340,196	17,054,940
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	\$ 7,898,102	\$ 14,941,902
Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets as of June 30, 2017 and 2016:
Cash and cash equivalents in the consolidated balance sheets Bank overdraft	\$ 13,290,204 (5,392,102)	\$ 16,018,237 (1,076,335)
Cash and cash equivalents in the consolidated statements of cash flows	\$ 7,898,102	\$ 14,941,902

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

(With Deloitte & Touche review report dated August 9, 2017)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

China Steel Corporation (the Corporation) was incorporated on December 3, 1971. It manufactures and sells steel products and engages in mechanical, communications, and electrical engineering.

The shares of the Corporation and its subsidiaries, including China Steel Structure Co., Ltd., China Steel Chemical Corporation, CHC Resources Corporation, China Ecotek Corporation and Chung Hung Steel Corporation Ltd., have been listed on the Taiwan Stock Exchange. The shares of the subsidiary Thintech Materials Technology Co., Ltd. have been traded on the Taipei Exchange. The subsidiary Dragon Steel Corporation has issued shares to the public.

As of June 30, 2017, the Ministry of Economic Affairs (MOEA), Republic of China owned 20.05 % of the Corporation's issued ordinary shares.

The consolidated financial statements are presented in the Corporation's functional currency, New Taiwan Dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were reported to the Corporation's board of directors and approved for issue on August 9, 2017.

3. APPLICATION OF NEW AND AMENDED 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) (the IFRSs) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

1) Amendment to IAS 36 "Impairment of Assets"

The amendment "Disclosures for Non-financial Assets" clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is fair value less costs of disposal, the Corporation and its subsidiaries are required to disclose the fair value hierarchy. If the fair value measurements are categorized within Level 2 or Level 3, the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using present value technique. The amendment should be applied retrospectively from January 1, 2017.

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

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

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

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

When the amendments were applied retrospectively from January 1, 2017, the disclosures of related party transactions were enhanced in Note 32.

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 Corporation and its subsidiaries.

New IFRSs	Effective Date Announced by IASB (Note1)

Annual Improvements to IFRSs 2014-2016 Cycle	Note 2
Amendment to IFRS 2 "Classification and Measurement of Share-based Payment Transactions"	January 1, 2018
IFRS 9 "Financial Instruments"	January 1, 2018
Amendments to IFRS 9 and IFRS 7 "Mandatory Effective Date of IFRS 9 and Transition Disclosures"	January 1, 2018
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
Amendments to IFRS 15 "Clarifications to IFRS 15 Revenue from Contracts with Customers"	January 1, 2018
Amendment to IAS 7 "Disclosure Initiative"	January 1, 2017
Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Losses"	January 1, 2017
Amendments to IAS 40 "Transfers of investment property"	January 1, 2018
IFRIC 22 "Foreign Currency Transactions and Advance Consideration"	January 1, 2018

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

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

Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.
1) IFRS 9 "Financial Instruments"

Recognition, measurement and impairment of financial assets

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

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

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

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

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

a) The Corporation's investment in listed shares, emerging market shares, and unlisted shares classified as available-for-sale will be designated as at fair value through other comprehensive income and the fair value gains or losses accumulated in other equity will be transferred directly to retained earnings instead of being reclassified to profit or loss on disposal. In addition, part of the subsidiaries' investment in available-for-sale will be classified as at fair value through profit or loss.
b) Debt investments with no active market and measured at amortized cost will be classified as at fair value through profit or loss, because on initial recognition, the contractual cash flows that are not solely payments of principal and interest on the principal outstanding. In addition, part of the subsidiaries' investment in debt investments with no active market and measured at amortized cost will be classified as measured at amortized cost under IFRS 9 because on initial recognition, the contractual cash flows that are solely payments of principal and interest on the

principal outstanding and these investments are held within a business model whose objective is to collect the contractual cash flows.

c) Mutual funds classified as available-for-sale held by some subsidiaries will be classified as at fair value through profit or loss because the contractual cash flows are not solely payments of principal and interest on the principal outstanding and they are not equity instruments; part of the subsidiaries investment in debt investments classified as held-to-maturity financial assets will be classified as at fair value through other comprehensive income under IFRS 9, because on initial recognition, the contractual cash flows that are solely payments of principal and interest on the principal outstanding and these investments are held within a business model whose objective is achieved both by collecting the contractual cash flows and selling the financial assets.

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

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

The Corporation and its subsidiaries are still assessing whether to restate prior-period's data for comparison when applying the requirements for the recognition, measurement, and impairment of financial assets under IFRS 9. Furthermore, the Corporation and its subsidiaries will provide disclosure of the differences in amounts if the Corporation and its subsidiaries continue applying the existing accounting treatments in 2018.

Hedge accounting

The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the Corporation and its subsidiaries' risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risks eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.

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

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

When applying IFRS 15, the Corporation and its subsidiaries shall recognize revenue by applying the following steps:

Identify the contract with the customer;

Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; and
Recognize revenue when the Corporation and its subsidiaries satisfy a performance obligation.

In identifying performance obligations, IFRS 15 and related amendment require that a good or service is distinct if it is capable of being distinct (for example, the Corporation and its subsidiaries regularly sell it separately) and the promise to transfer it is distinct within the context of the contract (i.e. the nature of the promise in the contract is to transfer each of those goods or services individually rather than to transfer combined items).

The Corporation and its subsidiaries are still assessing whether to retrospectively apply IFRS 15 and restate comparative information in 2017 or to retrospectively apply IFRS 15 to contracts that are not complete by January 1, 2018.

In addition, the Corporation and its subsidiaries will disclose the difference between the amount that results from applying IFRS 15 and the amount that results from applying current standards for 2018.

3) Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Losses"

The amendment clarifies that the difference between the carrying amount of the debt instrument measured at fair value and its tax base gives rise to a temporary difference, even though there are unrealized losses on that asset, irrespective of whether the Corporation and its subsidiaries expect to recover the carrying amount of the debt instrument by sale or by holding it and collecting contractual cash flows.

In addition, in determining whether to recognize a deferred tax asset, the Corporation and its subsidiaries should assess a deductible temporary difference in combination with all of its other deductible temporary differences, unless the tax law restricts the utilization of losses as deduction against income of a specific type, in which case, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. The amendment also stipulates that, when determining whether to recognize a deferred tax asset, the estimate of probable future taxable profit may include some of the Corporation and its subsidiaries assets for more than their carrying amount if there is sufficient evidence that it is probable that the Corporation and its subsidiaries will achieve the higher amount, and that the estimate for future taxable profit should exclude tax deductions resulting from the reversal of deductible temporary differences.

4) Amendments to IAS 40 "Transfers of Investment Property"

The amendments clarify that the Corporation and its subsidiaries should transfer to, or from, investment property when, and only when, the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. In isolation, a change in management's intentions for the use of a property does not provide evidence of a change in use. The amendments also clarify that the evidence of the change in use is not limited to those illustrated in IAS 40.

The Corporation and its subsidiaries will reclassify the property as necessary according to the amendments to reflect the conditions that exist at January 1, 2018. In addition, the Corporation and its subsidiaries will disclose the reclassified amounts in 2018 and the reclassified amount in January 1, 2018 should be included in the reconciliation of the carrying amount of investment property.

As of the date the consolidated financial statements were reported to the board of directors for issue, the Corporation and its subsidiaries are in the process of estimating the impact of the impending initial application of the aforementioned and other standards and the amendments to interpretations on their financial position and results of operations. Disclosures will be provided after a detailed review of the impact has been completed.

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

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

Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
1) Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

The amendments stipulate that, when the Corporation and its subsidiaries sell or contribute assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Corporation and its subsidiaries lose control of a subsidiary that contains a business but retain significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

Conversely, when the Corporation and its subsidiaries sell or contribute assets that do not constitute a business as defined in IFRS 3 to an associate or joint venture, or when the Corporation and its subsidiaries lose control of a subsidiary that does not contain a business as defined in IFRS 3 but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors' interest as the associate or joint venture, i.e. the Corporation and its subsidiaries' shares of the gain or loss are eliminated.

2) IFRS 16 "Leases"

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

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

The application of IFRS 16 is not expected to have a material impact on the accounting of the Corporation and its subsidiaries as lessor.

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

3) IFRIC 23 "Uncertainty Over Income Tax Treatments"

IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should assume that the taxation authority will have full knowledge of all related information when making related examinations. If the Group concludes that it is probable that the taxation authority will accept an uncertain tax treatments, the Group should determine the taxable profit, tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain tax treatment, the Group should make estimates using either the most likely amount or the expected value of the tax treatment, depending on which method the entity expects to better predict the resolution of the uncertainty. The Group has to reassess its judgments and estimates if facts and circumstances change.

The Group may elect to apply IFRIC 23 either retrospectively to each prior reporting period presented, if this is possible without the use of hindsight, or retrospectively with the cumulative effect of the initial application of IFRIC 23 recognized at the date of initial application.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

For readers' convenience, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If inconsistencies arise between the English version and the Chinese version or if differences arise in the interpretations between the two versions, the Chinese version of the consolidated financial statements shall prevail. However, the accompanying consolidated financial statements do not include English translation of the additional footnote disclosures that are not required under generally accepted accounting principles but are required by the Securities and Futures Bureau for their oversight purposes.

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 in effect by the FSC. The consolidated financial statements do not present full disclosures required for a complete set of IFRSs annual consolidated financial statements.

b. Basis of consolidation
1) Subsidiaries included in consolidated financial statements

The consolidated entities were as follows:

				Percentage of Ownership (%)
Investor	Investee	Main Businesses	June 30, 2017	December 31, 2016	June 30, 2016	Additional Descriptions
China Steel Corporation	China Steel Express	Ocean freight forwarding and bulk	100	100	100
	Corporation (CSE) C. S. Aluminium	shipping transportation Production and sale of aluminum and	100	100	100
	Corporation (CSAC) Gains Investment	other non-ferrous metal General investment	100	100	100
	Corporation (GIC) China Prosperity Development	Land and commercial real estate sale, rental and development service	100	100	100
	Corporation (CPDC) China Steel Asia Pacific Holdings Pte Ltd	General investment	100	100	100
	(CSAPH) China Steel Global Trading	Steel product agency and trading	100	100	100
	Corporation (CSGT) China Steel Machinery Corporation	service Manufacture and sale of machinery and equipment for railroad,	74	74	74	Direct and indirect ownerships
	China Steel Security	transportation and generator Guard security and system security	100	100	100	amounted to 100%
	Corporation Info Champ Systems	Design and sale of IT hardware and	100	100	100
	Corporation (ICSC) CSC Steel Australia Holdings Pty Ltd.	software General investment	100	100	100
	(CSCAU) Himag Magnetic Corporation	Manufacture and sale of magnetic material, special usage chemicals	69	69	69	Direct and indirect ownerships
	Dragon Steel Corporation	and ferric iron oxide Manufacture and sale of steel product	100	100	100	amounted to 88%
	(DSC) China Steel Management	Business management consultant	100	100	100
	Consulting Corporation China Ecotek Corporation	Electrical engineering and	45	45	45	Refer to 1) below
	(CEC) China Steel Chemical Corporation (CSCC)	co-generation Production and sale of coal chemistry and specialty chemicals	29	29	29	Refer to 1) below
	Chung Hung Steel Corporation Ltd. (CHSC)	Manufacture and sale of steel product	41	41	41	Refer to 1) below
	CHC Resources Corporation (CHC)	Manufacture and sale of slag powder, air-cooled blast-furnace slag and basic-oxygen-furnace slag, treatment and disposal of hazardous waste, and recovery of materials	20	20	20	Direct and indirect ownerships amounted to 36%, and refer to 1) below
	China Steel Structure Co., Ltd. (CSSC)	Design, manufacture and sale of steel structure	33	33	33	Direct and indirect ownerships amounted to 37%, and refer to 1)
	China Steel Sumikin Vietnam Joint Stock Company (CSVC)	Manufacture and sale of steel product	56	56	56	below
	China Steel Corporation India Pvt. Ltd. (CSCI)	Manufacture and sale of steel product (electromagnetic steel coil)	100	100	100
	Kaohsiung Rapid Transit Corporation (KRTC)	Operation of mass rapid transit	43	43	43	Direct and indirect ownerships amounted to 51%
	China Steel Resources Corporation	Manufacture of other non - metallic mineral products	100	100	100
	CSC Precision Metal Industrial Corporation	Industry of metal rolling and extruding	100	100	100
	Eminent Venture Capital	General investment	-	-	-	Indirect ownership
	Corporation (EVCC) White Biotech Corporation	Biology introduction and	87	87	87	was 55%
	(WBC) CSC Solar Corporation	development Electricity generation	55	55	-	Investment in September 2016. Direct and indirect ownerships
China Steel Express Corporation CSE Transport Corporation		Ocean freight forwarding	100	100	100	amounted to 100%
	(Panama) (CSEP) CSEI Transport Corporation (Panama)	Ocean freight forwarding	100	100	100
	(CSEIP) Transyang Shipping Pte Ltd	Ocean freight forwarding	51	51	51
	(TSP) Transglory Investment Corporation (TIC)	General investment	50	50	50	Direct and indirect ownerships amounted to 100%
	Kaohsiung Port Cargo Handling Services Corporation	Cargo stevedoring	66	66	66
C.S. Aluminium Corporation	ALU Investment Offshore Corporation	General investment	100	100	100
ALU Investment Offshore Corporation	United Steel International Development Corporation	General investment	65	65	65	Direct and indirect ownerships amounted to 79%
United Steel International Development Corporation	Ningbo Huayang Aluminum-Tech Co., Ltd.	Manufacture and sale of aluminum alloy material	100	100	100
Gains Investment Corporation	Eminence Investment Corporation	General investment	100	100	100
	Gainsplus Asset Management Inc.	General investment	100	100	100

				Percentage of Ownership (%)
Investor	Investee	Main Businesses	June 30, 2017	December 31, 2016	June 30, 2016	Additional Descriptions
	Winning Investment Corporation (WIC)	General investment	49	49	49	Direct and indirect ownerships
	Mentor Consulting	Consulting service of management	100	100	100	amounted to 58%
	Corporation Betacera Inc. (BETA)	Manufacture and trading of	48	48	48	Refer to 1) below
	Universal Exchange Inc.	electronic ceramics Wholesale of information software and electronic information supply	64	64	64	Direct and indirect ownerships
	Thintech Materials Technology Co., Ltd. (TMTC)	service Manufacture and sale of metal sputter targets	32	32	32	amounted to 99% Direct and indirect ownerships amounted to 40%, and refer to 2)
Eminence Investment Corporation	Shin-Mau Investment Corporation	General investment	30	30	30	below Direct and indirect ownerships
	Gau Ruel Investment Corporation	General investment	25	25	25	amounted to 100% Direct and indirect ownerships amounted to 100%
	Ding Da Investment Corporation	General investment	30	30	30	Direct and indirect ownerships amounted to 100%
	Chiun Yu Investment Corporation	General investment	25	25	25	Direct and indirect ownerships amounted to 100%
Shin-Mau Investment Corporation	Horng Chyuan Investment Corporation	General investment	5	5	5	Direct and indirect ownerships amounted to 100%
	Chii Yih Investment Corporation	General investment	5	5	5	Direct and indirect ownerships amounted to 100%
Gau Ruel Investment Corporation	Lih Ching Loong Investment Corporation	General investment	5	5	5	Direct and indirect ownerships amounted to 100%
	Sheng Lih Dar Investment Corporation	General investment	4	4	4	Direct and indirect ownerships amounted to 100%
Ding Da Investment Corporation Jiing Cherng Fa Investment	Corporation	General investment	4	4	4	Direct and indirect ownerships amounted to 100%
Betacera Inc. Lefkara Ltd.	Lefkara Ltd. Shang Hai Xike Ceramic Electronic Co., Ltd.	Electronic ceramics trading Manufacture and sale of electronic ceramics	100 100	100 100	100 100
	Betacera (Su Zhou) Co., Ltd.	Manufacture and sale of electronic ceramics	100	100	100
	Suzhou Betacera Technology Co., Ltd.	Manufacture and sale of life-saving equipment for aviation and shipping	100	100	100
Thintech Materials Technology Co., Ltd.	Thintech International Limited	International trading and investment service	-	100	100	End of settlement in May 2017
	Thintech Global Limited	International trading and investment service	100	100	100
	Thintech United Limited	International trading and investment service	100	100	100
Thintech International Limited	Nantong Zhongxing Materials Technology Co., Ltd. (NZMTCL)	Manufacture and development of new compound metal material and vacuum sputtering targets	-	47	47	End of settlement in April 2017
Thintech Global Limited	Taicang Thintech Materials Co., Ltd.	Process and sale of targets and electro conductive slurry	100	100	100
Thintech United Limited	Thintech United Metal Resources (Taicang) Co., Ltd.	Refining, sale and process of metal	84	84	84
China Prosperity Development Corporation	CK Japan Co., Ltd.	Real estate sale and rental	80	80	80	Direct and indirect ownerships amounted to 100%
China Steel Asia Pacific	CSC Steel Holdings Berhad	General investment	46	46	46	Refer to 1) below
Holdings Pte Ltd	(CSHB) Changzhou China Steel Precision Materials Co.,	Manufacture and sale of titanium-nickel alloy and	70	70	70
	Ltd. (CCSPMC) China Steel Precision Metals-Qingdao Co., Ltd.	non-ferrous metal Steel cutting and processing	60	60	60	Direct and indirect ownerships
	United Steel International Co., Ltd.	General investment	80	80	80	amounted to 70% Direct and indirect ownerships
CSC Steel Holdings Berhad	CSC Bio-Coal Sdn. Bhd. CSC Steel Sdn. Bhd.	Manufacture bio-coal from bio-mass Manufacture and sale of steel product	100 100	100 100	100 100	amounted to 100%
	(CSCSSB) Group Steel Corp. (M) Sdn. Bhd.	Manufacture and sale of steel product	100	100	100
CSC Steel Sdn. Bhd. United Steel International Co., Ltd.	Constant Mode Sdn. Bhd. United Steel Engineering and Construction Co., Ltd.	General investment Steel cutting and processing	100 100	100 100	100 100
China Steel Global Trading Corporation	Chung Mao Trading (SAMOA) Co., Ltd.	Investment and trading service	100	100	100
		CSGT (Singapore) Pte. Ltd. Steel product agency and trading service	100	100	100
	Chung Mao Trading (BVI) Co., Ltd.	Steel product agency and trading service	65	65	65

				Percentage of Ownership (%)
Investor	Investee	Main Businesses	June 30, 2017	December 31, 2016	June 30, 2016	Additional Descriptions
	Wabo Global Trading Corporation	Steel product agency and trading service	44	44	44	Direct and indirect ownerships amounted to 50%
	CSGT International	Investment and trading service	100	100	100
Chung Mao Trading (SAMOA)	Corporation	CSGT (Shanghai) Co., Ltd. Steel product agency and trading	100	100	100
Co., Ltd. Chung Mao Trading (BVI) Co.,		service CSGT Hong Kong Limited Steel product agency and trading	100	100	100
Ltd. CSGT International Corporation CSGT Metals Vietnam	Joint Stock Company	service Steel cutting and processing	54	54	54	Direct and indirect ownerships
	CSGT Trading India Private Limited	Steel product agency and trading service	99	99	99	amounted to 60% Direct and indirect ownerships
Wabo Global Trading	CSGT Japan Co., Ltd.	Steel product agency and trading	100	100	100	amounted to 100%
Corporation China Steel Machinery	China Steel Machinery	service General investment	100	100	100
Corporation	Holding Corporation China Steel Machinery	Installation and technology service of	100	100	100
	Vietnam Co., Ltd. China Steel Machinery	machinery and equipment Manufacture of machinery	99	99	99	Direct and indirect
	Corporation India Private Limited					ownerships amounted to 100%
China Steel Machinery Holding Corporation	CSMC (Shanghai) Global Trading Co., Ltd.	Wholesale and retail trade	100	100	100
China Steel Security Corporation	Steel Castle Technology Corporation	Firefighting equipment wholesaling	100	100	100
	China Steel Management and Maintenance for Buildings Corporation	Building management	100	100	100
Info Champ Systems Corporation	Info-Champ System (B.V.I) Corporation	Information service	100	100	100
Info Champ System (B.V.I) Corporation	Wuham InfoChamp I.T. Co., Ltd.	Software programming	100	100	100
CSC Steel Australia Holdings Pty Ltd.	CSC Sonoma Pty. Ltd.	Coal investment	100	100	100
Himag Magnetic Corporation	Himag Magnetic (Belize) Corporation	Magnetic powder trading	-	100	100	End of settlement in June 2017
	MagnPower Corporation	Manufacture and sale of permanent magnetic ferrite	55	55	55
China Ecotek Corporation	CEC International Co.	General investment	100	100	100
	CEC Development Co.	General investment	100	100	100
	CEC Holding Co., Ltd. China Ecotek Construction	General investment Engineering	100 100	100 100	100 100
CEC International Co.	Corporation China Ecotek India Private	Engineering design and construction	100	100	100
CEC Development Co.	Limited China Ecotek Vietnam	Engineering design and construction	100	100	100
	Company Ltd. (CEVC) Xiamen Ecotek PRC Co.,	Metal materials agency and trading	100	100	100
China Steel Chemical	Ltd. Ever Glory International	service International trading	100	100	100
Corporation	Co., Ltd. Ever Wealthy International	General investment	100	100	100
	Corporation
	Formosa Ha Tinh CSCC (Cayman) International Limited	International trading	50	50	50
Ever Wealthy International Corporation	China Steel Carbon Materials Technology Co., Ltd.	General investment	100	100	100
China Steel Carbon Materials Technology Co., Ltd.	Changzhou China Steel New Materials Technology Co., Ltd.	Processing and trading of asphalt mesocarbon microbeads product sorting	100	100	100
Chung Hung Steel Corporation Ltd.	Taiwan Steel Corporation (TSC)	Metal smelting	100	100	100
	Hung Kao Investment Corporation	General investment	100	100	100
	Hung Li Steel Corporation Ltd. (HLSC)	Steel product processing	100	100	100
CHC Resources Corporation	Union Steel Development Corp.	Manufacture and trade of metal powder and refractory materials, and trade and manpower dispatch	93	93	93
	Pao Good Industrial Co., Ltd.	Fly ash and cement dry mixing processing and trading	51	51	51
	Yu Cheng Lime Corporation	Real estate leasing and raw material tally	90	90	90
	CHC Resources Vietnam	Sale of water quenched slag and	85	85	85
China Steel Structure Co., Ltd.	Co., Ltd. United Steel Engineering & Construction Corp.	subcontract of steel mill Contract project of civil engineering and construction engineering, and	100	100	100
	China Steel Structure	steel structure installation General investment	100	100	100
United Steel Engineering &	Investment Pte Ltd. United Steel Investment Pte	General investment	100	100	100
Construction Corp.	Ltd. United Steel Construction (Vietnam) Co., Ltd.	Civil engineering construction and other business contract and	100	100	100
	United Steel Development Co., Ltd.	management House and construction development and real estate sale and rental business	100	100	100

				Percentage of Ownership (%)
Investor	Investee	Main Businesses	June 30, 2017	December 31, 2016	June 30, 2016	Additional Descriptions
China Steel Structure Investment Pte Ltd.	China Steel Structure Holding Co., Ltd.	General investment	63	63	63	Direct and indirect ownerships amounted to 100%
China Steel Structure Holding Co., Ltd.	China Steel Structure Investment Co., Ltd.	General investment	100	100	100
China Steel Structure Investment Co., Ltd.	Chung-Kang Steel Structure (Kunshan) Co., Ltd.	Manufacture, installation and consulting of steel structure and steel cutting	100	100	100
White Biotech corporation (WBC)	Renewable Energy Biotech Corp.	Manufacture and sale of alcohol	100	100	100
						(Concluded)

Explanations for subsidiaries which are less than 50% owned but included in the consolidated entities are as follows:

a) The actual operations of CEC, CSCC, CHSC, CHC, CSSC, BETA and NZMTCL are controlled by the respective board of directors. The Corporation and other subsidiaries jointly had more than half of the seats in the board of directors of CEC, CSCC, CHSC, CHC, CSSC, BETA and NZMTCL. The actual operation of CSHB is also controlled by the board of directors. The Corporation's subsidiaries had control of more than half of the voting rights in the board of directors. Therefore, the Corporation had control-in-substance over the aforementioned entities and included them in the consolidated entities.
b) The chairman and general manager of TMTC are designated by other subsidiaries in order to control its finance, operation, and human resources. Therefore, the Corporation had control-in-substance over TMTC and included it in the consolidated entities.
2) The subsidiary, China Steel Machinery Corporation, acquired 50% of shareholding in Senergy Wind Power Co., Ltd. Under the shareholders' agreement, the subsidiary China Steel Machinery Corporation and the other shareholder of the company each hold half of the seats in the board of directors, respectively. The chairman of the board of directors and chief executive officer are served in turns and actual operations should be approved by more than half of the seats in the board of directors. Thus, the Corporation and its subsidiaries have no control over the company. The management of the Corporation and its subsidiaries, however, believe that they are able to exercise significant influence over the company and therefore classified the company as an associate of the Corporation and its subsidiaries.
3) The Corporation had no subsidiary with material non-controlling interests.
c. Other significant accounting policy

Except for the following, refer to the summary of significant accounting policy and basis of preparation in the consolidated financial statements for the year ended December 31, 2016.

1) Non-current assets held for sale

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition. To meet the criteria for the sale being highly probable, the appropriate level of management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within 1 year from the date of classification.

When a sale plan would result in loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale, regardless of whether the Corporation and its subsidiaries will retain a non-controlling interest in that subsidiary after the sale.

2) 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.

3) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated on an interim period's pre-tax income by applying to the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

6. CASH AND CASH EQUIVALENTS

	June 30, 2017	December 31, 2016	June 30, 2016
Cash on hand	\$ 47,081	\$ 47,111	\$ 47,429
Checking accounts and demand deposits	7,286,126	7,267,847	10,896,133
Cash equivalents (investments with original maturities less than three months) Commercial papers with repurchase
agreements	1,214,891	3,914,480	2,008,179
Time deposits	4,492,106	3,503,330	3,066,496
Bonds with repurchase agreements	250,000	735,000	-
	\$ 13,290,204	\$ 15,467,768	\$ 16,018,237

Cash and cash equivalents shown in the consolidated statements of cash flows can be reconciled to the related items in the consolidated balance sheets. The reconciliation information as of June 30, 2017 and 2016 was shown in the consolidated statements of cash flows; the reconciliation information as of December 31, 2016 was as follows:

	December 31, 2016
Cash and cash equivalents Bank overdraft	\$ 15,467,768 (2,127,572)
	\$ 13,340,196

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	June 30, 2017	December 31, 2016	June 30, 2016
Financial assets at FVTPL - current
Financial assets designated as at FVTPL Mutual funds Listed shares Future contracts (a)	\$ 2,094,224 45,227 560	\$ 1,359,532 36,488 899	\$ 1,762,779 30,655 -
Financial assets held for trading Listed shares Mutual funds Convertible bonds Emerging market shares Foreign exchange forward contracts (b)	2,140,011 1,160,894 621,121 265,137 217,373 - 2,264,525 \$ 4,404,536	1,396,919 607,426 732,951 319,100 231,953 - 1,891,430 \$ 3,288,349	1,793,434 828,259 955,863 231,643 231,261 782 2,247,808 \$ 4,041,242
Financial liabilities at FVTPL - current
Financial liabilities designated as at FVTPL Call and put options (Note 20) Financial liabilities held for trading	\$ 623	\$ 405	\$ 549
Futures contracts (a) Foreign exchange forward contracts (b)	- 4,524 4,524	- 4,536 4,536	1,207 - 1,207
	\$ 5,147	\$ 4,941	\$ 1,756

a. The subsidiary Thintech United Metal Resources (Taicang) Co., Ltd. entered into precious metals futures contracts to manage fair value exposures arising from price fluctuation on precious metals. However, some of those contracts did not accounted for by using hedge accounting. As of the balance sheet date, the outstanding precious metals futures contracts were as follows:

Maturity Date	Weight (Kilograms)	Amount (In thousands)
June 30, 2017
December 15, 2017	450	\$ 8,671 ( RMB 1,933 thousand)
December 31, 2016
June 15, 2017	1,275	25,046 ( RMB 5,425 thousand)
June 30, 2016
December 15, 2016	1,305	24,273 ( RMB 5,010 thousand)

b. The subsidiaries entered into foreign exchange forward contracts to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, some of those contracts were not accounted for by using hedge accounting. The outstanding foreign exchange forward contracts not under hedge accounting of the subsidiaries at the end of the reporting period were as follows:

	Currency	Maturity Date	Contract Amount (In Thousands)
June 30, 2017
Sell Sell	USD/NTD HKD/NTD	July 2017-December 2017 August 2017-September 2017	USD11,184/NTD336,094 HKD33,000/NTD127,702
December 31, 2016
Sell Sell	USD/NTD HKD/NTD	January 2017-March 2017 February 2017	USD7,634/NTD241,717 HKD7,500/NTD30,734
June 30, 2016
Sell	USD/NTD	September 2016	USD3,627/NTD117,694

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	June 30, 2017	December 31, 2016	June 30, 2016
Current
Domestic investments
Listed shares	\$ 2,604,497	\$ 2,359,896	\$ 2,218,594
Mutual funds	303,731	397,759	615,157
Unlisted shares	72,451	49,082	5,662
	2,980,679	2,806,737	2,839,413
Foreign investments
Listed shares	-	-	2,414
	\$ 2,980,679	\$ 2,806,737	\$ 2,841,827
Noncurrent
Domestic investments
Listed shares	\$ 10,115,281	\$ 7,428,757	\$ 2,642,658
Emerging market shares and unlisted shares	2,245,234	2,754,165	6,196,585
Private-placement shares of listed companies	168,110	136,042	193,291
	12,528,625	10,318,964	9,032,534
Foreign investments
Unlisted shares	12,575,696	12,757,612	13,028,924
Listed shares	2,127,795	2,457,207	2,576,153
Certificate of entitlement	797,410	773,130	824,708
	15,500,901	15,987,949	16,429,785
	\$ 28,029,526	\$ 26,306,913	\$ 25,462,319

In January 2016, the subsidiary CSAPH invested USD329,135 thousand in Formosa Ha Tinh (Cayman) Limited and increased the total shareholding from 19% to 25%. As the result, the investment was reclassified from available-for-sale financial assets to investments accounted for using equity method (Note 15).

In November 2016, Congonhas Minerios S.A., the Corporation held 0.41% shareholding, had been renamed as CSN Mineracao S.A.

9. HELD-TO-MATURITY FINANCIAL ASSETS - NONCURRENT

	June 30,	December 31,	June 30,
	2017	2016	2016
Structured notes	\$	\$	\$
	104,630	110,924	143,285
Guarantee debt certificates	79,274	84,043	84,108
Corporate bonds	26,916	27,702	47,965
	\$	\$	\$
	210,820	222,669	275,358

10. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING

	June 30, 2017	December 31, 2016	June 30, 2016
Derivative financial assets for hedging - current
Foreign exchange forward contracts (a)	\$ 47,213	\$ 36,784	\$ 40,009
Derivative financial assets for hedging - noncurrent
Foreign exchange forward contracts (a)	\$ 21,713	\$ 3,354	\$ 39,280
Derivative financial liabilities for hedging - current
Foreign exchange forward contracts (a) Interest rate swap contracts (b)	\$ 42,712 5,824	\$ 28,328 9,281	\$ 11,739 4,991
	\$ 48,536	\$ 37,609	\$ 16,730
Derivative financial liabilities for hedging - noncurrent
Foreign exchange forward contracts (a) Interest rate swap contracts (b)	\$ 35,194 8,679	\$ 17,599 18,466	\$ 11,033 49,779
	\$ 43,873	\$ 36,065	\$ 60,812

a. The Corporation and its subsidiaries entered into foreign exchange forward contracts to manage cash flow and fair value exposures arising from exchange rate fluctuations on foreign-currency capital expenditures and sales and purchases contracts. The outstanding foreign exchange forward contracts of the Corporation and its subsidiaries at the balance sheet date were as follows:

Currency	Period for Generating Cash Flows and Maturity Date	Contract Amount (In Thousands)

NTD/USD	July 2017-April 2020	NTD3,782,397/USD125,867
NTD/JPY	July 2017-December 2019	NTD290,572/JPY1,046,489
		NTD1,657,127/EUR48,892
		NTD22,474/CNY5,000
		USD71/NTD2,129

		NTD1,845,189/USD58,454
		NTD140,853/JPY500,540
		NTD983,531/EUR28,130
	May 2017	NTD20,736/CNY4,375
USD/NTD	January 2017-March 2017	USD417/NTD13,321

		NTD1,873,361/USD59,357
		NTD185,909/JPY686,735
NTD/EUR	July 2016-October 2018	NTD628,282/EUR17,434
NTD/CNY	November 2016	NTD9,161/RMB1,875
USD/NTD	July 2016-September 2016	USD120/NTD3,888
	NTD/EUR NTD/CNY USD/NTD NTD/USD NTD/JPY NTD/EUR NTD/CNY NTD/USD NTD/JPY	August 2017-February 2020 July 2017-March 2018 July 2017-August 2017 January 2017-February 2020 May 2017-June 2018 January 2017-March 2019 July 2016-February 2020 July 2016-December 2019

b. The subsidiary DSC entered into interest rate swap contracts to manage cash flow exposures arising from interest rate fluctuations on bank loans. The outstanding interest rate swap contracts as of June 30, 2017, December 31, 2016 and June 30, 2016 were as follows:

Contract Amount (In Thousands)	Maturity Date	Range of Interest Rates Paid (%)	Range of Interest Rates Received
June 30, 2017
NT\$7,277,000	July 2017-July 2018	0.988-1.14	90 days fixing TAIBOR rate provided by Thomson Reuters
December 31, 2016
NT\$9,277,000	February 2017-July 2018	0.988-1.14	90 days fixing TAIBOR rate provided by Thomson Reuters
June 30, 2016
NT\$9,277,000	February 2017-July 2018	0.988-1.14	90 days fixing TAIBOR rate provided by Thomson Reuters

c. Movements of derivative financial instruments for hedging were as follows:

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Balance, beginning of period Recognized in other	\$ (176,938)	\$ 18,017	\$ (33,536)	\$ 78,701
comprehensive income Recognized in other gains and	108,734	(21,095)	(3,143)	(113,608)
losses Transferred to construction in progress and equipment to be	37,999	9,178	6,028	3,251
inspected	3,280	(4,353)	3,563	30,136
Transferred to construction contract	3,442	-	3,605	-
Transferred to operating revenues	-	-	-	3,267
Balance, end of period	\$ (23,483)	\$ 1,747	\$ (23,483)	\$ 1,747

11. NOTES AND ACCOUNTS RECEIVABLE, NET (INCLUDING RELATED PARTIES)

	June 30,	December 31,	June 30,
	2017	2016	2016
Notes receivable Operating Non-operating	\$ 1,602,724 - 1,602,724	\$ 1,617,847 - 1,617,847	\$ 1,370,332 - 1,370,332
Less: Allowance for doubtful accounts	- \$ 1,602,724	- \$ 1,617,847	- \$ 1,370,332
Accounts receivable	\$	\$	\$
Less:	11,555,945	12,042,400	11,212,144
Allowance for doubtful accounts	62,234	79,640	51,058
	\$	\$	\$
	11,493,711	11,962,760	11,161,086

The allowance for doubtful accounts was recognized based on estimated irrecoverable amounts determined by reference to the account aging analysis, past default experience of the customers and analysis of customers' current financial position. In determining the recoverability of an account receivable, the Corporation and its subsidiaries considered any change in the credit quality of the account receivable since the credit was initially granted to the end of the reporting period. For the past due notes and accounts receivable not collected after executing legal procedures, the Corporation and its subsidiaries will recognize 100% allowance for doubtful accounts.

The Corporation and its subsidiaries had not recognized an allowance for some notes and accounts receivable that are past due at the end of the reporting period because there had not been a significant change in credit quality and the amounts were still considered recoverable. The Corporation and its subsidiaries did not hold any collateral or other credit enhancement for these balances.

The aging of notes and accounts receivable was as follows:

	June 30, 2017	December 31, 2016	June 30, 2016
Not past due	\$ 12,213,622	\$ 12,809,916	\$ 11,663,734
1-30 days	492,987	365,801	356,310
31-60 days	126,411	179,756	69,499
61-365 days	195,791	156,229	312,107
More than 365 days	67,624	68,905	129,768
	\$ 13,096,435	\$ 13,580,607	\$ 12,531,418

Above analysis of account receivable after deducting the allowance for doubtful accounts was based on the past due days from end of credit term.

Aging analysis of notes and accounts receivable that are past due but not impaired was as follows:

	June 30,	December 31,	June 30,
	2017	2016	2016
Less than 31 days	\$	\$	\$
	491,709	365,801	356,214
31-60 days	120,838	172,525	64,613
61-365 days	193,340	151,389	241,537
More than 365 days	59,311	65,846	128,229
	\$	\$	\$
	865,198	755,561	790,593

Above analysis of account receivable was based on the past due days from end of credit term.

Movements in the allowance for doubtful accounts recognized on accounts receivable were as follows:

	For the Six Months Ended June 30
	2017	2016
Balance, beginning of period	\$ 79,640	\$ 34,207
Recognition (Reversal)	(16,505)	17,623
Reclassified to other receivables	-	(283)
Effect of foreign currency exchange difference	(901)	(489)
Balance, end of period	\$ 62,234	\$ 51,058

Aging analysis of individually impaired accounts receivable was as follows:

	June 30,	December 31,	June 30,
	2017	2016	2016
Less than 31 days	\$	\$	\$
	1,278	-	96
31-60 days	5,573	7,231	4,886
61-365 days	2,451	4,840	70,570
More than 365 days	8,313	3,059	1,539
	\$	\$	\$
	17,615	15,130	77,091

Above analysis of accounts receivable after deducting the allowance for doubtful accounts was based on the past due days from end of credit term.

Retentions receivable from construction contracts included in the accounts receivable did not bear interests; they were expected to be received upon the satisfaction of conditions specified in each contract for the payment of such amounts during retention periods, which were within normal operating cycle of the Corporation and its subsidiaries, usually more than twelve months. Refer to Note 12 for details on construction contracts.

The Corporation and the subsidiary CHSC entered into accounts receivable factoring agreements (without recourse) with Mega Bank and other financial institutions. Under the agreements, the Corporation and its subsidiaries are empowered to sell accounts receivable to the banks upon the delivery of products to customers and are required to complete related formalities at the next banking day.

For the six months ended June 30, 2017 and 2016, the related information for the Corporation and CHSC's sale of accounts receivable was as follows. Advances received at period-end dominated in US Dollars were converted to NT Dollars at the closing rate.

Counterparty	Advances Received at Period - Beginning	Receivables Sold	Amounts Collected by Bank	Advances Received at Period - End	Interest Rate on Advances Received (%)	Credit Line
For the Six Months Ended June 30, 2017
Mega Bank Mega Bank Bank of Taiwan	\$ 1,099,546 3,407,655 106,911	\$ 1,736,584 5,040,650 179,911	\$ 1,687,342 4,557,320 180,984	\$ 1,148,788 3,890,985 105,838	1.19 1.02-1.68 2.45	NT\$3 billion NT\$9 billion USD30,000 thousand
Bank of Taiwan Bank of Taiwan	1,305,411 658,609	2,025,891 2,346,043	1,828,828 2,712,423	1,502,474 292,229	1.02-1.68 1.84-2.17	NT\$3 billion USD130,000 thousand
Taishin Bank	-	546,062	401,140	144,922	2.52	USD10,000 thousand
Taishin Bank	1,944,923	4,291,825	3,292,142	2,944,606	1.59-1.70	USD110,000 thousand
CTBC Bank	552,811	1,377,784	1,042,025	888,570	1.59-1.70	USD40,000 thousand
	\$ 9,075,866	\$ 17,544,750	\$ 15,702,204	\$ 10,918,412
For the Six Months Ended June 30, 2016
Mega Bank Bank of Taiwan Bank of Taiwan	\$ 3,727,574 1,256,796 785,395	\$ 5,931,570 1,653,475 1,680,706	\$ 5,367,898 1,591,374 1,649,715	\$ 4,291,246 1,318,897 816,386	1.09-1.46 1.09-1.46 1.64-2.14	NT\$12 billion NT\$3 billion USD130,000 thousand
Taishin Bank	1,178,084	2,503,304	1,837,001	1,844,387	1.29-1.58	USD100,000 thousand
CTBC Bank	118,633	422,909	264,348	277,194	1.29-1.45	USD30,000 thousand
	\$ 7,066,482	\$ 12,191,964	\$ 10,710,336	\$ 8,548,110

12. AMOUNTS DUE FROM (TO) CUSTOMERS FOR CONSTRUCTION CONTRACTS

		June 30, 2017	December 31, 2016	June 30, 2016
	Amounts due from customers for construction contracts
	Construction costs incurred plus recognized profits less recognized losses to date Less: Progress billings	\$ 65,271,303 55,025,004	\$ 51,910,226 43,438,189	\$ 54,933,049 45,857,950
	Amounts due from customers for construction contracts	\$ 10,246,299	\$ 8,472,037	\$ 9,075,099
	Amounts due to customers for construction contracts
	Progress billings Less: Construction costs incurred plus	\$ 22,901,826	\$ 27,629,282	\$ 25,714,527
	recognized profits less recognized losses to date	19,705,156	23,775,558	22,762,802
	Amounts due to customers for construction contracts	\$ 3,196,670	\$ 3,853,724	\$ 2,951,725
	Retentions receivable	\$ 1,305,841	\$ 1,131,990	\$ 1,170,097
	Retentions payable	\$ 2,574,689	\$ 2,575,200	\$ 2,534,671
13.	INVENTORIES
		June 30, 2017	December 31, 2016	June 30, 2016
	Work in progress	\$ 23,760,505	\$ 21,410,134	\$ 17,733,903
	Finished goods	24,115,435	19,679,031	15,086,223
	Raw materials	21,207,654	19,618,052	15,081,891
	Supplies	10,472,801	10,064,257	10,783,180
	Raw materials and supplies in transit	8,461,676	6,914,867	4,380,249
	Buildings and lands under construction	1,851,125	1,462,463	1,082,998
	Lands held for construction	142,688	142,688	142,688
	Others	190,901	197,646	143,922

The cost of inventories recognized as operating costs for the three months and six months ended June 30, 2017 and 2016 was NT\$65,324,474 thousand, NT\$49,879,624 thousand, NT\$128,014,396 thousand and NT\$100,317,195 thousand, respectively, included inventories write-downs of NT\$2,444,489 thousand, the reversal of inventories write-downs of NT\$1,510,091 thousand, inventories write-downs of NT\$2,432,564 thousand, and the reversal of inventories write-downs of NT\$2,699,490 thousand, respectively.

\$ 90,202,785 \$ 79,489,138 \$ 64,435,054

14. DEBT INVESTMENTS WITH NO ACTIVE MARKET

	June 30, 2017	December 31, 2016	June 30, 2016
Noncurrent
Unlisted preference shares - overseas East Asia United Steel Corporation (EAUS) -
Preference A Subordinated financial bonds	\$ 1,810,757 4,104	\$ 1,837,425 24,351	\$ 2,095,438 124,354
Bonds	87,615	71,038	76,054
	\$ 1,902,476	\$ 1,932,814	\$ 2,295,846

In May 2003, the Corporation signed a slab production joint-venture contract with Sumitomo Metal Industries, Ltd. (renamed as Nippon Steel & Sumitomo Metal Corp. in October 2012) and Sumitomo Corporation. In July 2003, the joint venture company EAUS was established. The Corporation invested JPY10 billion in EAUS to acquire 10,000 shares of preference A. The Corporation thus has a stable supply of slab from this joint venture. The Corporation signed the long-term purchase agreement with EAVS and promised to purchase certain amount of slabs annually. In 2015, the Corporation sold 3,333 shares of preference A of EAUS to Nippon steel & Sumitomo Metal Corp.

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	June 30,	December 31,	June 30,
	2017	2016	2016
Material associates
Formosa Ha Tinh (Cayman) Limited	\$	\$	\$
	32,093,048	34,874,658	35,056,864
7623704 Canada Inc.	8,246,181	8,738,490	8,776,331
Associates that are not individually material	5,542,581	5,915,804	6,170,233
	\$	\$	\$
	45,881,810	49,528,952	50,003,428

a. Material associates

				Percentage of Ownership and Voting Rights (%)
Name of Associate	Nature of Activities	Principal Place of Business	June 30, 2017	December 31, 2016	June 30, 2016
Formosa Ha Tinh (Cayman) Limited	General Investment	Cayman	25	25	25
7623704 Canada Inc.	Mineral Investment	Canada	25	25	25

The summarized financial information below represent amounts shown in the financial statements of Formosa Ha Tinh (Cayman) Limited prepared in accordance with IFRSs, which were converted to the functional currency and adjusted for the purposes of applying equity method.

	June 30, 2017	December 31, 2016	June 30, 2016
Current assets	\$ 165,491,504	\$ 33,309,463	\$ 143,185,127
Noncurrent assets	122,301,518	253,081,599	133,192,214
Current liabilities	(62,831,577)	(16,863,112)	(94,268,697)
			(Continued)

	June 30,	December 31,	June 30,
	2017	2016	2016
Noncurrent liabilities	\$	\$	\$
	(102,819,600)	(137,090,790)	(49,411,993)
Equity	\$	\$	\$
	122,141,845	132,437,160	132,696,651
Percentage of the Corporation and its subsidiaries' ownership (%)	25	25	25
Equity attributable to the Corporation and its	\$	\$	\$
subsidiaries	30,535,462	33,107,828	33,173,056
Intangible assets	1,557,586	1,766,830	1,883,808
Carrying amount of the investment	\$ 32,093,048	\$ 34,874,658	\$ 35,056,864 (Concluded)

	Ended June 30	For the Three Months	For the Six Months Ended June 30
	2017	2016	2017	2016
Net loss for the period	\$	\$	\$	\$
	(1,036,078)	(2,473,433)	(2,812,044)	(3,024,794)
Total comprehensive income	\$	\$	\$	\$
for the period	(1,036,078)	(2,473,433)	(2,812,844)	(3,024,794)
Comprehensive income attributable to the Corporation and its
subsidiaries	\$	\$	\$	\$
	(313,225)	(717,630)	(811,521)	(827,411)

The summarized financial information below represents amounts shown in the financial statements of 7623704 Canada Inc. prepared in accordance with IFRSs, and converted to the Corporation's functional currency and adjusted for the purposes of applying equity method.

	June 30, 2017	December 31, 2016	June 30, 2016
Current assets Noncurrent assets Current liabilities	\$ 140,082 33,462,956 (18)	\$ 134,511 35,474,697 (38)	\$ 260,858 35,502,659 (147)
Equity	\$ 33,603,020	\$ 35,609,170	\$ 35,763,370
Percentage of the Corporation and its subsidiaries' ownership (%)	25	25	25
Equity attributable to the Corporation and its subsidiaries (carrying amount of the investment)	\$ 8,246,181	\$ 8,738,490	\$ 8,776,331

	Ended June 30	For the Three Months	For the Six Months Ended June 30
	2017	2016	2017	2016
Net profit (loss) for the period	\$	\$	\$	\$
	(193,743)	853,883	639,093	1,060,699
Total comprehensive income	\$	\$	\$	\$
for the period	(277,192)	1,881,587	(1,485,820)	460,575
Dividends received from	\$	\$	\$	\$
7623704 Canada Inc.	-	155,972	152,998	155,972
Comprehensive income attributable to the Corporation and its subsidiaries	\$ (68,023)	\$ 454,571	\$ (364,620)	\$ 105,855

b. Information about associates that are not individually material was as follows:

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
The Corporation and its subsidiaries' share of Net profit (loss) for the period Other comprehensive income	\$ 65,619 (5,091)	\$ (38) (32,350)	\$ 50,318 (88,621)	\$ 100,208 (120,485)
Total comprehensive income	\$ 60,528	\$ (32,388)	\$ (38,303)	\$ (20,277)

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

	June 30,	December 31,	June 30,
	2017	2016	2016
Chateau International Development Co., Ltd.	\$	\$	\$
	804,508	869,182	879,480

Except for the investments in some companies, investments accounted for using equity method as of June 30, 2017 and 2016, and the share of profit or loss and other comprehensive income of associates for the three months and six months ended June 30, 2017 and 2016, were calculated based on the reviewed financial statements. The Corporation's management considered the use of unreviewed financial statements as acceptable and will not have material impact on both the investments and income accounted for using the equity method.

16. OTHER FINANCIAL ASSETS

	June 30, 2017	December 31, 2016	June 30, 2016
Current
Pledged time deposits Deposits for projects	\$ 6,508,732 198,830	\$ 6,327,109 16	\$ 6,519,366 8,052
Time deposits with original maturities more than three months Hedging foreign-currency deposits	11,114,365 2,032,709	3,098,858 2,407,725	4,464,362 3,078,689
	\$ 19,854,636	\$ 11,833,708	\$ 14,070,469
Noncurrent
Pledged receivables Deposits for projects Pledged time deposits Time deposits with original maturities more than	\$ 2,000,000 478,637 272,146	\$ 2,000,000 1,090,454 279,024	\$ 2,000,000 216,046 343,079
three months	22,144 \$ 2,772,927	23,696 \$ 3,393,174	23,694 \$ 2,582,819

For the purpose of managing cash flow risk arising from exchange rate fluctuations due to purchasing imported equipment, the Corporation and its subsidiaries purchased foreign-currency deposits and entered into foreign exchange forward contracts (Note 10). As of June 30, 2017, December 31, 2016 and June 30, 2016, the balance of the foreign-currency deposits, which consist of those designated as hedging instruments and were settlements of expired foreign exchange forward contracts, was NT\$2,032,709 thousand (JPY0.99 billion, RMB96,316 thousand, USD33,472 thousand, EUR8,561 thousand and GBP332 thousand), NT\$2,407,725 thousand (JPY1.17 billion, RMB118,463 thousand, USD37,820 thousand, EUR9,040 thousand and GBP332 thousand) and NT\$3,078,689 thousand (JPY0.93 billion, RMB159,781 thousand, USD52,114 thousand, EUR8,820 thousand and GBP332 thousand), respectively. As of June 30, 2017, December 31, 2016 and June 30, 2016, cash outflows would be expected from aforementioned contracts during the periods from 2017, 2017 and 2016 to 2017, respectively.

Movements of hedging foreign-currency deposits were as follows:

	For the Three Months Ended	June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Balance, beginning of period Increase (decrease) Recognized in other comprehensive	\$ 2,086,293 (81,224)	\$ 2,323,908 735,620	\$ 2,407,725 (292,397)	\$ 2,428,316 626,688
income Transferred to construction in progress and equipment to be inspected	16,493 11,147	22,422 (3,261)	(79,644) (2,975)	27,059 (3,374)
Balance, end of period	\$ 2,032,709	\$ 3,078,689	\$ 2,032,709	\$ 3,078,689

Refer to Note 33 for information relating to other financial assets pledged as collateral.

17. PROPERTY, PLANT AND EQUIPMENT

For the six months ended June 30, 2017

	Land	Land Improvements	Buildings	Machinery and Equipment	Transportation Equipment	Other Equipment	Spare Parts	Rental Assets	Construction in Progress and Equipment to be Inspected	Total
Cost
Balance at January 1, 2017 Additions Disposals Reclassification Effect of foreign currency exchange	\$ 63,547,108 3,158,611 - 3,525	\$ 4,992,881 28,620 - 161	\$ 122,481,708 599,619 (8,650) (188,866)	\$ 618,315,362 2,508,503 (1,717,714) (93,120)	\$ 29,763,661 76,645 (77,108) 646	\$ 17,086,014 322,412 (127,419) (6,506)	\$ 9,906,663 737,012 (982,660) 290,017	\$ 323,003 - - -	\$ 17,497,100 2,945,117 - (494,736)	\$ 883,913,500 10,376,539 (2,913,551) (488,879)
difference Others	(883) -	(1,383) -	(263,981) -	(1,190,034) 1,362	(1,301,141) -	(26,651) -	- (21,250)	- -	(4,767) -	(2,788,840) (19,888)
Balance at June 30, 2017	\$ 66,708,361	\$ 5,020,279	\$ 122,619,830	\$ 617,824,359	\$ 28,462,703	\$ 17,247,850	\$ 9,929,782	\$ 323,003	\$ 19,942,714	\$ 888,078,881
Accumulated depreciation and impairment
Balance at January 1, 2017 Depreciation Disposals Impairments Reclassification	\$ 25,546 - - - -	\$ 4,568,858 37,772 - - -	\$ 44,480,284 1,949,213 (7,266) - (32,597)	\$ 375,772,170 13,323,580 (1,690,314) 81,967 (17,048)	\$ 11,541,392 796,424 (76,862) - 646	\$ 12,646,644 606,128 (125,911) - (1,939)	\$ 4,006,875 698,078 (982,660) - 53,670	\$ 22,144 5,351 - - -	\$ - - - - -	\$ 453,063,913 17,416,546 (2,883,013) 81,967 2,732
Effect of foreign currency exchange difference Others	- -	(166) -	(40,251) -	(271,271) 1,362	(562,736) -	(19,630) 2,294	- -	- -	- -	(894,054) 3,656
Balance at June 30, 2017	\$ 25,546	\$ 4,606,464	\$ 46,349,383	\$ 387,200,446	\$ 11,698,864	\$ 13,107,586	\$ 3,775,963	\$ 27,495	\$ -	\$ 466,791,747
Carrying amount at December 31, 2016	\$ 63,521,562	\$ 424,023	\$ 78,001,424	\$ 242,543,192	\$ 18,222,269	\$ 4,439,370	\$ 5,899,788	\$ 300,859	\$ 17,497,100	\$ 430,849,587
Carrying amount at June 30, 2017	\$ 66,682,815	\$ 413,815	\$ 76,270,447	\$ 230,623,913	\$ 16,763,839	\$ 4,140,264	\$ 6,153,819	\$ 295,508	\$ 19,942,714	\$ 421,287,134

For the six months ended June 30, 2016

	Land	Land Improvements	Buildings	Machinery and Equipment	Transportation Equipment	Other Equipment	Spare Parts	Rental Assets	Construction in Progress and Equipment to be Inspected	Total
Cost
Balance at January 1, 2016 Additions Disposals Reclassification	\$ 63,550,486 - (1,880) (534,454)	\$ 5,025,039 9,921 - (48,145)	\$120,691,611 1,069,099 (43,263) 104,720	\$604,487,779 7,060,449 (1,294,006) (111,427)	\$ 33,561,105 93,555 (5,421,296) 1,205	\$ 16,821,603 304,130 (147,971) 25,546	\$ 10,731,091 592,809 (1,221,228) -	\$ 322,270 733 - -	\$ 21,071,613 (589,359) - (35,738)	\$876,262,597 8,541,337 (8,129,644) (598,293)
Effect of foreign currency exchange difference Others	6,071 -	(3,075) -	(158,230) -	(389,774) -	(267,763) -	(9,424) -	- (1,222)	- -	(8,574) -	(830,769) (1,222)
Balance at June 30, 2016	\$ 63,020,223	\$ 4,983,740	\$121,663,937	\$609,753,021	\$ 27,966,806	\$ 16,993,884	\$ 10,101,450	\$ 323,003	\$ 20,437,942	\$875,244,006
Accumulated depreciation and impairment
Balance at January 1, 2016 Depreciation Disposals Reclassification	\$ 25,546 - - -	\$ 4,493,123 38,214 - -	\$ 40,756,301 1,921,469 (42,077) 10,074	\$350,679,360 13,709,592 (1,172,359) (1,503)	\$ 15,360,049 858,765 (5,292,355) 536	\$ 11,591,381 654,185 (119,802) (1,474)	\$ 4,656,809 686,536 (1,221,228) 1,314	\$ 11,447 5,346 - -	\$ - - - -	\$427,574,016 17,874,107 (7,847,821) 8,947
Effect of foreign currency exchange difference Others	- -	(288) -	(7,982) -	4,632 -	(66,899) -	(3,391) 63	- -	- -	- -	(73,928) 63
Balance at June 30, 2016	\$ 25,546	\$ 4,531,049	\$ 42,637,785	\$363,219,722	\$ 10,860,096	\$ 12,120,962	\$ 4,123,431	\$ 16,793	\$ -	\$437,535,384
Carrying amount at June 30, 2016	\$ 62,994,677	\$ 452,691	\$ 79,026,152	\$246,533,299	\$ 17,106,710	\$ 4,872,922	\$ 5,978,019	\$ 306,210	\$ 20,437,942	\$437,708,622

The above items of property, plant and equipment are depreciated on a straight-line basis over the following useful lives:

Land improvements
Drainage system	40 years
Wharf	20-40 years
Wall	20-40 years
Others	5-15 years
Buildings
Main structure	2-60 years
Facility	8-40 years
Mechanical and electrical facilities	10-15 years
Trellis and corrugated iron building	3-20 years
Others	3-10 years
Machinery and equipment
Power equipment	2-25 years
Process equipment	8-25 years
	(Continued)

Lifting equipment	8-25 years
Electrical equipment	3-16 years
High-temperature equipment	2-25 years
Examination equipment	3-10 years
Others	2-25 years
Transportation Equipment
Ship equipment	18-25 years
Railway equipment	5-20 years
Telecommunication equipment	5-6 years
Transportation equipment	3-10 years
Others	2-3 years
Other equipment
Leasehold improvement	3-35 years
Office, air condition and extinguishment equipment	5-25 years
Computer equipment	3-15 years
Others	2-15 years
Rental assets
Financial lease assets	30 years
	(Concluded)

The subsidiary CHSC bought farmlands for warehousing at the Jia Xing Section and Quing Shui Section of the Gangshan District in Kaohsiung City. However, certain regulations prohibit CHSC from registering the title of these farmlands in CHSC's name; therefore, the registration was made in the name of an individual person. The individual person consented to fully cooperate with CHSC in freely changing the land title to CHSC or to other name of other under CHSC instructions. Meanwhile, the land had been pledged to CHSC as collateral. As of June 30, 2017, December 31, 2016 and June 30, 2016, the book value of the farmlands was NT\$66,753 thousand, recorded as land.

Refer to Note 33 for the carrying amount of property, plant and equipment that had been pledged by the Corporation and its subsidiaries to secure borrowings.

18. INVESTMENT PROPERTIES

For the six months ended June 30, 2017

	Land	Buildings	Total
Cost
Balance at January 1, 2017 Additions Transfer to property, plant and equipment Effect of foreign currency exchange difference	\$ 8,222,428 - (3,525) (2,273)	\$ 3,236,752 265,026 (9,028) (8,420)	\$ 11,459,180 265,026 (12,553) (10,693)
Balance at June 30, 2017	\$ 8,216,630	\$ 3,484,330	\$ 11,700,960
Accumulated depreciation and impairment
Balance at January 1, 2017 Depreciation Transfer to property, plant and equipment Effect of foreign currency exchange difference	\$ 222,057 - - -	\$ 920,981 36,537 (4,098) (1,325)	\$ 1,143,038 36,537 (4,098) (1,325)
Balance at June 30, 2017	\$ 222,057	\$ 952,095	\$ 1,174,152 (Continued)

	Land	Buildings	Total
Carrying amount at December 31, 2016	\$ 8,000,371	\$ 2,315,771	\$ 10,316,142
Carrying amount at June 30, 2017	\$ 7,994,573	\$ 2,532,235	\$ 10,526,808 (Concluded)
For the six months ended June 30, 2016
	Land	Buildings	Total
Cost
Balance at January 1, 2016 Additions Transfer from (to) property, plant and equipment Effect of foreign currency exchange difference	\$ 8,220,781 - 534,454 23,630	\$ 2,963,556 101,275 (67,477) 52,293	\$ 11,184,337 101,275 466,977 75,923
Balance at June 30, 2016	\$ 8,778,865	\$ 3,049,647	\$ 11,828,512
Accumulated depreciation and impairment
Balance at January 1, 2016 Depreciation Transfer to property, plant and equipment Effect of foreign currency exchange difference	\$ 222,057 - - -	\$ 854,091 41,699 (11,131) 4,367	\$ 1,076,148 41,699 (11,131) 4,367
Balance at June 30, 2016	\$ 222,057	\$ 889,026	\$ 1,111,083
Carrying amount at June 30, 2016	\$ 8,556,808	\$ 2,160,621	\$ 10,717,429

The above items of investment properties are depreciated on a straight-line basis over the following useful lives:

Buildings 5-60 years

The Corporation and its subsidiaries participated in "Qianzhen Residential Building Project" conducted by the subsidiary CPDC and signed the land purchase agreement with its employees. According to the purchase agreement, land prices received from its employees are deposited in the Bank of Taiwan and recognized as other financial assets-noncurrent and other noncurrent liabilities.

The fair value of the investment properties was arrived at on the basis of valuation carried out in 2013, 2014, 2015, 2016 and 2017 by independent appraisers, who are not related parties. Lands were valued under market approach, income approach, cost approach and land developing analysis approach. Buildings were evaluated using Level 3 inputs under market approach, cost approach and income approach. In December 2016, due to the significant change in the present value assessed for several pieces of land, the Corporation, based on the actual land sale prices in the vicinity, reappraised the land value. The important assumptions and fair value were as follows:

	June 30,	December 31,	June 30,
	2017	2016	2016
Fair value	\$	\$	\$
	26,058,022	25,137,693	25,325,367
Depreciation rate (%)	1.20-2.00	1.20-2.00	1.20-2.00
Discount rate (%)	2.11-4.14	2.11-4.14	1.55-4.14

All of the Corporation and its subsidiaries' investment properties are held under freehold interests. Refer to Note 33 for the carrying amount of the investment properties that had been pledged by the Corporation and its subsidiaries to secure borrowings.

19. BORROWINGS

a. Short-term borrowings and bank overdraft

	June 30, 2017	December 31, 2016	June 30, 2016
Unsecured loans - interest at 0.35%-7.70%
p.a., 0.35%-8.52% p.a. and 0.43%-9.50%
p.a. as of June 30, 2017, December 31, 2016 and June 30, 2016, respectively	\$ 30,055,042	\$ 31,384,879	\$ 23,402,415
Bank overdraft - interest at 0.14%-7.90% p.a.,
0.14%-8.35% p.a. and 0.21%-2.63% p.a.
as of June 30, 2017, December 31, 2016
and June 30, 2016, respectively	5,392,102	2,127,572	1,076,335
Letters of credit - interest at 0%-1.89% p.a.,
0.93%-1.85% p.a. and 0.98%-1.49% p.a.
as of June 30, 2017, December 31, 2016
and June 30, 2016, respectively	1,099,633	2,088,590	1,885,529
Secured loans (Note 33) - interest at
4.35%-5.22% p.a. and 4.35% p.a. as of
June 30, 2017 and December 31, 2016,
respectively	343,328	304,699	-
	\$ 36,890,105	\$ 35,905,740	\$ 26,364,279

Starting from February 2016, the subsidiary CCSPMC entered into several credit facility agreements with several financial institutions for total amount of USD22,000 thousand (or the equal amount in RMB, the credit line remained unchanged) and RMB168,000 thousand credit line. Under the agreements, the Corporation and its subsidiaries should collectively hold more than 50% of the CCSPMC's equity and half or more of the seats in the board of directors and supervisors. As of June 30, 2017, the subsidiary CSAPH held 70% equity of CCSPMC and three-quarters of the seats in the board of directors and supervisors.

Starting from March 2015, the subsidiary United Steel Engineering and Construction Co., Ltd. entered into short-term financing contract with several banks for USD45,000 thousand (or the equal amount in RMB, the credit line remained unchanged) and RMB50,000 thousand credit line. Under the agreements, the Corporation and its subsidiaries should directly or indirectly hold 100% of United Steel Engineering and Construction Co., Ltd.'s issued shares and all of the seats in the board of directors. As of June 30, 2017, CSAPH and CSGT, both subsidiaries, collectively held 100% equity of United Steel Engineering and Construction Co., Ltd. and all of the seats in the board of directors.

In June 2016 and February 2016, the subsidiary CSCI entered into short-term financing contracts with Bank BNP Paribas for INR 1 billion credit line and ANZ Bank for INR0.66 billion credit lines. Under the agreements, the Corporation and its related parties should collectively hold both 60% of CSCI's issued shares and hold either half or more than half of the seats in the board of directors. As of June 30, 2017, the Corporation held 100% equity of CSCI and all of the seats in the board of directors.

Starting from March 2014, the subsidiary CSVC continuously entered into short-term financing contracts with Standard Chartered Bank and several financial institutions for USD40,000 thousand credit lines. Under the agreements, the Corporation should hold at least 51% of CSVC's issued shares and half or more of the seats in the board of directors. In May 2017, the subsidiary CSVC entered into another short-term financing contract with Standard Chartered Bank for USD50,000 thousand credit line. Under the agreements, the Corporation should hold at least 56% of CSVC's issued shares and half or more of the seats in the board of the directors. As of June 30, 2017, the Corporation held 56% equity of CSVC and half or more of the seats in the board of directors.

Starting from September 2016, the subsidiary China Steel Precision Metals-Qingdao Co., Ltd., entered into a short-term financing contract with MUFG Bank (Qingdao) for USD 10,000 thousand credit line (or an equivalent amount in RMB, the credit line remained unchanged). Under the agreements, the Corporation and its related parties should collectively hold at least 70% of issued shares of China Steel Precision Metals-Qingdao Co., Ltd., together with half or more of the seats in the board of directors. As of June 30, 2017, the Corporation held 70% equity of China Steel Precision Metals-Qingdao Co., Ltd. and four-fifths seats in the board of directors.

b. Short-term bills payable

	June 30,	December 31,	June 30,
	2017	2016	2016
Commercial paper - interest at 0.33%-1.40% p.a., 0.40%-1.00% p.a. and 0.24%-1.00% p.a. as of June 30, 2017, December 31,
2016 and June 30, 2016, respectively	\$	\$	\$
Less:	46,547,000	16,639,000	43,048,000
Unamortized discounts	7,987	6,900	7,662
	\$	\$	\$
	46,539,013	16,632,100	43,040,338

The above commercial paper was secured by Mega Bills Finance Corporation, China Bills Finance Corporation, International Bills Finance Corporation, Taching Bill Finance Ltd., Grand Bills Finance Corp., Taiwan Finance Corporation, Taiwan Cooperative Bills Finance Corporation, Union Bank of Taiwan, Bank of Taiwan, Hua Nan Commercial Bank, Taiwan Cooperative Bank, Dah Chung Bills Finance Corp., and Taipei Fubon Commercial Bank Co., Ltd.

c. Long-term borrowings

	June 30, 2017	December 31, 2016	June 30, 2016
Syndicated bank loans
Bank of Taiwan and other banks loan to
CHSC
Repayable in 13 equal semiannual
installments from March 2013 to March
2019, interest all at 1.58% p.a. as of
June 30, 2017, December 31, 2016 and
June 30, 2016, respectively	\$ 2,133,846	\$ 2,672,308	\$ 3,210,769
Repayable in March 2019 with a
revolving credit, interest all at 1.58%
p.a. as of June 30, 2017, December 31,
2016 and June 30, 2016, respectively	2,250,000	2,250,000	2,250,000
			(Continued)

	June 30, 2017	December 31, 2016	June 30, 2016
Bank of Taiwan and other banks loan to DSC
Repayable in 14 equal semiannual installments from January 2012 to July 2018, interest at 1.15% p.a., 1.11% p.a.
and 1.15% p.a. as of June 30, 2017, December 31, 2016 and June 30, 2016,
respectively	\$ 9,788,540	\$ 13,053,540	\$ 16,318,540
Chinatrust Commercial Bank and other
banks loan to CSCI
Repayable in 5 semiannual installments
from June 2017 to June 2019, interest at 2.74% p.a., 3.00% p.a. and 2.26% p.a.
as of June 30, 2017, December 31, 2016
and June 30, 2016, respectively	3,344,101	3,559,603	3,550,074
Bank of Taiwan and other banks loan to the
Corporation
Repayable in several installments from
February 2020, interest at 2.56% p.a.,
2.42% p.a. and 2.00% p.a. as of June
30, 2017, December 31, 2016 and June
30, 2016, respectively	15,210,000	16,125,000	16,137,500
Mizuho Bank and other banks loan to the Corporation
Repayable in August 2018, interest at
2.25%-2.27% p.a., 1.97%-1.99% p.a.
and 1.67%-1.70% p.a. as of June 30,
2017, December 31, 2016 and June 30,
2016, respectively	4,563,000	4,837,500	4,841,250
Mega Bank and other banks loan to CSVC
Repayable in 10 semiannual installments
from September 2015 to March 2020,
interest at 2.43% p.a., 2.25% p.a. and 2.25% p.a. as of June 30, 2017,
December 31, 2016 and June 30, 2016,
respectively	3,066,336	3,453,975	3,659,985
Mortgage loans (Note 33)
Due on various dates through April 2032,
interest at 1.26%-2.28% p.a.,
1.22%-2.02% p.a. and 0.89%-1.76% p.a.
as of June 30, 2017, December 31, 2016
and June 30, 2016, respectively	8,723,087	9,968,040	9,118,628
Unsecured loans Due on various dates through June 2022,
interest at 0.31%-2.26% p.a.,
0.31%-2.81% p.a. and 0.31%-3.35% p.a.
as of June 30, 2017, December 31, 2016
and June 30, 2016, respectively	22,579,982	30,664,227	28,506,477
	71,658,892	86,584,193	87,593,223
Less: Syndicated loan fee	33,853	44,824	78,295
Current portion	11,076,441	16,210,014	14,821,127
	\$ 60,548,598	\$ 70,329,355	\$ 72,693,801 (Concluded)

1) In December 2011, the subsidiary CHSC entered into a syndicated credit facility agreement with Bank of Taiwan and 11 other financial institutions for a NT\$16 billion credit line, which consists of NT\$7 billion secured loans with a non-revolving credit line and NT\$9 billion unsecured loans with a revolving credit line. Under the agreement, the Corporation and its related parties should collectively hold at least 30% of the CHSC's issued shares and control CHSC's operation. Starting from 2012, CHSC should meet some financial ratios and criteria.

The amounts referring to the above financial ratios and criteria should be based on audited annual financial statements. If CHSC breaches the agreements, it should take remedial measures within half a year from the next day of the financial statements' declaration date; otherwise, the interest rate needs to be adjusted in accordance with the agreement without being considered breach of agreement. The financial ratios of CHSC 2016 standalone financial statements is in compliance with the agreements. As of June 30, 2017, the Corporation directly held 41% equity of CHSC and held half or more of the seats in the board of directors and controlled its operation.

2) In July 2012, the subsidiary DSC entered into a syndicated credit facility agreement with Bank of Taiwan and 17 other financial institutions for a NT\$35 billion credit line, which consists of NT\$30 billion secured loans with a non-revolving credit line and NT\$5 billion secured commercial paper with a revolving credit line. In February 2008, DSC entered into a syndicated credit facility agreement with Bank of Taiwan and 13 other financial institutions for a NT\$51.7 billion credit line. Under the agreements, the Corporation and its associates should collectively hold at least 80% and 40% of DSC's issued shares and hold half or more of the seats in the board of directors. Starting from 2012, DSC should meet some financial ratios and criteria.

The amounts referring to the above financial ratios and criteria should be based on audited annual financial statements. If DSC breaches the financial ratios or the agreements, the management bank can, based on the decision by majority of banks, immediately terminate the credit line, declare DSC's outstanding principal and interest to maturity as due, and request DSC to settle immediately. DSC was in compliance with the syndicated credit facility agreement based on its financial statements of 2016. As of June 30, 2017, the Corporation held 100% equity of DSC and all of the seats in the board of directors.

3) In October 2012, the subsidiary CSVC entered into a syndicated credit facility agreement with Mega Bank and 11 other banks for a USD246,000 thousand credit line, which consists of USD126,000 thousand long-term borrowings with a non-revolving credit line and USD120,000 thousand short-term borrowings for operation with a revolving credit line. Under the agreements, the Corporation should hold at least 51% of CSVC's issued shares and half of more of the seats in the board of directors. Starting from 2015, CSVC should meet some financial ratios and criteria. CSVC was not in compliance with the financial ratios under the syndicated credit facility agreement based on its 2016 audited financial statements. Breaching of financial ratios referring to the above has made the interest rate adjusted in accordance with the agreement; however, the interest rate adjusted was not being considered breaching of agreement. As of June 30, 2017, the Corporation held 56% equity of CSVC and half or more of the seats in the board of directors.
4) In January 2013, the subsidiary CSCI entered into a syndicated credit facility agreement with CTBC Bank and 9 other banks for a USD110,000 thousand credit line. Under the agreement, the Corporation should collectively hold at least 75% of CSCI's issued shares and hold two-thirds or more of the seats in the board of directors. If CSCI expands or invites new strategic investors, the Corporation should collectively hold at least 60% of CSCI's issued shares and hold half or more of the seats in the board of directors. The syndicated credit facility agreement has been re-sign in November 2016. CSCI should meet some financial ratios and criteria required by the new syndicated credit facility agreement based on the Corporation's reviewed financial statements for the six months ended June 30 and audited annual financial statements as well as CSCI's unreviewed financial statements for the six months ended September 30 and audited annual financial statements. CSCI was in compliance with the syndicated credit facility agreement based on its financial

statement for the six months ended June 30, 2017 and 2016 audited financial statements. As of June 30, 2017, the Corporation held 100% equity of CSCI and held all of the seats in the board of directors.

5) In July and August 2015, the Corporation entered into a syndicated credit facility agreement with Mizuho bank with 7 other financial institutions and Bank of Taiwan with 14 other financial institutions for a USD150,000 thousand and USD500,000 thousand unsecured non-revolving credit line, respectively. Under the agreement, the Corporation should meet some financial ratios and criteria which were based on reviewed consolidated financial statements for the six months ended June 30 and audited annual consolidated financial statements. If the Corporation breaches the financial ratios or the clauses, the management bank can, based on the decision by majority of banks, immediately terminate the credit line, declare the Corporation's outstanding principal and interest to maturity as due, and request the Corporation to settle immediately. The Corporation was in compliance with the syndicated credit facility agreements based on its consolidated financial statements for the six months ended June 30, 2017 and for the year ended December 31, 2016.
6) The above unsecured loans included those obtained by the Corporation in JPY, AUD and USD to hedge the exchange rate fluctuations on equity investments in EAUS, CSCAU, CSVC, and CSAPH and on the available-for-sale financial assets in Maruichi Steel Tube Ltd. and Yodogawa Steel Works, Ltd.

d. Long-term bills payable

	June 30,	December 31,	June 30,
	2017	2016	2016
Commercial paper - interest at 0.35%-1.05% p.a., 0.41%-1.05% p.a. and 0.38%-1.04% p.a. as of June 30, 2017, December 31, 2016 and June 30, 2016, respectively Secured commercial paper in syndicated bank loans - interest at 0.97% p.a., 0.97% p.a. and 0.96% p.a. as of June 30, 2017, December 31, 2016 and June 30, 2016,	\$ 22,100,000	\$ 31,640,000	\$ 16,390,000
respectively	1,000,00	5,000,000	5,000,000
	23,100,000	36,640,000	21,390,000
Less: Unamortized discounts Current portion	6,496 500,000	13,835 -	6,888 -
	\$	\$	\$
	22,593,504	36,626,165	21,383,112

The Corporation and its subsidiaries entered into commercial paper contracts with bills finance corporations and banks. The duration of the contracts is three to five years and the cycle of issuance is fifteen to sixty days, during which the Corporation and its subsidiaries only have to pay service fees and interests. Therefore, the Corporation and its subsidiaries recorded those commercial papers issued as long-term bills payable.

The subsidiary DSC issued secured commercial paper in syndicated bank loans with the duration of seven years. Refer to c. 2) for details.

The above commercial paper was secured by Mega Bank, Agricultural Bank of Taiwan, Taishin Bank, ANZ Bank (Taiwan), Hua Nan Commercial Bank and Bank BNP Paribas etc.

20. BONDS PAYABLE

	June 30, 2017	December 31, 2016	June 30, 2016
5-year unsecured bonds - issued at par by the
Corporation in:
October 2011; repayable in October 2015 and
October 2016; interest at 1.36% p.a., payable annually	\$ -	\$ -	\$ 4,650,000
5-year unsecured bonds - issued at par by DSC in:
June 2014; repayable in June 2018 and June
2019; interest at 1.40% p.a., payable annually	7,000,000	7,000,000	7,000,000
June 2015; repayable in June 2019 and June
2020; interest at 1.45% p.a., payable annually	7,500,000	7,500,000	7,500,000
June 2016; repayable in June 2020 and 2021;
interest at 0.89% p.a., payable annually 7-year unsecured bonds - issued at par by the	5,400,000	5,400,000	5,400,000
Corporation in:
October 2011; repayable in October 2017 and
October 2018; interest at 1.57% p.a., payable
annually	10,400,000	10,400,000	10,400,000
August 2012; repayable in August 2018 and
August 2019; interest at 1.37% p.a., payable annually	5,000,000	5,000,000	5,000,000
July 2013; repayable in July 2019 and July
2020; interest at 1.44% p.a., payable annually	6,300,000	6,300,000	6,300,000
January 2014; repayable in January 2020 and
January 2021; interest at 1.75% p.a., payable
annually 7-year unsecured bonds - issued at par by DSC in:	6,900,000	6,900,000	6,900,000
June 2014; repayable in June 2020 and June
2021; interest at 1.75% p.a., payable annually	5,000,000	5,000,000	5,000,000
June 2015; repayable in June 2021 and June
2022; interest at 1.72% p.a., payable annually 10-year unsecured bonds - issued at par by the	2,500,000	2,500,000	2,500,000
Corporation in:
August 2012; repayable in August 2021 and
August 2022; interest at 1.50% p.a., payable
annually July 2013; repayable in July 2022 and July	15,000,000	15,000,000	15,000,000
2023; interest at 1.60% p.a., payable annually	9,700,000	9,700,000	9,700,000
January 2014; repayable in January 2023 and
January 2024; interest at 1.95% p.a., payable
annually 15-year unsecured bonds - issued at par by the	7,000,000	7,000,000	7,000,000
Corporation in:
July 2013; repayable 30% in July 2026 and July
2027, and 40% in July 2028; interest at 1.88%
p.a., payable annually	3,600,000	3,600,000	3,600,000
January 2014; repayable 30% in January 2027 and January 2028, and 40% in January 2029;
interest at 2.15% p.a., payable annually	9,000,000	9,000,000	9,000,000
Liability component of secured domestic
convertible bonds - issued by TMTC	14,000	14,000	48,300 (Continued)

		June 30, 2017	December 31, 2016	June 30, 2016
	Liability component of unsecured domestic
	convertible bonds - issued by TMTC	\$ -	\$ -	\$ 15,000
		100,314,000	100,314,000	105,013,300
Less:	Issuance cost of bonds payable	38,472	43,256	48,117
	Unamortized discount on bonds payable	17,853	20,782	23,801
	Current portion	8,713,285	5,212,668	4,712,230
		\$ 91,544,390	\$ 95,037,294	\$ 100,229,152
				(Concluded)

In September 2013, the subsidiary TMTC issued NT\$200,000 thousand of 3-year secured domestic convertible bonds at par from September 2013 to September 2016 which were secured by Hua Nan Commercial Bank. From one month after the issuance date to 10 days before the maturity date, bondholders may request TMTC to convert the bonds into its ordinary shares (except for the related book closure period). On the repurchase date, two years after the issuance date, bondholders may request TMTC to repurchase the bonds at their face value plus interest (1.9090% of face value, yield to put 0.95%) by cash in five trading days. From one month after the issuance date to 40 days before the maturity date, if the closing price of TMTC's shares on the Taipei Exchange is higher than 130% of the conversion price for 30 consecutive trading days or when the outstanding convertible bonds are less than 10% of initial issued bonds, TMTC may redeem the remaining bonds at their face value by cash in five trading days after the redemption date. As of June 30, 2017, the convertible bonds with NT\$151,700 thousand face value have been converted and redeemed into NT\$5,766 thousand ordinary share capital.

In September 2013, the subsidiary TMTC issued NT\$100,000 thousand of 5-year unsecured domestic convertible bonds at par from September 2013 to September 2018. From one month after the issuance date to 10 days before the maturity date, bondholders may request TMTC to convert the bonds into its ordinary shares (except for the related book closure period). On the repurchase dates, two years, three years and four years after the issuance date, bondholders may request TMTC to repurchase the bonds at their face value plus interest (2.5156%, 3.7971% and 5.0945% of face value for two years, three years and four years, respectively, yield to put 1.25%) by cash in five trading days. From one month after the issuance date to 40 days before the maturity date, if the closing price of TMTC's shares on the Taipei Exchange is higher than 130% of the conversion price for 30 consecutive trading days or when the outstanding convertible bonds are less than 10% of initial issued bonds, TMTC may redeem the remaining bonds at their face value by cash in five trading days after the redemption date. As of June 30, 2017, the convertible bonds with NT\$85,000 thousand face value have been converted into NT\$21,975 thousand ordinary share capital.

According to IAS 32 and IAS 39, TMTC has separately accounted for the embedded derivatives and the host contract - bonds payable. The embedded derivatives, including put options and call options, were recognized in financial instruments at fair value through profit or loss (Note 7) and measured at fair value.

21. ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

Accounts payable includes advances received on construction contracts. Advances received on construction contracts bears no interests and are expected to be paid until the satisfaction of conditions specified in each contract for the payment of such amounts during retention periods, which were within the normal operating cycle of the Corporation and its subsidiaries, usually more than twelve months. Refer to Note 12 for details on construction contracts.

22. OTHER PAYABLES

	June 30, 2017	December 31, 2016	June 30, 2016
Dividends payable	\$ 15,459,021	\$ 300,632	\$ 10,087,150
Salaries and incentive bonus	5,316,100	7,820,606	5,932,753
Purchase of equipment	2,657,641	2,788,624	3,552,024
Employees' compensation and remuneration of
directors and supervisors	2,505,262	1,708,289	1,182,100
Sales returns and discounts	2,017,505	1,492,872	1,648,936
Interest payable	1,024,135	1,091,405	1,083,954
Outsourced repair and construction	877,566	1,084,736	970,947
Others	7,025,888	5,150,485	4,569,296

	\$ 36,883,118	\$ 21,437,649	\$ 29,027,160

23. PROVISIONS

	June 30, 2017	December 31, 2016	June 30, 2016
Current
Onerous contracts (a) Construction warranties (b) Sale returns and discounts (c) Others	\$ 1,196,266 421,545 1,355,141 96,559 \$ 3,069,511	\$ 3,750,118 463,355 24,415 86,218 \$ 4,324,106	\$ 2,773,982 473,417 659,946 77,314 \$ 3,984,659
Noncurrent
Provision for stabilization funds (d) Others	\$ 806,626 9,616	\$ 802,859 12,835	\$ 797,301 18,191
	\$ 816,242	\$ 815,694	\$ 815,492

	Onerous Contracts	Construction Warranties	Sale Returns and Discounts	Provision for Stabilization Funds	Others	Total
Balance at January 1, 2017 Recognized (Reversal) Paid	\$ 3,750,118 3,420,123 (5,973,975)	\$ 463,355 (41,365) (445)	\$ 24,415 1,355,141 -	\$ 802,859 3,815 (48)	\$ 99,053 10,904 (3,782)	\$ 5,139,800 4,748,618 (5,978,250)
Effect of foreign currency exchange difference	-	-	(24,415)	-	-	(24,415)
Balance at June 30, 2017	\$ 1,196,266	\$ 421,545	\$ 1,355,141	\$ 806,626	\$ 106,175	\$ 3,885,753
Balance at January 1, 2016 Recognized Paid	\$ 2,611,156 4,118,777 (3,955,951)	\$ 491,899 841 (19,323)	\$ - 659,946 -	\$ 793,851 3,450 -	\$ 90,386 10,544 (5,425)	\$ 3,987,292 4,793,558 (3,980,699)
Balance at June 30, 2016	\$ 2,773,982	\$ 473,417	\$ 659,946	\$ 797,301	\$ 95,505	\$ 4,800,151

a. The provision for onerous contracts represents the present value of the future payments that the Corporation and its subsidiaries were presently obligated to make under non-cancellable onerous purchase and service contracts, less revenue expected to be earned on the contracts.

b. The provision for construction warranties represents the present value of management's best estimate of the future outflow of economic benefits that will be required under the Corporation and its subsidiaries' obligations for warranties. The estimate had been made on the basis of historical warranty trends.
c. The provision for sales returns and discounts, recognized as a reduction of operating revenues, represents the annual rewards estimated on the basis of historical experience, management's judgments and other known reasons.
d. The provision for stabilization funds represents the provision recognized in accordance with the build-operate-transfer contract by the subsidiary KRTC. The provision was used for capital demand due to force majeure, exceptional events, operating deficits, etc. The provision for stabilization funds was recognized based on increase in stabilization funds.

24. RETIREMENT BENEFIT PLANS

Employee benefit expenses for the six months ended June 30, 2017 and 2016 in respect of the Corporation and its subsidiaries' defined benefit retirement plans were calculated using the actuarially determined pension cost discount rate as of December 31, 2016 and 2015. An analysis by function of the amounts is as follows:

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Operating costs	\$ 146,174	\$ 148,209	\$ 296,354	\$ 304,101
Operating expenses	60,496	64,075	123,059	122,162
Others	472	582	929	1,153
	\$ 207,142	\$ 212,866	\$ 420,342	\$ 427,416

25. EQUITY

a. Share capital

	June 30, 2017	December 31, 2016	June 30, 2016
Numbers of shares authorized (in thousands)	17,000,000	17,000,000	17,000,000
Shares authorized	\$ 170,000,000	\$ 170,000,000	\$ 170,000,000
Numbers of shares issued and fully paid (in thousands) Ordinary shares (in thousands) Preference shares (in thousands)	15,734,861 38,268	15,734,861 38,268	15,734,861 38,268
	15,773,129	15,773,129	15,773,129
Shares issued Ordinary shares Preference shares	\$ 157,348,610 382,680 \$ 157,731,290	\$ 157,348,610 382,680 \$ 157,731,290	\$ 157,348,610 382,680 \$ 157,731,290

1) Ordinary shares

Fully paid ordinary shares, which have a par value of NT\$10, carry one vote per share and the right to dividends.

2) Preference shares

Preference shareholders have the following entitlements or rights:

a) 14% annual dividends, with dividend payments ahead of those to ordinary shareholders;
b) Preference over ordinary shares in future payment of dividends in arrears;
c) The sequence and percentage of appropriation of residual property are the same with ordinary shares;
d) The same rights as ordinary shareholders, except the right to vote for directors and supervisors; and
e) Redeemable by the Corporation and convertible to ordinary shares by preference shareholders with the ratio of 1:1.
3) Overseas depositary receipts

In May 1992, February 1997, October 2003 and August 2011, for the purpose of working capital expansion and in accordance with the instruction of the MOEA, the largest shareholder of the Corporation, the Corporation issued 126,512,550 units of GDR. The depositary receipts then increased by 6,924,354 units resulting from the capital increase out of retained earnings. Each unit represents 20 shares of the Corporation's ordinary shares and the issued GDRs account for the Corporation's ordinary shares totaling 2,668,738,370 shares (including 290 fractional shares). Under relevant regulations, the GDR holders may also request the conversion to the shares represented by the GDR and the circulation in domestic securities trading market. The foreign investors may also request the reissuance of such depositary receipts within the originally approved units. As of June 30, 2017, December 31, 2016, and June 30, 2016, the outstanding depositary receipts were 1,051,831 units, 1,055,002 units and 1,179,943 units, equivalent to 21,036,930 ordinary shares (including 310 fractional shares), 21,100,350 ordinary shares (including 310 fractional shares), and 23,599,170 ordinary shares (including 310 fractional shares), which represented 0.13%, 0.13% and 0.15% of the outstanding ordinary shares, respectively.

b. Capital surplus

	June 30, 2017	December 31, 2016	June 30, 2016
May be used to offset deficits, distribute cash or transfer to share capital (see 1 below)
Additional paid-in capital	\$ 31,154,766	\$ 31,154,766	\$ 31,154,766
Treasury share transactions	329,296	301,230	301,203
Others	8,099	8,099	8,099
	31,492,161	31,464,095	31,464,068
May be used to offset deficits only (see 2 below)
Treasury share transactions	5,880,812	5,880,812	5,721,774
Share of change in equity of subsidiaries	455,400	441,368	432,578
			(Continued)

	June 30,	December 31,	June 30,
	2017	2016	2016
Share of change in equity of associates	\$	\$	\$
	24,731	21,191	21,192
	6,360,943	6,343,371	6,175,544
	\$ 37,853,104	\$ 37,807,466	\$ 37,639,612 (Concluded)

1) The capital surplus could be used to offset a deficit and distribute as cash dividends or transferred to capital when the Corporation has no deficit (limited to a certain percentage of the Corporation's paid-in capital and once a year).
2) The capital surplus included the share of change in equity of subsidiaries recognized without any actual acquisition or disposal of subsidiaries' share by the Corporation or the adjustments to capital surplus of subsidiaries under equity method.
c. Retained earnings and dividend policy

The Corporation's Articles of Incorporation provide that the annual net income, less any deficit, should be appropriated in the following order:

1) 10% as legal reserve;
2) Preference share dividends at 14% of par value;
3) Ordinary share dividends at 14% of par value; and
4) The remainder, if any, as additional dividends divided equally between the holders of preference and ordinary shares.

The board of directors should propose the appropriation of earnings. If necessary, it may, after appropriating for preference shares dividends, propose to appropriate a special reserve or to retain certain earnings. These proposals should be submitted to the shareholders' meeting for approval.

The Corporation's steel business is in a phase of stable growth; thus, 75% or more of the appropriation for dividends should be in cash and 25% or less in shares.

Appropriation of earnings to legal reserve could be made until the legal reserve equals the Corporation's paid-in capital. Legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation's paid-in capital, the excess may be transferred to capital or distributed in cash.

Under Rule issued by the FSC and the directive titled "Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs", the Corporation should appropriate or reverse a special reserve. In addition, if the market price of the Corporation's ordinary shares held by subsidiaries is lower than the carrying value of the Corporation's shares held by subsidiaries, the Corporation should appropriate a special reserve equal to the difference between market price and carrying value multiplied by the percentage of ownership. Any special reserve appropriated may be reversed to the extent of the increase in valuation.

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

The appropriations of earnings for 2016 and 2015 had been approved in the shareholders' meeting in June 2017 and 2016, respectively, were as follows:

	Appropriation of Earnings		(NT\$)	Dividend Per Share
	2016	2015	2016	2015
Legal reserve	\$ 1,603,837	\$ 760,472
Special reserve (reversal)	(2,130,614)	2,654,116
Preference shares
Cash dividends	53,575	53,575	\$ 1.40	\$ 1.40
Ordinary shares
Cash dividends	13,374,632	7,867,430	\$ 0.85	\$ 0.50

As of June 30, 2017 and 2016, the cash dividends declared have not been distributed to shareholders and were recognized as other payables.

d. Special reserves

	For the Six Months Ended June 30
	2017	2016
Balance, beginning of period	\$ 29,786,846	\$ 27,132,983
Appropriation in respect of
The difference between carrying amount of the Corporation's
shares held by subsidiaries	-	2,654,116
Reversal of special reserve
The difference between carrying amount of the Corporation's
shares held by subsidiaries	(2,130,614)	-
Disposal of property, plant and equipment	(111)	(233)
Balance, end of period
	\$ 27,656,121	\$ 29,786,866

e. Other equity items

1) Exchange differences on translating foreign operations

	For the Six Months Ended June 30
	2017	2016
Balance, beginning of period	\$ (32,048)	\$ 1,198,796
Exchange differences arising on translating foreign operations	(2,901,279)	(1,186,319)
Income tax relating to exchange differences arising on translating the net assets of foreign operations	36,473	12,266
Gains and losses on hedging instruments designated in hedges of the net assets of foreign operations	1,756,602	735,753
Share of exchange difference of associates accounted for using the equity method	(519,921)	(160,422)
Balance, end of period	\$ (1,660,173)	\$ 600,074

2) Unrealized gains and losses on available-for-sale financial assets

	For the Six Months Ended June 30
	2017		2016
Balance, beginning of period	\$ 8,650,573	\$	6,573,348
Unrealized gains and losses on available-for-sale financial assets	1,943,442		855,742
Income tax relating to unrealized gains and losses on available-for-sale financial assets Reclassified to profit or loss on disposal of available-for-sale	264		8,410
financial assets	(94,381)		(741,951)
Impairment on available-for-sale financial assets Share of unrealized gains and losses on available-for-sale financial assets of associates accounted for using the	20,350		4,962
equity method	(82,600)		(90,179)
Balance, end of period	\$ 10,437,648	\$	6,610,332

3) The effective portion of gains and losses on hedging instruments in a cash flow hedge

	For the Six Months Ended June 30
	2017	2016
Balance, beginning of period	\$ 62,181	\$ 152,264
Fair value changes of hedging instrument	(105,488)	(53,835)
Income tax relating to fair value changes	12,288	6,813
Fair value changes of hedging instruments transferred to
profit or loss	-	6,518
Income tax relating to amounts transferred to profit or loss	-	(418)
Fair value changes of hedging instruments transferred to adjust carrying amount of hedged items	3,012	26,762
Income tax relating to amounts transferred to adjust carrying amount of hedged items	(329)	(4,549)
Balance, end of period	\$ (28,336)	\$ 133,555

f. Treasury shares

	Thousand Shares			June 30
Purpose of Treasury Shares	Beginning of Period	Addition	Reduction	Thousand Shares	Book Value
For the six months ended June 30, 2017 Shares held by subsidiaries reclassified from investments accounted for using equity method to treasury shares	318,007	-	3,645	314,362	\$ 8,512,794

		Thousand Shares		June 30
Purpose of Treasury Shares	Beginning of Period	Addition	Reduction	Thousand Shares	Book Value
For the six months ended June 30, 2016 Shares held by subsidiaries reclassified from investments accounted for using equity
method to treasury shares	318,036	-	29	318,007	\$ 8,576,842 (Concluded)

The Corporation's shares acquired and held by subsidiaries for the purpose of investment are accounted for as treasury shares. The Corporation's shares held by more than 50%-owned subsidiaries are not allowed to participate in the Corporation's capital increase in cash and have no voting rights; other rights are the same as other ordinary shareholders. The decrease of treasury shares was mainly due to subsidiaries' sale of the Corporation's shares and change in percentage of ownership.

For the six months ended June 30, 2017, a total of 4,490 thousand shares of the Corporation held by its subsidiaries were sold for proceeds of NT\$114,019 thousand. Calculated based on the percentage of shares held, the proceeds of treasury shares sold were NT\$92,114 thousand, and after deducting book values, the remainders amounted to NT\$28,066 thousand, recorded as addition to the capital surplus. As of June 30, 2017, December 31, 2016, and June 30, 2016, the market values of the treasury shares calculated by combined holding percentage were NT\$7,781,758 thousand, NT\$7,840,025 thousand, and NT\$6,647,683 thousand, respectively.

g. Non-controlling interests

	For the Six Months Ended June 30
	2017	2016
Balance, beginning of period	\$ 27,019,807	\$ 26,404,014
Attributable to non-controlling interests:
Share of net profit for the period	1,598,720	1,318,647
Exchange difference on translating foreign operations	(529,550)	(117,291)
Income tax relating to exchange difference on translating
foreign operations	5,259	2,436
Unrealized gains and losses on available-for-sale financial
assets	(15,331)	(91,918)
Income tax relating to unrealized gains and losses on
available-for-sale financial assets	324	14,886
Impairment of available-for-sale financial assets	3,717	-
Reclassified to profit or loss on disposal of available-for-sale
financial assets	(36,879)	(155,133)
Fair value changes of cash flow hedges	22,701	(32,714)
Income tax relating to cash flow hedges	533	6,479
Fair value changes of hedging instruments transferred to adjust
the carrying amount of hedged items	1,181	-
Share of other comprehensive income of associates accounted
for using the equity method	(7,553)	(17,154)
Non-controlling interest arising from acquisition of subsidiaries	-	344,151
Capital reduction from subsidiaries	(180,040)	-
Dividend distributed by subsidiaries	(1,769,012)	(1,939,878)
Others	23,776	84,330
Balance, end of period	\$ 26,137,653	\$ 25,820,855

26. OPERATING REVENUES

		For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Revenue from the sale of goods	\$ 78,024,414	\$ 64,924,799	\$ 154,226,884	\$ 123,159,667
Construction contract revenue	4,477,437	4,586,261	9,169,572	9,385,544
Freight and service revenue	1,736,701	2,447,782	3,261,072	3,944,680
Other revenues	626,364	373,866	1,191,737	801,360
	\$ 84,864,916	\$ 72,332,708	\$ 167,849,265	\$ 137,291,251

27. PROFIT BEFORE INCOME TAX

The following items were included in profit before income tax:

a. Other income

		For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Dividends income	\$ 125,293	\$ 107,770	\$ 160,364	\$ 107,770
Interest income	83,534	85,623	138,320	160,652
Rental income	33,167	38,193	62,413	72,203
Insurance claim income	1,393	9,915	30,925	18,946
Others	164,943	136,216	254,734	239,627
	\$ 408,330	\$ 377,717	\$ 646,756	\$ 599,198

b. Other gains and losses

	For the Three Months Ended June 30		Ended June 30	For the Six Months
	2017 2016		2017	2016
Gain (loss) on disposal of
investments	\$ (6,788)	\$ 30,629	\$ 6,497	\$ 783,853
Net foreign exchange gain	255,009	5,067	325,215	64,994
Gain (loss) arising on financial assets at fair value through
profit or loss	40,851	(2,393)	63,313	9,247
Loss on disposal of property,
plant and equipment	(15,872)	(21,402)	(14,274)	(138,605)
Impairment loss	(81,600)	-	(129,028)	-
Other losses	(142,091)	(153,356)	(220,758)	(233,287)
	\$ 49,509	\$ (141,455)	\$ 30,965	\$ 486,202

The components of net foreign exchange gain were as follows:

		For the Three Months Ended June 30		For the Six Months Ended June 30
			2017	2016	2017	2016
	Foreign exchange gain	\$	505,452	\$ 313,605	\$1,171,105	\$ 775,961
	Foreign exchange loss		(250,443)	(308,538)	(845,890)	(710,967)
	Net exchange gain	\$	255,009	\$ 5,067	\$ 325,215	\$ 64,994
c.	Finance costs
				For the Three Months		For the Six Months
				Ended June 30	Ended June 30
			2017	2016	2017	2016
	Total interest expense	\$	969,298	\$ 1,004,267	\$ 1,958,375	\$ 2,048,315
	Less: Amounts included in the cost of qualifying assets		50,360	54,735	101,260	112,428

Information about capitalized interest was as follows:

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Capitalized amounts	\$ 50,360	\$ 54,735	\$ 101,260	\$ 112,428
Capitalized annual rates (%)	0.56-1.63	0.52-1.43	0.49-1.63	0.52-1.43

\$ 918,938 \$ 949,532 \$ 1,857,115 \$ 1,935,887

d. Impairment loss recognized on (Reversal of) financial assets

	For the Three Months Ended June 30		Ended June 30	For the Six Months
	2017 2016		2017	2016
Available-for-sale financial assets Accounts receivable Long-term receivable (recorded as other noncurrent assets)	\$ 12,585 (40) (5,551) \$ 6,994	\$ 1,909 15,551 - \$ 17,460	\$ 24,067 (16,505) (11,643) \$ (4,081)	\$ 4,962 17,623 - \$ 22,585
Analysis of impairment loss recognized on (reversal of) financial assets by function Operating costs Operating expenses Other income Others gains and losses	\$ 5,835 (40) (5,551) 6,750	\$ 906 15,551 - 1,003	\$ 17,317 (16,505) (11,643) 6,750	\$ 1,845 17,623 - 3,117
	\$ 6,994	\$ 17,460	\$ (4,081)	\$ 22,585

e. Impairment loss recognized on non-financial asset - For the three months and six months ended June 30, 2017

	For the Three Months Ended June 30	For the Six Months Ended June 30
Property, plant and equipment Goodwill	\$ 34,539 40,311	\$ 81,967 40,311
	\$ 74,850	\$ 122,278
Analysis of impairment loss recognized on non-financial assets by function Other gains and losses	\$ 74,850	\$ 122,278

f. Depreciation and amortization

		For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Property, plant and equipment	\$ 8,653,151	\$ 8,927,156	\$ 17,416,546	\$ 17,874,107
Investment properties	18,756	20,287	36,537	41,699
Intangible assets	68,654	65,830	137,547	141,180
Others	16,875	23,296	38,914	44,054
	\$ 8,757,436	\$ 9,036,569	\$ 17,629,544	\$ 18,101,040
Analysis of depreciation by function
Operating costs	\$ 8,251,714	\$ 8,560,585	\$ 16,611,173	\$ 17,152,711
Operating expenses	413,154	381,001	828,440	751,461
Others	7,039	5,857	13,470	11,634
	\$ 8,671,907	\$ 8,947,443	\$ 17,453,083	\$ 17,915,806
Analysis of amortization by function
Operating costs	\$ 43,630	\$ 48,766	\$ 93,755	\$ 106,802
Operating expenses	37,263	39,904	77,452	77,569
Others	4,636	456	5,254	863
	\$ 85,529	\$ 89,126	\$ 176,461	\$ 185,234

g. Operating expenses directly related to investment properties

		For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Direct operating expenses of investment properties that
generated rental income	\$ 44,496	\$ 44,098	\$ 82,039	\$ 83,965

h. Employee benefits

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Short-term employee benefits
Salaries	\$ 7,382,662	\$ 8,263,119	\$ 14,955,828	\$ 14,573,693
Labor and health insurance	497,270	455,144	1,013,526	936,806
Others	328,855	305,305	661,572	579,983
	8,208,787	9,023,568	16,630,926	16,090,482
Post-employment benefits
Defined contribution plans Defined benefit plans (Note	188,326	173,787	374,072	345,925
24)	207,142	212,866	420,342	427,416
	395,468	386,653	794,414	773,341
Termination benefits	15,591	32,914	37,995	55,920
	\$ 8,619,846	\$ 9,443,135	\$ 17,463,335	\$ 16,919,743
Analysis of employee benefits by function
Operating costs	\$ 6,925,389	\$ 7,594,136	\$ 14,027,540	\$ 13,577,471
Operating expenses	1,585,493	1,701,632	3,207,798	3,068,666
Others	108,964	147,367	227,997	273,606
	\$ 8,619,846	\$ 9,443,135	\$ 17,463,335	\$ 16,919,743

The numbers of employees of the Corporation and its subsidiaries combined were about 28,440 and 26,477 as of June 30, 2017 and 2016, respectively.

i. Employees' compensation and remuneration of directors and supervisors

According to the Articles of Incorporation, the article stipulates the Corporation distributed employees' compensation and remuneration of directors and supervisors at the rates no less than 0.1% and no higher than 0.15%, respectively, of the pre-tax profit prior to deducting employees' compensation, and remuneration of directors and supervisors. For the three months and six months ended June 30, 2017 and 2016, the employees' compensation and remuneration of directors and supervisors were as follows:

	Ended June 30	For the Three Months	For the Six Months Ended June 30
	2017	2016	2017	2016
Employees' compensation Remuneration of directors and	\$ 255,249	\$ 372,429	\$ 574,577	\$ 446,057
supervisors	4,786	6,983	10,773	8,364

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

The appropriations of employees' compensation and remuneration of directors and supervisors (all in cash) for 2016 and 2015 having been resolved by the board of directors in March 2017 and 2016, respectively, were as follows:

	For the Year Ended December 31
	2016		2015
Employees' compensation	\$ 1,320,926	\$	330,925
Remuneration of directors and supervisors	24,767		6,205

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

Information on the employees' compensation and remuneration of directors and supervisors are available on the Market Observation Post System website of the Taiwan Stock Exchange.

28. INCOME TAX

a. Income tax recognized in profit or loss

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017		2016		2017		2016
Current tax
In respect of the current
period	\$ 491,150	\$	514,803	\$	1,353,756	\$	727,500
Income tax on
unappropriated earnings	398,038		120,571		398,038		120,571
In respect of prior years	(108,328)		(284,436)		(109,838)		(237,208)
Deferred tax
In respect of the current
period	(29,416)		308,880		(192,159)		143,779
In respect of prior years	(332,449)		7,505		(321,881)		13,273
	\$ 418,995	\$	667,323	\$	1,127,916	\$	767,915

b. Income tax recognized directly in equity

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Current tax Reversal of special reserve due to disposal of property, plant and equipment Deferred tax Reversal of special reserve due to disposal of property, plant and	\$ 1	\$ 58	\$ 28	\$ 58
equipment	(1)	(58)	(28)	(58)
	\$ -	\$ -	\$ -	\$ -

c. Income tax benefit (expense) recognized in other comprehensive income

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Recognized in other comprehensive income: Translation of foreign operations	\$ (3,420)	\$ (5,658)	\$ 41,732	\$ 14,702
Unrealized gains and losses on available-for-sale financial assets	(1,158)	(1,945)	588	23,296
Fair value changes of cash flow hedges Fair value changes of hedging	(20,610)	(277)	12,821	13,292
instruments in cash flow hedges transferred to adjust carrying amounts of hedged items Fair value changes of hedging	(132)	-	(329)	(418)
instrument in cash flow hedges transferred to profit or loss	-	1,294	-	(4,549)
	\$ (25,320)	\$ (6,586)	\$ 54,812	\$ 46,323
d. Integrated income tax
		June 30, 2017	December 31, 2016	June 30, 2016
Unappropriated earnings Before January 1, 1998 On and after January 1, 1998		\$ 15,954 11,365,952	\$ 15,954 17,180,087	\$ 15,954 7,747,840
		\$ 11,381,906	\$ 17,196,041	\$ 7,763,794
Imputation credits accounts (ICA)		\$ 2,218,420	\$ 484,021	\$ 2,355,198
				For the Year Ended
			2016 (Expected)	2015
Tax creditable ratio for distribution of earnings (%)			12.91	19.73

e. Income tax assessments

The Corporation's income tax returns through 2011 and the subsidiaries' income tax returns through 2011 to 2015 have been assessed by the tax authorities.

29. EARNINGS PER SHARE

The net profit and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net profit for the period

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2017	2016	2017	2016
Net profit for the period attributable to owners of the Corporation	\$ 3,382,573	\$ 5,280,179	\$ 7,087,184	\$ 5,762,325
Less: Dividends on preference shares	13,394	13,394	26,788	26,788
Net profit used in computation of basic earnings per share	3,369,179	5,266,785	7,060,396	5,735,537
Add: Dividends on preference shares	-	13,394	-	-
Net profit used in computation of diluted earnings per share	\$ 3,369,179	\$ 5,280,179	\$ 7,060,396	\$ 5,735,537

Weighted average number of ordinary shares outstanding (in thousand shares)

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2017	2016	2017	2016
Weighted average number of ordinary shares in computation
of basic earnings per share Effect of dilutive potential ordinary shares:	15,420,215	15,416,854	15,420,215	15,416,854
Employees' compensation Convertible preference shares	23,215 -	21,866 38,268	46,039 -	28,761 -
Weighted average number of ordinary shares used in the computation of diluted earnings
per share	15,443,430	15,476,988	15,466,254	15,445,615

Preference shares were not included in the calculation of diluted earnings per share for the three months ended June 30, 2017, and six months ended June 30, 2017 and 2016 because of their anti-dilutive effect.

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

30. CAPITAL MANAGEMENT

The management of the Corporation and its subsidiaries optimized the balances of working capital, debt and equity as well as the related cost through monitoring the Corporation and its subsidiaries' capital structure and capital demand by reviewing quantitative data and considering industry characteristics, domestic and international economic environment, rate fluctuation, strategies for development, etc.

Except for Note 19, the Corporation and its subsidiaries are not subject to any externally imposed capital requirements.

31. FINANCIAL INSTRUMENTS

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

Except as detailed in the following table, the Corporation and its subsidiaries believe the carrying amounts of financial instruments, including cash and cash equivalents, receivables, debt investments with no active market and payables recognized in the consolidated financial statements approximated their fair values.

	June 30, 2017		December 31, 2016		June 30, 2016
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Financial assets
Held-to-maturity investments	\$ 210,820	\$ 191,543	\$ 222,669	\$ 197,485	\$ 275,358	\$ 259,341

The fair value of held-to-maturity investment, which was grouped into Level 2, was measured under valuation method. The estimates and assumptions used by the Corporation and its subsidiaries were consistent with those that market participants would use in setting a price for financial instrument.

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

	Level 1	Level 2	Level 3	Total
June 30, 2017
Financial assets at fair value
through profit or loss
Mutual funds	\$ 2,715,345	\$ -	\$ -	\$ 2,715,345
Listed shares	1,206,121	-	-	1,206,121
Convertible bonds	265,137	-	-	265,137
Emerging market shares	-	-	217,373	217,373
Future contracts	-	560	-	560
	\$ 4,186,603	\$ 560	\$ 217,373	\$ 4,404,536
Available-for-sale financial
assets
Foreign unlisted shares	\$ -	\$ -	\$ 12,575,696	\$ 12,575,696
Domestic listed shares	12,719,778	-	-	12,719,778
Domestic emerging market
shares and unlisted shares	-	-	2,317,685	2,317,685
Foreign listed shares	2,127,795	-	-	2,127,795
Certificate of entitlement	-	-	797,410	797,410
Mutual funds	303,731	-	-	303,731
Private-placement shares of
listed companies	-	168,110	-	168,110
	\$ 15,151,304	\$ 168,110	\$ 15,690,791	\$ 31,010,205

	Level 1	Level 2	Level 3	Total
Derivative financial assets for hedging Foreign exchange forward
contracts	\$ -	\$ 68,926	\$ -	\$ 68,926
Financial liabilities at fair
value through profit or loss Call and put options Foreign exchange forward	\$ -	\$ 623	\$ -	\$ 623
contracts	-	4,524	-	4,524
	\$ -	\$ 5,147	\$ -	\$ 5,147
Derivative financial liabilities for hedging Foreign exchange forward
contracts Interest rate swap contracts	\$ - -	\$ 77,906 14,503	\$ - -	\$ 77,906 14,503
	\$ -	\$ 92,409	\$ -	\$ 92,409
December 31, 2016
Financial assets at fair value through profit or loss
Mutual funds Listed shares	\$ 2,092,483 643,914	\$ - -	\$ - -	\$ 2,092,483 643,914
Convertible bonds	319,100	-	-	319,100
Emerging market shares Future contracts	- -	- 899	231,953 -	231,953 899
	\$ 3,055,497	\$ 899	\$ 231,953	\$ 3,288,349
Available-for-sale financial
assets Foreign unlisted shares Domestic emerging market	\$ -	\$ -	\$ 12,757,612	\$ 12,757,612
shares and unlisted shares	-	-	2,803,247	2,803,247
Domestic listed shares Foreign listed shares	9,788,653 2,457,207	- -	- -	9,788,653 2,457,207
Certificate of entitlement	-	-	773,130	773,130
Mutual funds Private-placement shares of	397,759	-	-	397,759
listed companies	-	136,042	-	136,042
	\$ 12,643,619	\$ 136,042	\$ 16,333,989	\$ 29,113,650
Derivative financial assets for hedging
Foreign exchange forward contracts	\$ -	\$ 40,138	\$ -	\$ 40,138
Financial liabilities at fair value through profit or loss Foreign exchange forward
contracts Call and put options	\$ - -	\$ 4,536 405	\$ - -	\$ 4,536 405
	\$ -	\$ 4,941	\$ -	\$ 4,941 (Continued)

	Level 1	Level 2	Level 3	Total
Derivative financial liabilities for hedging
Interest rate swap contracts	\$ -	\$ 27,747	\$ -	\$ 27,747
Foreign exchange forward contracts	-	45,927	-	45,927
	\$ -	\$ 73,674	\$ -	\$ 73,674
June 30, 2016
Financial assets at fair value through profit or loss Mutual funds	\$ 2,718,642	\$ -	\$ -	\$ 2,718,642
Listed shares	858,914	-	-	858,914
Emerging market shares Convertible bonds	- 231,643	- -	231,261 -	231,261 231,643
Foreign exchange forward contracts	-	782	-	782

	\$ 3,809,199	\$ 782	\$ 231,261	\$ 4,041,242
Available-for-sale financial assets
Foreign unlisted shares Domestic emerging market	\$ -	\$ -	\$ 13,028,924	\$ 13,028,924
shares and unlisted shares Domestic listed shares Foreign listed shares	-	-	6,202,247	6,202,247
	4,861,252	-	-	4,861,252
	2,578,567 615,157	- -	- -	2,578,567 615,157
Mutual funds Certificate of entitlement	-	-	824,708	824,708
Private-placement shares of listed companies	-	193,291	-	193,291
	\$ 8,054,976	\$ 193,291	\$ 20,055,879	\$ 28,304,146
Derivative financial assets for hedging
Foreign exchange forward contracts	\$ -	\$ 79,289	\$ -	\$ 79,289
Financial liabilities at fair value through profit or loss
Call and put options Foreign exchange forward	\$ -	\$ 549	\$ -	\$ 549
contracts	-	1,207	-	1,207
	\$ -	\$ 1,756	\$ -	\$ 1,756
Derivative financial liabilities for hedging
Interest rate swap contracts Foreign exchange forward	\$ -	\$ 54,770	\$ -	\$ 54,770
contracts	-	22,772	-	22,772
	\$ -	\$ 77,542	\$ -	\$ 77,542 (Concluded)

There was no transfer between Level 1 and Level 2 for the six months ended June 30, 2017 and 2016.

		Reconciliation of Level 3 fair value measurements of financial assets

	Financial Assets at Fair Value Through Profit or Loss	Available-for sale Financial Assets	Total
For the six months ended June 30, 2017
Balance, beginning of period Recognized in profit or loss Recognized in other comprehensive income (included in unrealized gains	\$ 231,953 9,104	\$ 16,333,989 (16,666)	\$ 16,565,942 (7,562)
and losses on available-for-sale financial assets)	-	65,554	65,554
Purchases	-	136,500	136,500
Disposal	(23,684)	(20,323)	(44,007)
Transfers out of Level 3	-	(780,801)	(780,801)
Effect of foreign currency exchange difference	-	(27,462)	(27,462)
Balance, end of period	\$ 217,373	\$ 15,690,791	\$ 15,908,164
For the six months ended June 30, 2016
Balance, beginning of period	\$ 245,455	\$ 45,129,968	\$ 45,375,423
Recognized in profit or loss	(14,194)	133,653	119,459
Recognized in other comprehensive income (included in unrealized gains and losses on available-for-sale
financial assets)	-	631,741	631,741
Purchases	-	232,069	232,069
Reclassification	-	(25,908,765)	(25,908,765)
Disposal	-	(204,897)	(204,897)
Effect of foreign currency exchange difference	-	42,110	42,110
Balance, end of period	\$ 231,261	\$ 20,055,879	\$ 20,287,140

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

Financial Instrument	Valuation Techniques and Inputs
Derivative instruments	A discounted cash flow analysis was performed using the applicable yield curve for the duration of the instruments for non-option derivatives, and option pricing models for option derivatives. The estimates and assumptions used by the Corporation and its subsidiaries were consistent with those that market participants would use in setting a price for the financial instrument. (Continued)

60 -

Financial Instrument	Valuation Techniques and Inputs
Private-placement shares of listed companies	Based on information from the Market Observation Post System, the Taipei Exchange, etc. and calculated by using the Black-Scholes Model. (Concluded)

4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement
a) For emerging market shares, fair values were estimated on the basis of the closing price and liquidity.
b) For domestic unlisted shares, some foreign unlisted shares and certificate of entitlement, fair values were determined based on industry types, valuations of similar companies and operations, or by using the net worth of companies.
c) For other foreign unlisted shares, fair values were measured under income approach and calculated by the present value of the expected return present value by using a discounted cash flow model. Significant unobservable inputs were as follows; if the long-term revenue growth rate increased, long-term pre-tax operating income rate increased or discount rate decreased, the fair value of the investments would increase.

	June 30, 2017	December 31, 2016	June 30, 2016
Long-term pre-tax operating income
rate (%)	18.68-51.85	19.13-51.68	22.73-51.68
Discount rate (%)	6.52-8.00	6.52-8.24	7.00-8.00

If the below input to the valuation model was changed to reflect reasonably possible alternative assumptions while all other variables were held constant, the fair value of the equity investment would increase (decrease) as follows:

	June 30, 2017	December 31, 2016	June 30, 2016
Long-term pre-tax operating income rate
Increase 1% Decrease 1%	\$ 98,691 \$ (122,573)	\$ 104,370 \$ (124,143)	\$ 165,472 \$ (198,854)
Discount rate Increase 1% Decrease 1%	\$ (490,077) \$ 611,560	\$ (511,318) \$ 637,710	\$ (547,506) \$ 687,269

c. Categories of financial instruments

	June 30, December 31, 2017 2016		June 30, 2016
Financial assets
Fair value through profit or loss
Designated as at fair value through profit
or loss	\$	2,140,011	\$ 1,396,919	\$ 1,793,434
Held for trading		2,264,525	1,891,430	2,247,808
Derivative instruments in designated hedge
accounting relationships		68,926	40,138	79,289
Held-to-maturity investments		210,820	222,669	275,358
Loans and receivables 1)		54,463,061	48,156,503	49,520,028
Available-for-sale financial assets		31,010,205	29,113,650	28,304,146
Financial liabilities
Fair value through profit or loss
Designated as at fair value through profit
or loss		623	405	549
Held for trading		4,524	4,536	1,207
Derivative instruments in designated hedge
accounting relationships		92,409	73,674	77,542
Measured at amortized cost 2)		330,892,342	311,543,875	323,442,106

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, notes and accounts receivable (including related parties), other receivables, debt investments with no active market, refundable deposits and other financial assets.

2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings and bank overdraft, short-term bills payable, notes and accounts payable (including related parties), other payables, bonds payable, long-term borrowings, long-term bills payable and deposits received.

d. Financial risk management objectives and policies

The Corporation and its subsidiaries place great emphasis on financial risk management. By tracking and managing the market risk, credit risk, and liquidity risk efficiently, the management ensured that the Corporation and its subsidiaries were equipped with sufficient and lower cost working capital, which reduced financial uncertainty that may have adverse effects on the operations.

The significant financial activities of the Corporation and its subsidiaries are reviewed by the board of directors in accordance with relevant regulations and internal controls. The finance department follows the accountability and related financial risk control procedures required by the Corporation for executing financial projects. Compliance with policies and exposure limits is continually reviewed by the internal auditors. The Corporation and its subsidiaries did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

1) Market risk
a) Foreign currency risk

The Corporation and its subsidiaries were exposed to foreign currency risk due to sales, purchases, capital expenditures and equity investments denominated in foreign currencies. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts, foreign deposits or foreign borrowings.

The carrying amounts of the significant non-functional currency monetary assets and liabilities (including those eliminated on consolidation) at the balance sheet date were referred to Note 36.

The Corporation and its subsidiaries were mainly exposed to the USD and RMB. The following table details the sensitivity to a 1% increase in the functional currencies against the relevant foreign currencies.

		USD Impact	RMB Impact
	For the Six Months Ended June 30			For the Six Months Ended June 30
	2017	2016	2017	2016
Pre-tax profit or loss Equity	\$ 38,556 273,803	\$ (20,093) i 297,277 ii	\$ (11,851) (4,492)	\$ (11,854) i (7,926) ii

i. These were mainly attributable to the exposure of cash, outstanding receivables and payables, which were not hedged at the balance sheet date, and debt instrument investments with no active market and borrowings, which were respectively designated as hedged items and hedging instruments in fair value hedges.
ii. These were attributable to other financial assets, which were designated as hedging instruments in cash flow hedges, and borrowings, which were designated as hedging instruments in net investments in foreign operations hedges.

In management's opinion, the sensitivity analysis was unrepresentative of the inherent foreign exchange risk because the exposure at the balance sheet date did not reflect the exposure during the period.

b) Interest rate risk

The Corporation and its subsidiaries were exposed to interest rate risk because the Corporation and its subsidiaries borrowed funds at both fixed and floating interest rates. The risk is managed by the Corporation and its subsidiaries by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts.

The carrying amounts of the Corporation and its subsidiaries' financial liabilities with exposure to interest rates at the balance sheet date were as follows:

	June 30,	December 31,	June 30,
	2017	2016	2016
Fair value interest rate risk	\$	\$	\$
Financial liabilities	146,796,688	116,882,062	147,981,720
Cash flow interest rate risk Financial liabilities	131,608,648	159,071,274	135,262,319

If interest rates had been 1% higher/lower and all other variables were held constant, the Corporation and its subsidiaries' pre-tax profit for the six months ended June 30, 2017 and 2016 would have been lower/higher by NT\$658,043 thousand and NT\$676,312 thousand, respectively.

c) Other price risk

The Corporation and its subsidiaries were exposed to equity price risk through their investments in mutual funds, listed shares and private placement shares of listed companies.

If equity prices had been 1% higher/lower, the pre-tax profit for the six months ended June 30, 2017 and 2016 would have been higher/lower by NT\$39,215 thousand and NT\$35,776 thousand, respectively, as a result of the fair value changes of financial assets at fair value through profit or loss, and the other comprehensive income for the six months ended June 30, 2017 and 2016 would have been higher/lower by NT153,194 thousand and NT\$82,483 thousand, respectively, as a result of the changes in fair value of available-for-sale financial assets.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Corporation and its subsidiaries. As at the balance sheet date, the Corporation and its subsidiaries' maximum exposure to credit risk is the carrying amount of the financial assets on the consolidated balance sheets and the amount of contingent liabilities in relation to financial guarantee issued by the Corporation and its subsidiaries.

The Corporation and its subsidiaries do not expect significant credit risk because the counterparties are creditworthy financial institutions and companies.

Counterparties of accounts receivable consisted of a large number of different customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the customers' financial condition.

The Corporation and its subsidiaries did not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Corporation and its subsidiaries define counterparties as having similar characteristics if they are related entities.

As of June 30, 2017, December 31, 2016 and June 30, 2016, the maximum credit risk of off-balance-sheet guarantees and amount provided to investees of co-investment for procurement compliance was NT\$26,355,005 thousand, NT\$13,196,277 thousand and NT\$14,699,321 thousand, respectively.

3) Liquidity risk

The management of the Corporation and its subsidiaries continuously monitors the movement of cash flows, net cash position, significant capital expenditures and the utilization of bank loan commitments to control proportion of the long-term and short-term bank loans or issue bonds payable, and ensures compliance with loan covenants.

The following table details the undiscounted cash flows of the Corporation and its subsidiaries' remaining contractual maturity for its non-derivative financial liabilities from the earliest date on which they can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time span 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.

The table below summarized the maturity profile of the Corporation and its subsidiaries' financial liabilities based on contractual undiscounted payments:

	Less Than 1 Year	1-5 Years	Over 5 Years	Total
June 30, 2017
Non-derivative financial liabilities Non-interest bearing
liabilities Variable interest rate	\$ 50,200,045	\$ 737,897	\$ -	\$ 50,937,942
liabilities	51,666,551	81,390,301	2,030,633	135,087,485
Fixed interest rate liabilities Financial guarantee	54,248,082	62,465,763	38,483,828	155,197,673
liabilities	-	9,923,943	16,431,062	26,355,005
	\$ 156,114,678	\$ 154,517,904	\$ 56,945,523	\$ 367,578,105
December 31, 2016
Non-derivative financial liabilities Non-interest bearing
liabilities Variable interest rate	\$ 33,114,877	\$ 1,103,811	\$ -	\$ 34,218,688
liabilities	53,965,318	106,590,665	2,721,873	163,277,856
Fixed interest rate liabilities	24,184,220	61,814,679	40,085,283	126,084,182
Financial guarantee liabilities	-	197,622	12,998,655	13,196,277
	\$ 111,264,415	\$ 169,706,777	\$ 55,805,811	\$ 336,777,003
June 30, 2016
Non-derivative financial liabilities Non-interest bearing
liabilities Variable interest rate	\$ 38,319,104	\$ 298,951	\$ -	\$ 38,618,055
liabilities	42,563,490	93,425,632	3,306,086	139,295,208
Fixed interest rate liabilities Financial guarantee	49,387,794	59,767,807	47,931,187	157,086,788
liabilities	2,289,583	-	12,409,738	14,699,321
	\$ 132,559,971	\$ 153,492,390	\$ 63,647,011	\$ 349,699,372

The amounts included above for financial guarantee liabilities were the maximum amounts the Corporation and its subsidiaries could be required to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the balance sheet date, the Corporation and its subsidiaries considered that it is more likely than not that none of the amount will be payable under the arrangement.

32. TRANSACTIONS WITH RELATED PARTIES

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

a. The name of the company and its relationship with the Corporation and its Subsidiaries

Company	Relationship

TaiAn Technologies Corporation	Associates
FUKUTA ELECTRIC & MACHINERY CO., LTD.	Associates
Hsin Hsin Cement Enterprise Corporation	Associates
Nikken & CSSC Metal Products Co., Ltd.	Associates
Eminent II Venture Capital Corporation iPASS Corporation	Associates Associates
Honley Auto. Parts Co., Ltd.	Associates
Majestic Solid Light Corporation	Associates
Ascentek Venture Capital Corp.	Associates
TAIWAN ROLLING STOCK COMPANY LTD.	Associates
CHUNGKANG STEEL STRUCTURE (CAMBODIA) CO., LTD.	Associates
Formosa Ha Tinh Steel Corporation	Associates
Formosa Ha Tinh (Cayman) Limited	Associates
Wuhan Huade Ecotek Corporation	Associates
HC&C Auto Parts Co., Ltd.	Associates
PT. MICS Steel Indonesia	Associates
SINO Vietnam Hi-tech Material Co., Ltd.	Associates
Tatt Giap Steel Centre Sdn. Bhd.	Associates
TSK Steel Company Limited	Associates
Wuhan WISCO YUTEK Environment Technology Co., Ltd.	Associates
Dyna Rechi Co., Ltd.	Associates
Dyna Rechi (Jiujiang) Co., Ltd.	Associates
Changchun CECK Auto. Parts Co., Ltd.	Associates
Mahindra Auto Steel Private Limited	Associates
Chateau International Development Co., Ltd.	Associates
Kaohsiung Arena Development Corp.	Associates
CSBC Corporation, Taiwan	The Corporation as key management personnel of other related parties
Taiwan High Speed Rail Corporation	The Corporation as key
	management personnel of other
	related parties
Rechi Precision Co., Ltd.	The Corporation as key management
	personnel of other related parties
Overseas Investment & Development Corp.	The Corporation as key management personnel of other related parties
East Asia United Steel Corporation	The Corporation as key management personnel of other related parties
Sakura Ferroalloys Sdn. Bhd.	The Corporation as key management personnel of other
	related parties
CDIB Bioscience Ventures I, Inc.	The Corporation as key
	management personnel of other related parties
Ministry of Economic Affairs, R.O.C.	Other related parties as key
	management personnel of the
	Corporation
	(Continued)

Company	Relationship
The CSC Labor Union	Other related parties as key management personnel of the
HSIN KUANG STEEL CO., LTD	Corporation Other related parties as supervisors of the Corporation (The relationship ended since July
	2016)
	(Concluded)

b. Operating revenues

	Related Parties	Ended June 30	For the Three Months		For the Six Months Ended June 30
Account Items	Types	2017	2016	2017	2016
Revenue from sales of goods	Associates The Corporation as key management personnel of other related parties	\$ 383,519 301,178	\$ 1,325,535 983,767	\$ 1,050,410 546,487	\$ 2,496,123 1,589,045
	Others	417,985	921,720	1,113,885	1,670,741
Construction contract revenue	Associates Others	\$ 1,102,682 \$ 232,616 -	\$ 3,231,022 \$ 434,484 43,860	\$ 2,710,782 \$ 405,346 -	\$ 5,755,909 \$ 766,769 118,417
		\$ 232,616	\$ 478,344	\$ 405,346	\$ 885,186

Sales to related parties were made at arm's length. The construction contracts undertaken by the Corporation and its subsidiaries with related parties were different from those with unrelated parties; therefore, the prices were not comparable while collection terms have no material differences.

c. Purchase of goods

	Ended June 30	For the Three Months	For the Six Months Ended June 30
Related Parties Types	2017	2016	2017	2016
Associates Others	\$ 862,378 -	\$ 83,242 794,959	\$ 1,579,338 1,007,804	\$ 127,170 1,320,269
	\$ 862,378	\$ 878,201	\$ 2,587,142	\$ 1,447,439

Purchases from related parties were made at arm's length.

d. Receivables from related parties

Account Items	Related Parties Types	June 30, 2017	December 31, 2016	June 30, 2016
Notes and accounts receivable	Associates The Corporation as key	\$ 348,203 125,352	\$ 127,622 324,461	\$ 431,525 335,455
	management personnel of other related parties

Account Items	Related Parties Types / Name	June 30, 2017	December 31, 2016	June 30, 2016
	Others	\$ 204,671	\$ 431,180	\$ 234,156
		\$ 678,226	\$ 883,263	\$ 1,001,136
Other receivables	Associates Formosa Ha Tinh (Cayman) Limited Others Others	\$ 212,940 14,429 31	\$ 232,684 8 28	\$ 229,359 381 216
		\$ 227,400	\$ 232,720	\$ 229,956 (Concluded)

The subsidiary China Ecotek Corporation recognized and reverse the allowance for doubtful accounts in the amount of reversal of NT\$1,207 thousand, recognition of NT\$3,389 thousand, reversal of NT\$1,207 thousand and NT\$3,781 thousand for the three months and six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, December 31, 2016 and June 30, 2016, the allowance for doubtful accounts amounted to NT\$1,761 thousand, NT\$3,059 thousand, and NT\$5,077 thousand, respectively.

e. Payables to related parties

Account Items	Related Parties Types	June 30, 2017	December 31, 2016	June 30, 2016
Notes and accounts payable	Associates Others	\$ 44,618 -	\$ 44,998 491,546	\$ 63,363 370,088
		\$ 44,618	\$ 536,544	\$ 433,451
Other payables	Associates The Corporation as key management personnel of other related parties	\$ 568,938 285,268	\$ 598,693 37,313	\$ 607,448 -
	Others	17,482	32,084	28,197
		\$ 871,688	\$ 668,090	\$ 635,645

The outstanding payables to related parties were unsecured.

f. Others

Related			For the Three Months Ended June 30	For the Six Months Ended June 30
Account Items	Parties Types	2017	2016	2017	2016
Service and other revenues	Associates Others	\$ 283,745 4,688	\$ 310,601 31,561	\$ 295,059 6,760	\$ 416,872 53,258
		\$ 288,433	\$ 342,162	\$ 301,819	\$ 470,130

g. Endorsements and guarantees provided by the Corporation and its subsidiaries

Related Party Types/Name	June 30,	December 31,	June 30,
	2017	2016	2016
Associates - Formosa Ha Tinh (Cayman) Limited Amount endorsed	\$ 25,704,900	\$ 27,251,250	\$ 28,240,625 (Continued)

Related Party Types/Name	June 30, 2017	December 31, 2016	June 30, 2016
Amount utilized	\$ (25,704,900)	\$(12,400,125)	\$ (12,409,738)
	\$ -	\$ 14,851,125	\$ 15,830,887
The Corporation as key management personnel of others Amount endorsed Amount utilized	\$ 790,173 (650,105)	\$ 807,392 (796,152)	\$ 2,508,060 (2,289,583)
	\$ 140,068	\$ 11,240	\$ 218,477 (Concluded)

h. Compensation of key management personnel

The remuneration of directors and other members of key management personnel were as follows:

	For the Three Months Ended June 30			For the Six Months Ended June 30
	2017	2016	2017	2016
Short-term employee benefits Post-employment benefits	\$ 22,079 102	\$ 16,783 276	\$ 46,971 379	\$ 32,257 553
	\$ 22,181	\$ 17,059	\$ 47,350	\$ 32,810

33. ASSETS PLEDGED AS COLLATERAL OR SECURITY

The Corporation and its subsidiaries' assets mortgaged or pledged as collateral for long-term borrowings, short-term borrowings and bank overdraft, performance guarantees, bankers' acceptance bills, etc. were as follows (listed based on their carrying amounts):

	June 30, 2017	December 31, 2016	June 30, 2016
Net property, plant and equipment	\$ 119,467,940	\$ 124,349,476	\$ 117,677,880
Time deposits (Note 16)	6,780,878	6,606,133	6,862,445
Shares (a.)	5,838,525	5,814,935	4,930,310
Pledged receivables (Note 16) (b.)	2,000,000	2,000,000	2,000,000
Net investment properties	1,491,320	1,511,854	1,598,636
	\$ 135,578,663	\$ 140,282,398	\$ 133,069,271

a. Shares of the Corporation were pledged by WIC and TIC, both subsidiaries, and were recorded as treasury shares in the consolidated financial statements.
b. In accordance with revised agreements of build-operate-transfer contract in 2013, the subsidiary KRTC reclassified NT\$2,000,000 thousand including arbitration receivable - Kaohsiung City Government and part of the consideration of transferred assets to operating performance guarantees.

34. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in Note 19, significant commitments and contingencies of the Corporation and its subsidiaries as of June 30, 2017 were as follows:

a. The Corporation and its subsidiaries provided letters of credits for NT\$7.9 billion guaranteed by financial institutions for several constructions, lease contracts and payment. Guarantee notes for NT\$72.4 billion were provided to banks and owners for loans, purchase agreements and warranties.
b. Unused letters of credit for importation of materials and machinery amounted to NT\$8.5 billion.
c. Property purchase and construction contracts for NT\$2.2 billion were signed but not yet recorded.
d. Construction contracts for NT\$34.7 billion were not yet being completed.
e. The Corporation and its subsidiaries entered into raw material purchase contracts with suppliers in Australia, Brazil, Canada, China, Japan, Philippines, Vietnam and domestic companies with contract terms of 1 to 5 years. Contracted annual purchases of 10,130,000 metric tons of coal, 23,470,000 metric tons of iron ore, and 3,520,000 metric tons of limestone are at prices negotiable with the counterparties. Purchase commitments as of June 30, 2017 were USD5.4 billion (including 8,700,000 metric tons of coal, 68,690,000 metric tons of iron ore, and 2,680,000 metric tons of limestone).
f. In February 2016, May 2015 and August 2014, the associate Changchun CECK Auto. Parts Co., Ltd. (CCCA) entered into credit facility agreements with Taipei Fubon Bank, CTBC Bank and CTBC Bank for USD5,000 thousand (or the equal amount in EUR, the credit line remained unchanged) USD 5,000 thousand and USD5,000 thousand (or the equal amount in EUR, the credit line remained unchanged) credit lines. Under the agreements, the Corporation and its associates should collectively hold at least 38%, 30% and 30% of CCCA's issued shares and one seat in the board of directors. As of June 30, 2017, the Corporation indirectly held 38% equity of CCCA and one seat in the board of directors.
g. In November 2014, the associate Honley Auto. Parts Co., Ltd. (HAPC) entered into a construction financing agreement with Shanghai Commercial and Savings Bank for a NT\$295,000 thousand which had been transferred to long-term credit line in March 2016. Under the agreement, the Corporation and its associates should collectively hold at least 30% of HAPC's issued shares and two seats in the board of directors. As of June 30, 2017, the Corporation held 38% equity of HAPC and two seats in the board of directors.

35. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

In July 2017, the Corporation participated in the cash capital increase of NT\$449,498 thousand of Taiwan Rolling Stock Co., Ltd., increasing the total shareholding from 36% to 48%.

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Corporation and its subsidiaries and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

	Foreign Currencies (In Thousands)		Exchange Rate	Carrying Amount (In Thousands of New Taiwan Dollars)
June 30, 2017
Monetary financial assets
USD	\$ 196,093	30.4200	(USD:NTD)	\$ 5,965,159
USD	19,414	6.7811	(USD:RMB)	590,566
USD	6,933	1.3031	(USD:AUD)	210,896
JPY	7,942,928	0.2716	(JPY:NTD)	2,157,299
RMB	360,334	4.4860	(RMB:NTD)	1,616,458
VND	551,281,784	0.00004	(VND:USD)	672,564
EUR	8,849	34.7200	(EUR:NTD)	307,227
EUR	3,085	1.1414	(EUR:USD)	107,097
Non-monetary financial assets
Available-for-sale financial assets USD	129,288	30.4200	(USD:NTD)	3,932,939
JPY	7,717,600	0.2716	(JPY:NTD)	2,096,100
MYR	246,282	6.8015	(MYR:NTD)	1,675,085
KRW	19,771,584	0.0268	(KRW:NTD)	529,878
RMB	21,426	4.4860	(RMB:NTD)	100,601
Non-current assets held for sale
RMB	47,432	4.4860	(RMB:NTD)	212,780
Associates accounted for using
equity method USD	1,430,382	30.4200	(USD:NTD)	43,499,184
AUD	682,900	23.3450	(AUD:NTD)	15,942,293
INR	4,912,462	0.4696	(INR:NTD)	2,306,892
Monetary financial liabilities
USD	1,109,081	30.4200	(USD:NTD)	33,738,232
USD USD	110,000 22,117	64.7790 23.350	(USD:INR) (USD:VND)	3,346,200 672,806
USD	15,056	6.7810	(USD:RMB)	458,018
JPY	11,040,123	0.2716	(JPY:NTD)	2,998,497
December 31, 2016
Monetary financial assets
USD	244,290	32.2500	(USD:NTD)	7,878,362
USD	18,827	6.9851	(USD:RMB)	607,164
USD USD	10,039 8,914	1.3850 4.6705	(USD:AUD) (USD:MYR)	323,762 287,483
USD	3,883	24,807.6923	(USD:VND)	125,226
JPY	7,729,021	0.2756	(JPY:NTD)	2,130,118
RMB	304,794	4.6170	(RMB:NTD)	1,407,236
VND	1,035,080,000	0.00004	(VND:USD)	1,335,253
EUR	10,559	33.9000	(EUR:NTD)	357,942

(In Thousands) Exchange Rate Dollars) Non-monetary financial assets Available-for-sale financial assets USD \$ 93,665 32.2500 (USD:NTD) \$ 3,020,686 JPY 8,832,000 0.2756 (JPY:NTD) 2,434,099 MYR 255,987 6.9050 (MYR:NTD) 1,767,588 KRW 20,541,000 0.0270 (KRW:NTD) 554,607 RMB 80,198 4.6170 (RMB:NTD) 370,272 Associates accounted for using equity method USD 1,447,829 32.2500 (USD:NTD) 46,657,095 AUD 711,451 23.2850 (AUD:NTD) 16,566,147 INR 4,656,887 0.4762 (INR:NTD) 2,217,610 Monetary financial liabilities USD 1,107,225 32.2500 (USD:NTD) 35,708,001 USD 110,000 67.7240 (USD:INR) 3,547,500 USD 24,279 6.9850 (USD:RMB) 782,986 USD 21,709 24,807.6923 (USD:VND) 700,127 USD 9,133 4.6710 (USD:MYR) 294,536 JPY 11,053,025 0.2756 (JPY:NTD) 3,046,214 AUD 180,194 23.2850 (AUD:NTD) 4,195,825 June 30, 2016 Monetary financial assets USD 352,426 32.2750 (USD:NTD) 11,374,554 USD 23,286 6.6615 (USD:RMB) 751,541 USD 9,755 1.3462 (USD:AUD) 314,855 USD 4,402 24,826.9231 (USD:VND) 142,080 JPY 8,653,760 0.3143 (JPY:NTD) 2,719,877 RMB 392,310 4.8450 (RMB:NTD) 1,900,742 VND 203,398,311 0.00004 (VND:USD) 270,520 EUR 10,096 35.8900 (EUR:NTD) 362,328 EUR 3,000 1.1120 (EUR:USD) 107,667 HKD 32,290 4.1590 (HKD:NTD) 134,295 Non-monetary financial assets Available-for-sale financial assets USD 69,870 32.2750 (USD:NTD) 2,255,058 JPY 8,128,800 0.3143 (JPY:NTD) 2,553,625 MYR 259,490 7.6665 (MYR:NTD) 1,989,378 VND 614,957,769 0.00004 (VND:USD) 817,894 RMB 82,112 4.8450 (RMB:NTD) 397,834 KRW 36,337,500 0.0282 (KRW:NTD) 1,024,718 Associates accounted for using equity method USD 1,454,676 32.2750 (USD:NTD) 46,935,963 AUD 701,949 23.9750 (AUD:NTD) 16,829,235 INR 5,134,560 0.4773 (INR:NTD) 2,450,725	Foreign Currencies		Carrying Amount (In Thousands of New Taiwan













































			(Continued)

	Foreign Currencies (In Thousands)		Exchange Rate	Carrying Amount (In Thousands of New Taiwan Dollars)
Monetary financial liabilities
USD	\$ 1,070,163	32.2750	(USD:NTD)	\$ 34,539,496
USD	110,000	67.6200	(USD:INR)	3,550,250
USD	53,926	6.6620	(USD:RMB)	1,740,454
USD	16,995	24,826.9231	(USD:VND)	548,499
AUD	180,194	23.9750	(AUD:NTD)	4,320,169
JPY	10,887,527	0.3143	(JPY:NTD)	3,421,950
EUR	11,558	1.1120	(EUR:USD)	414,815
				(Concluded)

For the three months and six months ended June 30, 2017 and 2016, realized and unrealized net foreign exchange gains were NT\$255,009 thousand, NT\$5,067 thousand, NT\$325,215 thousand and NT\$64,994 thousand, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of each entity.

37. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. As a result, those whose nature of the products and production processes are similar have been considered single operation segments. Reported segments of the Corporation and its subsidiaries were as follows:

Steel manufacture and sell steel products, including the Corporation, DSC, CHSC, CSCSSB, CSVC, CSCI, HLSC and TSC.
Ocean freight forwarding ship bulk merchandise, such as iron ore and coal, including CSE, TSP, CSEP and CSEIP.
a. Segment revenues and operating results

The following is an analysis of the Corporation and its subsidiaries' revenues and results of operations by reportable segment.

	Steel	Ocean Freight Forwarding	Others	Adjustment and Elimination	Total
For the six months ended June 30, 2017
Revenues from external customers	\$ 135,535,015	\$ 160,376	\$ 32,153,874	\$ -	\$ 167,849,265
Inter-segment revenues	39,876,318	7,602,695	15,466,007	(62,945,020)	-
Segment revenues	\$ 175,411,333	\$ 7,763,071	\$ 47,619,881	\$ (62,945,020)	\$ 167,849,265
Segment profit	\$ 8,146,181	\$ 901,790	\$ 2,529,306	\$ 60,260	\$ 11,637,537
Interest income	82,558	5,704	87,108	(37,050)	138,320
Financial costs	(1,573,539)	(101,151)	(204,704)	22,279	(1,857,115)
Share of the profit of associates	2,851,974	37,111	106,455	(3,639,863)	(644,323)
Other non-operating income and expenses	871,056	44,763	(61,768)	(314,650)	539,401
Profit before income tax	10,378,230	888,217	2,456,397	(3,909,024)	9,813,820
Income tax	721,312	23,898	391,556	(8,850)	1,127,916
Net profit for the period	\$ 9,656,918	\$ 864,319	\$ 2,064,841	\$ (3,900,174)	\$ 8,685,904
					(Continued)

	Steel	Ocean Freight Forwarding	Others	Adjustment and Elimination	Total
For the six months ended June 30, 2016
Revenues from external customers Inter-segment revenues	\$ 107,303,033 27,647,187	\$ 1,020,656 5,390,572	\$ 28,967,562 13,491,582	\$ - (46,529,341)	\$ 137,291,251 -
Segment revenues	\$ 134,950,220	\$ 6,411,228	\$ 42,459,144	\$ (46,529,341)	\$ 137,291,251
Segment profit Interest income Financial costs Share of the profit of associates Other non-operating income and expenses Profit before income tax Income tax	\$ 4,957,777 104,933 (1,720,403) 2,814,869 946,929 7,104,105 165,462	\$ 1,538,254 2,683 (73,833) (208,162) 33,822 1,292,764 30,087	\$ 2,325,575 84,287 (159,456) 364,689 255,321 2,870,416 533,328	\$ 380,676 (31,251) 17,805 (3,474,304) (311,324) (3,418,398) 39,038	\$ 9,202,282 160,652 (1,935,887) (502,908) 924,748 7,848,887 767,915
Net profit for the period	\$ 6,938,643	\$ 1,262,677	\$ 2,337,088	\$ (3,457,436)	\$ 7,080,972 (Concluded)

Inter-segment revenues were accounted for according to market price or cost-plus pricing.

Segment profit represented the profit from operations earned by each segment and was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Segment total assets and liabilities

	June 30,	December 31,	June 30,
	2017	2016	2016
Segment assets
Steel Ocean freight forwarding Others Adjustment and elimination	\$ 745,913,720 27,086,961 208,080,298 (295,126,716)	\$ 728,761,785 27,222,864 210,626,969 (290,489,825)	\$ 726,512,847 26,435,638 212,693,435 (294,017,525)
Consolidated total assets	\$	\$	\$
Segment liabilities	685,954,263	676,121,793	671,624,395
Steel Ocean Freight Forwarding Others Adjustment and Elimination	\$ 315,642,055 13,898,344 65,477,352 (31,598,123)	\$ 293,415,373 12,440,136 61,279,112 (20,592,521)	\$ 305,156,307 12,994,092 63,363,141 (27,333,060)
Consolidated total liabilities	\$	\$	\$
	363,419,628	346,542,100	354,180,480

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CSC — Interim / Quarterly Report 2017

51937_rns_2017-11-13_08318848-869b-41cb-bd65-b025f2a5952f.pdf

China Steel Corporation and Subsidiaries

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

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

CHINA STEEL CORPORATION AND SUBSIDIARIES

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

Recognition, measurement and impairment of financial assets

Hedge accounting

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

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. AVAILABLE-FOR-SALE FINANCIAL ASSETS

9. HELD-TO-MATURITY FINANCIAL ASSETS - NONCURRENT

10. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING

11. NOTES AND ACCOUNTS RECEIVABLE, NET (INCLUDING RELATED PARTIES)

12. AMOUNTS DUE FROM (TO) CUSTOMERS FOR CONSTRUCTION CONTRACTS

14. DEBT INVESTMENTS WITH NO ACTIVE MARKET

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

a. Material associates

16. OTHER FINANCIAL ASSETS

17. PROPERTY, PLANT AND EQUIPMENT

For the six months ended June 30, 2017

For the six months ended June 30, 2016

18. INVESTMENT PROPERTIES

Buildings 5-60 years

19. BORROWINGS

b. Short-term bills payable

c. Long-term borrowings

d. Long-term bills payable

20. BONDS PAYABLE

21. ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

22. OTHER PAYABLES

23. PROVISIONS

24. RETIREMENT BENEFIT PLANS

25. EQUITY

b. Capital surplus

d. Special reserves

e. Other equity items

1) Exchange differences on translating foreign operations

f. Treasury shares

26. OPERATING REVENUES

27. PROFIT BEFORE INCOME TAX

a. Other income

b. Other gains and losses

f. Depreciation and amortization

g. Operating expenses directly related to investment properties

h. Employee benefits

i. Employees' compensation and remuneration of directors and supervisors

28. INCOME TAX

b. Income tax recognized directly in equity

29. EARNINGS PER SHARE

Net profit for the period

30. CAPITAL MANAGEMENT

31. FINANCIAL INSTRUMENTS

d. Financial risk management objectives and policies

32. TRANSACTIONS WITH RELATED PARTIES

b. Operating revenues

c. Purchase of goods

d. Receivables from related parties

e. Payables to related parties

f. Others

h. Compensation of key management personnel

33. ASSETS PLEDGED AS COLLATERAL OR SECURITY

34. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

35. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

37. SEGMENT INFORMATION

b. Segment total assets and liabilities

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CSC Interim / Quarterly Report 2017