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CSCC Annual Report 2015

Dec 24, 2015

51903_rns_2015-12-24_e41ca277-6b65-424d-839a-6c92eb67e574.pdf

Annual Report

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Stock Code: 1723

China Steel Chemical Corporation (CSCC) and Subsidiaries

Consolidated Financial Statements and Independent Auditor’s Report Q3 of 2015 and 2014

Address : 25F, No. 88, Chengong 2nd Road, Qianzhen District, Kaohsiung City Tel. : (07)338–3515

  • 1 -

§Table of Contents§

Item Page Note to financial
statements
I.
Cover page
II.
Table of contents
III.
Independent Auditor’s Report
IV.
Consolidated Balance Sheet
V.
Consolidated Income Statement
VI.
Consolidated Statement of Retained Earnings
VII.
Consolidated Statement of Cash Flow
VIII.
Notes to consolidated financial statements
(I) Company background
(II) Financial statements approval date and
procedures
(III) The application of newly published and
revised standards and interpretations
(IV) Material accounting polices summary
(V) Primary source of uncertainty in material
accounting
judgment,
estimate,
and
assumption
(VI) Main accounting titles description
(VII) Related party transactions
(VIII) Pledged assets
(IX) Material
contingent
liability
and
unrecognized contractual commitments
(X) Material disaster damage and loss
(XI) Material post events
(XII) Exchange rate of financial assets and
financial liabilities in foreign currency
(XIII) Supplementary disclosures
1. Significant transactions information
2. Transfer
investment
business
information
3. Investment in Mainland China
(XIV) Department Information		 1
2
3~4
5
6~7
8
9~11
12
12
12~21
21~22
22
23~48
48~52
–
52
–
–
52~54
54~55
54~55
55~56
56~57		 –
–
–
–
–
–
–
I
II
III
IV
V
VI~XXVIII
XXIX
–
XXX
–
–
XXXI
XXXII
XXXII
XXXII
XXXII
  • 2 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Consolidated Balance Sheet

September 30 2015, December 31 2014 and September 30 2014

Unit: NT$ Thousands

Code Assets September 30 2015
(Audited)		 September 30 2015
(Audited)		 December 31, 2014
(Audited after recompilation)		 December 31, 2014
(Audited after recompilation)		 December 31, 2014
(Audited after recompilation)		 September 30 2014
(Audited after
recompilation)
Amount
%
$ 274,604
3

1,533,372
19

220,673
3

7,502
–

565,454
7

160,464
2

346,938
4

88
–

461,850
6

–
–

271,600
3

81,239
1

3,923,784
48

496,758
6

104,630
1

155,038
2

1,344,114
17

1,395,859
17

585,046
7

42,416
1

21,386
–

1,527
–

35,280
1

25,000
–

4,207,054
52
$ 8,130,838
100		 Code Liabilities and Shareholders’ equity September 30 2015
(Audited)		 September 30 2015
(Audited)		 December 31, 2014
(Audited after
recompilation)		 December 31, 2014
(Audited after
recompilation)		 September 30 2014
(Audited after
recompilation)		 September 30 2014
(Audited after
recompilation)
Amount % Amount % Amount Amount % Amount % Amount %

1100
1110
1125
1150
1170
1180
1200
1220
130X
1460
1476
1479
11XX

1523
1527
1546
1550
1600
1760
1840
1915
1920
1985
1990
15XX
1XXX
 Current assets
Cash and cash equivalent (Note VI)
Financial assets measured at fair value through
profit and loss – current (Note VII)
Available-for-sale financial assets – current (Note
VIII)
Notes payable (Note XI)
Accounts receivable – net (Note XI)
Accounts receivable – related party (Note XI, &
XXIX)
Other receivables (Note XXIX)
Current income tax assets
Inventories (Note XII)
Available-for-sale noncurrent assets (Note XIII)
Other financial assets – current (Note XIV)
Other current assets
Total current assets
Noncurrent assets
Available-for-sale financial assets – noncurrent
(Note VIII)
Held-to-maturity financial assets - noncurrent
(Note IX)
Investment in debt instrument with no active
market – non-current (Note X)
Investment under the equity method (Note III &
XVI)
Property, plant, and equipment (Note XVII, &
XXX)
Investment property (Note XVIII and XXIX)
Deferred income tax assets (Note III)
Prepaid equipment (Note XXX)
Refundable deposit
Long-term prepaid rent (Note XXIX)
Other noncurrent assets (Note XXIX)
Total noncurrent assets
Total assets
$ 945,945
899,331
147,509
14,643
379,224
73,736
144,989
13
409,407
–
174,600
83,933
12

11

2

–

5

1

2

–

5

–

2

1
























$ 1,097,928

1,346,604

220,684

7,054

409,411

137,006

386,196

–

446,627

32,058

233,300

69,362
13

15

2

–

5

2

4

–

5

–

3

1
























$ 274,604

1,533,372

220,673

7,502

565,454

160,464

346,938

88

461,850

–

271,600

81,239
2100
2110
2170
2180
2200
2230
2300
21XX

2570
2640
25XX
2XXX

3110
3200
3310
3320
3350
3300
3400
3500
31XX
36XX

3XXX
3X2X
 Current liabilities
Short-term loan (Note XIX)
Short-term bills payable (Note XIX)
Accounts payable
Accounts payable – related party (Note XXIX)
Other payable (Note XX, & XXIX)
Current income tax liabilities
Other current liabilities
Total current liabilities
Noncurrent liabilities
Deferred income tax liabilities
Net determined benefit liabilities – non-current
(Note III & IV)
Total noncurrent liability
Total liability
Shareholders’ Equity (Note XXII)
Common stock capital
Additional paid-in capital
Retained earnings (Note III)
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Treasury stock
Total Shareholders’ equity
Non-controlling interests (Note XXII)
Total equity
Total Liabilities and Shareholders’ equity










$ 124,470
775,000
23,511
214,196
273,090
51,468
35,271
1,497,006
6,133
128,399
134,532
1,631,538
2,369,044
650,265
2,167,302
242,136
1,076,718
3,486,156
(
30,730 )
(
144,216 )
6,330,519
–
6,330,519
$ 7,962,057
2

10

–

3

3

1

–

19

–

1

1

20

30

8

27

3

14

44

–
(
2 )

80

–

80
100


















(





$ 100,441

–

24,524

256,098

356,036

187,738

30,011

954,848

1,663

133,056

134,719
1,089,567
2,369,044

515,023
1,948,583

242,136
2,215,199
4,405,918

317,045

162,034 )
7,444,996

150,840
7,595,836
$ 8,685,403
1

–

–

3

4

2

1

11

–

2

2

13

27

6

22

3

26

51

3
(
2 )

85

2

87

100


















(





$ 46,671

–

31,631

324,349

281,609

136,381

25,582

846,223

324

124,672

124,996

971,219
2,369,044

488,413
1,948,583

242,136
1,866,133
4,056,852

260,625

167,082 )
7,007,852

151,767
7,159,619
$ 8,130,838
1

–

–

4

3

2

–

10

–

2

2

12

29

6

24

3

23

50

3
(
2 )

86

2

88
100




3,273,330
41
4,386,230
50
3,923,784
430,643
113,056
206,939
1,147,370
1,395,974
563,513
43,269
718,094
1,582
32,589
35,698
5

1

3

14

18

7

1

9

–

–

1
525,241

108,860

160,597

1,380,338

1,431,399

552,988

42,644

24,409

2,467

33,454

36,776
6

1

2

16

17

6

1

–

–

–

1
496,758

104,630

155,038

1,344,114

1,395,859

585,046

42,416

21,386

1,527

35,280

25,000






4,688,727
59
4,299,173
50
4,207,054
$ 7,962,057
100		 $ 8,685,403
100		 $ 8,130,838

The notes hereinafter are an integral part of the financial statements. (Refer to the Auditor’s Report issued by Deloitte Taiwan on November 10 2015)

  • 3 -

China Steel Chemical Corporation (CSCC) and Subsidiaries Consolidated Income Statement

July 1 to September 30, 2015, July 1 to September 30, 2014, January 1 to September 30, 2015, and January 1 to September 30 2014

(Review only, no audit has been conducted in accordance with GAAP)

Unit: NT$ Thousands, Except for earnings per share in NTD

Code
Operating income (Note XXIII
& XXIX)
4100
Sales income
4800
Other income
4000
Total operating
income
5000
Operating cost (Note XII,
XXI, XXIV & XXIX)
5900
Gross profit
Operating expense (Note III,
XXI, XXIV & XXIX)
6100
Marketing expense
6200
Management expense
6300
R&D expense
6000
Total operating
expense
6900
Net operating income
Non-operating income and
expense
7190
Other incomes (Note
XXIV & XXIX)
7020
Other profit and loss
(Note XXIV & XXIX)
7060
The Portion of incomes
from associates
recognized under the
equity method (Note
III)
7510
Interest expense
7000
Total non-operating
income and
expense
7900
Net income before tax
7950
Income tax expenses (Note III,
IV & XXV)
8200
Net income		 July 1 to September 30,
2015		 July 1 to September 30,
2015		 July 1 to September 30,
2014
(Recompiled)		 July 1 to September 30,
2014
(Recompiled)		 January 1 to September 30,
2015		 January 1 to September 30,
2015		 January 1 to September 30,
2015		 January 1 to September
30, 2014
(Recompiled)		 January 1 to September
30, 2014
(Recompiled)
Amount % % Amount % Amount %
$ 1,366,021

28,021
1,394,042

1,039,979

354,063

39,269
34,082
23,801
97,152
256,911

18,292

37,449
38,045
(
1,022 )
92,764
349,675

(
48,257 )
301,418
 98
2
100
75
25
3
2
2
7
18
1
3
3

–
7
25
(
3 )
22
$ 4,498,572


73,965

4,572,537


3,308,927


1,263,610


100,011

83,161

76,912

260,084

1,003,526


38,601

100,146

70,793
(
2,183 )

207,357

1,210,883

(
164,285 )

1,046,598
 98
2
100
72
28
2
2
2
6
22
1
2
2

–
5
27
(
4 )
23		 $ 6,969,737

124,113
7,093,850
4,751,058
2,342,792

117,049

121,573

91,393

330,015
2,012,777

35,490

25,413

76,758
(
1,973 )

135,688
2,148,465
(
316,534 )
1,831,931		 98

2
100
67
33

2

2

1

5
28

1

–

1

–

2
30
(
4 )
26

(Continuing)

  • 4 -

(Continued)

(Continued)
Code
Other comprehensive income
(Note XXII)
8360
Items probable of
subsequent
reclassification under
the tile of incomes
8361
Exchange difference
from financial
statement
conversion of
foreign operation
8362
Available-for-sale
financial assets
unrealized
valuation profit
8370
The portion of other
comprehensive
incomes of
associates
recognized under
the equity
method.
8300
Current other
comprehensive
income (loss) (net
amount after
taxation)
8500
Total comprehensive income
8600
Net income classification:
8610
Shareholders’ equity
8620
Non-controlling interests
8700
Total comprehensive income
classification:
8710
Shareholders’ equity
8720
Non-controlling interests
Earnings per share (Note
XXVI)
9710
Basic
9810
Diluted		 July 1 to September 30,
2015		 July 1 to September 30,
2014
(Recompiled)		 January 1 to September 30,
2015		 January 1 to September 30,
2014
(Recompiled)
Amount % Amount % Amount % Amount
$ 7,906

110,454
(
16,670 )

101,690
$ 1,933,621
$ 1,829,543
2,388
$ 1,831,931
$ 1,931,353
2,268
$ 1,933,621
$ 7.95
$ 7.92		 %
$ 24,720
(
77,159 )
( 143,631 )
( 196,070 )
$ 105,348
$ 301,418

–
$ 301,418
$ 105,348

–
$ 105,348
$ 1.30
$ 1.30
2
(
6 )
( 10 )
( 14 )

8









$ 6,889

58,346

28,375
–

3

1
$ 14,836
(
151,998 )
(
210,282 )
(
347,444 )

$ 699,154
$ 1,046,545
53
$ 1,046,598
$ 698,770
384
$ 699,154
$ 4.53
$ 4.52
–
(
3 )
(
5 )
(
8 )
15
–

1
–

93,610
4
1
$ 703,358
31
27
$ 607,660
2,088













$ 609,748
$ 700,913
2,445
$ 703,358
$ 2.64
$ 2.63

The notes hereinafter are an integral part of the financial statements. (Refer to the Auditor’s Report issued by Deloitte Taiwan on November 10 2015)

  • 5 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Consolidated Statement of Retained Earnings

January 1 to September 30, 2015 and 2014

(Review only, no audit has been conducted in accordance with GAAP)

Unit: NT$ Thousands

Code
A1
Balance- January 1 2015
A3
The influence of recompilation under
the use of new standards (Note 3)
A5
Balance as of January 1 2015 after
recompilation
Earnings appropriation and
allocation – 2014 (Note XXII)
B1
Legal reserve
B5
Shareholder’s cash dividend –
83%
C7
Change in associates and joint venture
under the equity method
D1
Net - January 1 ~ September 30, 2015
D3
Other comprehensive earnings after
taxation from January 1 to
September 30, 2015
D5
Total comprehensive incomes from
January 1 to September 30, 2015.
L7
Subsidiary’s disposing parent
company’s stock deemed as
treasury stock transaction
M1
Dividend distributed to subsidiary
debited to additional paid-in
capital
M3
Disposition of subsidiaries
Z1
Balance- September 30, 2015
A1
Balance – January 1, 2014
Earnings appropriation and
allocation – 2013 (Note XXII)
B1
Legal reserve
B5
Shareholder’s cash dividend –
83%
O1
Non-controlling interests
increase/decrease
C7
Change in associates and joint venture
under the equity method
D1
Net - January 1 ~ September 30, 2014
D3
Other comprehensive earnings after
taxation from January 1 to
September 30, 2014
D5
Total comprehensive incomes from
January 1 to September 30, 2014.
M1
Dividend distributed to subsidiary
debited to additional paid-in
capital
Z1
Balance- September 30, 2014		 Shareholder Shareholder s’ Equity Non-controlling
interests (Note
XXII)		 Non-controlling
interests (Note
XXII)		 Total equity
Capital stock Additional
paid-in capital		 Retaine d earnings Other equityitems(Note XXII) Treasurystock Total

f		 Exchange
difference on
the basis of the
inancial reports
of foreign
operations
a		 Unrealized
profit and loss
of the
vailable-for-sa
le financial
assets		 Total
Shares (1,000
shares)		 Common stock
capital
Legal reserve		 Special reserve Unappropriated
earnings		 Total
236,904

–
$ 2,369,044

–
$ 515,023

–
$ 1,948,583

–
$ 242,136

–
(

(
(
(









(
(
(






 $ 2,215,495


296 )
2,215,199


218,719 )
1,966,307 )
2,185,026 )
–
1,046,545

–
1,046,545

–
–
–
$ 1,076,718

$ 2,223,888


220,991 )
1,966,307 )
2,187,298 )
–
–
1,829,543

–
1,829,543

–
$1,866,133
(

(
(




(
(


 $ 4,406,214

296 )
4,405,918
–
1,966,307 )
1,966,307 )
–
1,046,545
–
1,046,545
–
–
$ 3,486,156
$ 4,193,616
–
1,966,307 )
1,966,307 )
–
–
1,829,543
–
1,829,543
–
$4,056,852












(









 $ 27,989

–

27,989

–

–

–

–

–

23,107

23,107

–

–
–
$ 51,096
$ 2,154 )

–

–

–

–

–

–

9,082

9,082

–
$ 6,928







(
(



(










 $ 289,056
–
289,056
–
–
–
–
–

370,882 )

370,882 )
–
–
–
$ 81,826 )
$ 160,969
–
–
–
–
–
–
92,728
92,728
–
$ 253,697







(
(



(










 $ 317,045
–
317,045
–
–
–
–
–
347,775 )
347,775 )
–
–
–

30,730 )
158,815
–
–
–
–
–
–
101,810
101,810
–
260,625		 (

(










(
(









(		 $ 162,034 )
–
162,034 )
–
–
–
–
–
–
–
17,818
–
–
$ 144,216 )
$ 167,082 )
–
–
–
–
–
–
–
–
–
$167,082 )

(



(

(

(


(








(

(






 $ 7,445,292
296 )
7,444,996
–
1,966,307 )
1,966,307 )
2,310 )
1,046,545
347,775 )
698,770
107,002
48,368
–
6,330,519
6,986,104
–
1,966,307 )
1,966,307 )
–
664
1,829,543
101,810
1,931,353
56,038
7,007,852











(





(


(


 $ 150,840
–
150,840
–
–
–
–
53
331
384
–
–

151,224 )
$ –
$ 161,259
–
–
–

11,760 )
–
2,388

120 )
2,268
–
151,767
(


(
(
(

(



(



(
(
(





 $
7,596,132

296 )

7,595,836

–

1,966,307 )

1,966,307 )

2,310 )

1,046,598

347,444 )

699,154

107,002

48,368

151,224 )

6,330,519

7,147,363

–

1,966,307 )

1,966,307 )

11,760 )

664

1,831,931

101,690

1,933,621

56,038

7,159,619
236,904
2,369,044
515,023
1,948,583
242,136
–
–
–

–
–

–
218,719

–
–

–

–
–
–
218,719
–
–
–
(
2,310)		 –
–

–
–
–

–
–

–
–

–
–

–

–
–
–
–
–
–
–
89,184
–
–
–
–
48,368
–
–
–
–
–
–
–
236,904
$ 2,369,044
$ 650,265
$ 2,167,302
$ 242,136		 $ $ $
236,904
$ 2,369,044
$ 431,711
$ 1,727,592
$ 242,136		 $ $ $
–
–
–

–
–

–
220,991

–
–

–
–
–		 220,991
–
–
–
–
–
–
–
–
664
–
–

–
–
–

–
–

–
–

–
–

–

–
–
–
–
–
–
–
56,038
–
–
236,904
$ 2,369,044
$ 488,413
$ 1,948,583
$ 242,136		 $ $ $

The notes hereinafter are an integral part of the financial statements. (Refer to the Auditor’s Report issued by Deloitte Taiwan on November 10 2015)

  • 6 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Consolidated Statement of Cash Flow

January 1 to September 30, 2015 and 2014

(Review only, no audit has been conducted in accordance with GAAP)

Unit: NT$ Thousands

Unit: NT$ Thousands
Code
Cash flow from operating activities
A10000
Earnings before taxation in current period
A20010
Profits and losses not affecting cash flow
A20100
Depreciation expense
A20200
Amortization expense
A20400
Net profit of financial assets measured at fair
value through profit and loss
A20400
Held-for-trading financial instruments net
profit (loss)
A20900
Interest expense
A21200
Interest income
A21300
Dividend income
A22300
Portion of incomes from associates and joint
ventures recognized under the equity
method
A22500
Property, plant, and equipment disposal and
obsolescence loss (profit)
A23000
Capital gains from disposition of non-current
assets for disposal
A23100
Loss (profit) from the disposal of investment
A23700
Inventory loss in valuation and obsolescence
A30000
Change in operating assets and liabilities - net
A31110
Held-for-trading financial assets
A31130
Note receivable
A31150
Accounts receivable
A31160
Accounts receivable – related party
A31180
Other receivables
A31200
Inventories
A31240
Other current assets
A32150
Accounts payable
A32160
Accounts payable – related party
A32180
Other payables		 January 1 to September
30, 2015
 January 1 to September
30, 2014
(Recompiled)
$ 1,210,883
201,697
2,469
(
2,795 )
19,271
2,183
(
7,600 )
(
21,245 )
(
64,842 )
417
(
66,609 )

1,100

12,383
197,666
(
7,589 )
(
43,640 )
137,006
25,595
27,070
(
13,533 )
213,183
(
256,098 )
(
80,447 )		 $ 2,148,465
209,623
3,161
(
19,325 )
(
5,439 )
1,973
(
13,043 )
(
24,007 )
(
85,141 )
(
171 )
–
(
34,110 )
16,455
(
89,625 )
11,323
(
33,817 )
17,231
(
35,675 )
(
102,687 )
(
36,212 )
6,332
(
2,932 )
(
36,820 )

(Continuing)

  • 7 -

(Continued)

Code
A32230
Other current liabilities
A32240
Net determined benefit liabilities
A33000
Cash inflow from operating activities
A33500
Income tax paid
AAAA
Net cash inflow from operating activities
Cash flow from investing activities
B00100
Acquisition of financial assets measured at fair value
through profit and loss designated at initial
recognition
B00200
Proceeds from disposal of financial assets measured
at fair value through profit and loss designated at
initial recognition
B00300
Acquisition of available-for-sale financial assets
B00400
Proceeds from the disposal of available-for-sale
financial assets
B00500
De-capitalization of available-for-sale financial
assets and refund of stock capital liquidation
B00600
Acquisition of bond investment without market price
B00700
Proceeds from the disposal of bond investment
without market price
B02300
Decrease of cash from disposition of subsidiaries
B02600
Proceeds from disposition of non-current assets for
disposal
B02700
Acquisition of property, plant, and equipment
B02800
Disposal of the property, plant, and equipment
B03700
Increase of refundable deposit
B03800
Decrease of refundable deposit
B04200
Decrease of other receivables
B05400
Acquisition of investment property
B06600
Decrease of other financial assets
B06700
Increase of other noncurrent assets
B07300
Increase of long-term prepaid rent
B07400
Decrease of other current assets
B07500
Interest received
B07600
Associate dividend received
B07600
Other dividends received
BBBB
Net cash inflow (outflow) from investing
activities
Cash flow from financing activities
C00100
Increase of short-term loans
C00200
Decrease of short-term loans
C00500
Increase of short-term bills payable		 January 1 to September
30, 2015		 January 1 to September
30, 2014
(Recompiled)
$ 5,260
(
4,657 )
1,487,128
(
296,723 )
1,190,405
(
2,550,321 )
2,787,056
–
13,325
1,350

(
45,441 )
–
(
151,224 )
98,667
(
862,694 )
647
–
885
219,690
(
10,525 )
58,700
(
884 )
–
–
7,082
75,714
20,745
(
337,228 )
2,570,899
(
2,546,870 )
970,000		 ( $ 4,111 )
(
3,513 )
1,887,935
(
397,760 )
1,490,175
(
3,399,274 )
3,721,931
(
120,200 )
33,754
1,499
(
19,853 )
9,824
–
–
(
199,364 )
3,208
(
246 )
–
–
–
147,464
(
25,000 )
(
38,221 )
3,000
12,625
66,812
24,007
221,966
3,759,038
(
3,784,524 )
195,100

(Continuing)

  • 8 -

(Continued)

Code
C00600
Decrease of short-term bills payable
C04500
Distribution of cash dividend
C05000
Disposal of Treasury stock
C05600
Interest paid
C05800
Decrease of non-controlling interests
CCCC
Net cash outflow from financing activities
DDDD
Exchange rate effect on cash and cash equivalent
EEEE
Decrease of cash and cash equivalents in current period
E00100
Cash and cash equivalent balance - beginning
E00200
Cash and cash equivalent balance - yearend		 January 1 to September
30, 2015
 January 1 to September
30, 2014
(Recompiled)
( $ 195,000 )
(
1,918,030 )
107,002
(
2,284 )
–
(
1,014,283 )
9,123
(
151,983 )
1,097,928
$ 945,945		 ( $ 195,100 )
(
1,910,296 )
–
(
1,991 )
(
11,760 )
(
1,949,533 )
2,560
(
234,832 )
509,436
$ 274,604

The notes hereinafter are an integral part of the financial statements. (Refer to the Auditor’s Report issued by Deloitte Taiwan on November 10 2015)

  • 9 -

China Steel Chemical Corporation (CSCC) and Subsidiaries Notes to Consolidated Financial Statements

January 1 to September 30, 2015 and 2014

(Review only, no audit has been conducted in accordance with GAAP) (Unit in NT$ Thousands, unless otherwise stated)

I. Company background

China Steel Chemical Corporation (hereinafter referred to as “CSCC”) was established in February 1989 by China Steel Corporation (CSC, the parent of the Company that has dominant control, and held 29% of the stake as of September 30 2015 and September 30 2014) and other institutional shareholders with operation kicked off since May 1993. The principal business is the production, processing, and sale of distilled products of coal tar, light oil series and coke series, and also the trading of products from upper and lower streams.

The Company has been authorized to have stock shares traded publicly on Taiwan Stock Exchange since November 1998.

The consolidated financial statements are prepared in New Taiwan Dollar, the functional currency of the Company.

II. Financial statements approval date and procedures

This consolidated financial statement was announced after reporting to the Board on November 6 2015.

III. The application of newly published and revised standards and interpretations

  • (I) First-use of the amended Criteria for the Compilation of Financial Statements by Securities Issuers and the 2013 edition of IFRS, IAS, IFRIC, and SIC as recognized by FSC.

According to Letter Chin-Kuan-Cheng-Shen-Zi No. 1030029342 and Letter Chin- KuanCheng- Shen- Zi No. 1030010325 of Financial Supervisory Commission (hereinafter referred to as “FSC”), the Company and its subsidiaries started to use the 2013 edition of IFRS, IAS, IFRIC, and SIC announced by IASB and recognized by FSC and the amended Criteria for the Compilation of Financial Statements by Securities Issuers from 2015 onward.

Significant change in the accounting policies of the Company and its subsidiaries under the use of the amended Criteria for the Compilation of Financial Statements by Securities Issuers and the 2013 edition of IFRSs further to the explanation given below:

1. IFRS 10 “Consolidated Financial Statements”

This standard replaced IAS 27 “Consolidated and Separate Financial Statements” and also SIC 12 “Consolidation: Special Purpose Entities”. The Company and its subsidiaries consider the control over other entities to determine whether to have them included in the consolidated financial statements. When the Company and its subsidiaries are (i) having power over the investee, (ii) exposing to risk or having rights to the changes in returns by engaging in the investees’ operation, and (iii) using power over the investee to affect the amount of returns, the Company and its subsidiaries are with control over the investee. In addition, whether investor has control over the investee under a relatively complicated situation, new standards provide more guidance.

2. IFRS 12 “Disclosure of Interests in other Entities”

The new standard requires for the disclosure of the content of subsidiaries, joint arrangements, associates, and the equity of structural entities not included in the consolidated financial statements. In the first-use of IFRS 12, the consolidated financial

  • 10 -

statement of the Company and subsidiaries is under extensive disclosure.

3. IFRS 13 “Fair value measurement”

IFRS 13 provides a guideline on the measurement of fair value. The definition of fair value, establishment of a fair value measurement structure, and the disclosure of fair value measurement are stated in IFRS 13. In addition, the scope of disclosure under the new standard is broader. For example, before the application of IFRS 13, the standard only required the disclosure of financial instruments at fair value at 3 tiers of fair value. Under IFRS 13, all assets and liabilities are subject to disclosure.

IFRS 13 measurement requirement has been applied by deferral since 2015. For related disclosure, refer to Note 28.

  1. IAS 1 Amendment “Presentation of other comprehensive income items”

According to IAS 1 Amendment, other comprehensive income items shall be classified by nature and grouped as (1) items not being reclassified to profit and loss and (2) items may be subsequently reclassified to profit and loss. The related income tax should be also grouped on the same basis. The aforementioned mandatory grouping requirement is not in effect before implementing the amendment referred to above.

In 2015, the Company applied the aforementioned requirement in retrospect. The items not being reclassified as incomes included determined benefit plant reassessment value and the portion of determined benefit plans under reassessment for associates recognized under the equity method. Items that may be reclassified as incomes in the future may include the exchange difference for the conversion of financial statements of foreign entities in operation, unrealized gain (loss) of financial assets available for sale, and the portion of other comprehensive income of associates recognized under the equity method (except the reassessment value of determined benefit plan). However, the aforementioned amendment does not affect the net profits, corporate earnings, other comprehensive incomes, and the total earnings of the current period.

5. IAS 19 Amendment “Employee Benefits”

“Net interest” replaced the cost of interest and the expected return of planned assets of the standard before amendment with net interest determined by determined benefit liabilities (assets) multiplied by discount rate. The amended IAS 19 in addition to changing the expression of defined benefit cost requires a wider range of presentation.

In addition, the definition of short-term employee benefits is revised in this amendment. The definition of short-term employee benefits is modified as “the entire employees benefits (except for the benefit of the resigned employees) will be paid to employees in full within 12 months at the end of the service reporting period.” However, this revision does not affect the expression of vacation payable as current liabilities in the consolidated balance sheet.

In the first-use of IAS 19, the Company and its subsidiaries elected no disclosure of the annual consolidated financial statements for comparing the determined benefit obligation sensitivity analysis in the period. influence of previous period is shown below:

  • 11 -
Assets, Liabilities, and Shareholders’Equity
effect
January 1, 2014
Investment under the equity method
Deferred income tax assets
Accrued pension liabilities
Net determined benefit liabilities
Retained earnings
September 30 2014
Investment under the equity method
Deferred income tax assets
Accrued pension liabilities
Net determined benefit liabilities
Retained earnings
December 31, 2014
Investment under the equity method
Deferred income tax assets
Accrued pension liabilities
Net determined benefit liabilities
Retained earnings
The influence on comprehensive income
July 1 to September 30, 2014
Operating expense
Portion of earnings from associates recognized
under the equity method
Income tax expense
Net income
January 1 to September 30, 2014
Operating expense
Portion of earnings from associates recognized
under the equity method
Income tax expense
Net income		 Amount before
recompilation		 Amount before
recompilation		 Applicable in
first-use		 Amount after
recompilation






















$ 1,341,972
$ 42,629
$ 129,229
$ –
$ 4,193,616
$ 1,344,129
$ 42,398
$ 125,682
$ –
$ 4,056,959
$ 1,380,634
$ 42,644
$ 134,172
$ –
$ 4,406,214
$ 106,637
$ 37,906
$ 100,158
$ 609,784
$ 329,905
$ 76,773
$ 316,552
$ 1,832,038		 $ –
$ –
( $ 129,229 )
$ 129,229
$ –
( $ 15 )
$ 18
( $ 125,682 )
$ 125,792
( $ 107 )
( $ 296 )
$ –
( $ 134,172 )
$ 134,172
( $ 296 )
$ 37
( $ 5 )
( $ 6 )
( $ 36 )
$ 110
( $ 15 )
( $ 18 )
($ 107 )		 $ 1,341,972
$ 42,629
$ –
$ 129,229
$ 4,193,616
$ 1,344,114
$ 42,416
$ –
$ 125,792
$ 4,056,852
$ 1,380,338
$ 42,644
$ –
$ 134,172
$ 4,405,918
$ 106,674
$ 37,901
$ 100,152
$ 609,748
$ 330,015
$ 76,758
$ 316,534
$ 1,831,931

The earnings per share of the Company and its subsidiaries from July 1 to September 30, 2014 and January 1 to September 30, 2014, were unaffected. The influence on the consolidated assets, liabilities, and equity of the Company and subsidiaries as of September 30, 2015, and the consolidated comprehensive income from July 1 to September 30, 2015 and January 1 to September 30, 2015, was insignificant.

  • 12 -

6. “2009~2011 Annual improvements”

In the period of 2009~2011, the amendment with improvement of IAS 16 “Property, Plant and Equipment”, IAS 32 “Financial Instruments: Presentation”, and IAS 34 “Interim Financial Reporting”.

IAS 16 Amendment states that the spare parts, spare equipment, and maintenance equipment in conformity with the property, plant and equipment definition should be recognized in accordance with IAS 16. In addition, the remaining items that do not meet the property, plant, and equipment definition are recognized as inventories.

IAS 32 Amendment states that the income tax of the transaction costs allocated to the shareholders and equity transaction is to be processed in accordance with IAS 12 “Income Tax.”

IAS 34 Amendment states that if the total liability measurement amount of the department is regularly provided to the decision-maker of the Company and its subsidiaries and if there is material difference between the prior period financial statements and the measurement amount disclosed by the reporting department, the measurement amount should be disclosed in the interim financial statements.

  1. The recognition and measurement of the financial liability designated to be measured at fair value through profit and loss

According to the amended Regulations Governing the Preparation of Financial Reports by Securities Firms, for the financial liability designated to be measured at fair value through profit and loss, the change in fair value arising from the change in credit risk is recognized in other comprehensive income and it will not be reclassified subsequently to profit and loss; also, the remaining amount of the change in the fair value of liabilities is reported in profit and loss. However, if the aforementioned accounting treatment causes or worsens improper accounting ratio, the profit and loss of the liabilities will be reported in profit and loss entirely.

In sum, the use of the amended Criteria for the Compilation of Financial Statements by Securities Issuers and the 2013 edition of IFRSs do not significantly affect the Company and its subsidiaries.

(II) IFRSs published by IASB but not yet approved by the FSC

The Company and its subsidiaries are not subject to the following IFRSs that are published by IASB but not yet approved by the FSC. FSC still did not announce the effective date as of the day this consolidated financial statement was presented to the Board.

Newly published / amended / revised standards and interpretations IASB effective date (Note 1)

Newly published / amended / revised standards and interpretations IASB effective date(No
“2010~2012 Annual improvements” July 1, 2014 (Note 2)
“2011~2013 Annual improvements” July 1, 2014
“2012~2014 Annual improvements” January 1, 2016 (Note 4)
IFRS 9 “Financial Instruments” January 1, 2018
IFRS 9 and IFRS 7 Amendment “Mandatory effective date and January 1, 2018
transitional disclosure”
IFRS 10 and IAS 28 Amendment “Assets sales or input between January 1, 2016 (Note 3)
investors and their associates or joint venture”
IFRS 10, IFRS 12, and IFRS 28 Amendment “Investment entity: January 1, 2016
Application of the exceptions in the consolidated financial
statements”
IFRS 11 Amendment “Acquisitions of Interests in Joint Operations” January 1, 2016
IFRS 14 “Regulatory deferral account” January 1, 2016

(Continuing)

  • 13 -

(Continued)

Newly published / amended / revised standards and interpretations
IASB effective date(Note 1)
IFRS 15 “Revenue from contracts with customers”
IAS 1 Amendment “Disclosure plan”
IAS 16 and IAS 38 Amendment “Clarification of acceptable methods
of depreciation and amortization”
IAS 16 and IAS 41 Amendment “Agriculture: Plantation”
IAS 19 Amendment “Defined benefit plans: Employee appropriation”
IAS 36 Amendment “Non-financial assets recoverable amount
disclosure”
IAS 39 Amendment “Derivatives contract replacement and hedge
accounting continuity”
IFRIC 21 “Taxation”		 January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014

  • Note 1: Unless otherwise noted, the newly published / amended / revised standards and interpretations referred to above are valid starting from the period after the respective date.

  • Note 2: The share-based payment transaction with a grant date after July 1, 2014 is subject to IFRS 2 Amendment. The corporate merger with a merger date after July 1, 2014 is subject to IFRS 3 Amendment. IFRS 13 Amendment is effective immediately. The remaining amendments are valid starting from the period after July 1, 2014.

  • Note 3: It is applicable by deferral to all transactions starting from the period after January 1, 2016.

  • Note 4: All other amendment shall be effective as of January 1 2016 and beyond except the official launch of IFRS 5, which will be effective in the fiscal period thereafter.

Except for the following instructions, the application of the aforementioned newly published / amended / revised standards and interpretations will not cause significant changes to the accounting policies of the Company and its subsidiaries:

  1. IFRS 9 “Financial Instruments”

The recognition and measurement of financial assets

In terms of financial assets, the subsequent measurement of all financial assets within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” is measured at the amortized cost or fair value. The classification of financial assets according to IFRS 9 is as follows:

For the debt instrument invested by the Company and its subsidiaries, if its contractual cash flow is exclusive for the payment of principal and interest on the outstanding principal amount, the classification and measurement is as follows:

  • (1) The financial assets that are held for the purpose of collecting contractual cash flows are measured at the amortized cost. The interest income of such financial assets is subsequently recognized in profit and loss in accordance with the effective interest rate and is with impairment assessed continuously and recognized in profit and loss.

  • (2) The financial assets that are held for the purpose of collecting contractual cash flows and selling financial assets are measured at fair value through other comprehensive income. The interest income of such financial assets is subsequently recognized in profit and loss in accordance with the effective interest rate and is with impairment assessed continuously and recognized in profit and loss along with exchange profit and loss. The changes in other fair values are recognized in other comprehensive income. When such financial assets are de-recognized or reclassified, the changes in fair value accumulated in other comprehensive income should be reclassified to profit and loss.

  • 14 -

The financial assets not subject to the conditions referred to above invested by the Company and its subsidiaries are measured at fair value; also, changes in fair value are recognized in profit and loss. However, the Company and its subsidiaries may choose to have the not-held-for-trading equity investments designated at the original recognition to be measured at fair value through other comprehensive income. The dividend income of such financial assets is recognized in profit and loss; also, other related profits and losses are recognized in other comprehensive income without the need of subsequently assessing impairments; moreover, the changes in the fair value accumulated in other comprehensive income will not be reclassified to profit and loss.

Impairments of financial assets

According to IFRS 9, adopts “expected credit loss model” to recognize the impairments of financial assets. The financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income mandatorily, rent receivables, and the contractual assets or loan commitment and financial guarantee contracts arising from IFRS 15 “Revenue from contracts with customers” are with allowance for credit losses recognized. If the credit risk of the aforementioned financial assets has not significantly increased since the original recognition, its allowance for credit losses is measured in accordance with the expected credit loss within 12 months. If the credit risk of the aforementioned financial assets has significantly increased since the original recognition with high risk, its allowance for credit losses is measured in accordance with the expected credit losses within the remaining duration. However, the allowance for credit losses of the accounts receivable excluding significant financial composition should be measured in accordance with the expected credit loss of the duration.

In addition, for the financial assets with credit impairment at the time of recognition, the Company and its subsidiaries have the effective interest rate after credit adjustment calculated with the expected credit loss at the time of original recognition considered. The subsequent allowance for credit losses is measured in accordance with the cumulative changes in the subsequent expected credit losses.

2. IAS 36 Amendment “Non-financial assets recoverable amount disclosure”

IASB has amended the disclosure requirement of IAS 36 “Impairment of Assets” at the time of publishing IFRS 13 “Fair Value Measurement,” requiring the Company and its subsidiaries to additionally disclose the recoverable amount of each asset or cash-generating unit in each reporting period. IAS 36 Amendment is to clarify that the Company and its subsidiaries need to disclose such recoverable amount only when recognizing or reversing impairment loss. IAS 36 Amendment is to clarify that the Company and its subsidiaries need to disclose such recoverable amount only when recognizing or reversing impairment loss. In addition, if the recoverable amount is measured at the fair value derived from the present value method net of the cost of disposal, the Company and its subsidiaries need to disclose the discount rate adopted.

3. 2010~2012 Annual improvements

IFRS 8 Amendment is to clarify that if the Company and its subsidiaries have the operating divisions with similar economic characteristics disclosed comprehensively, the judgments made by the management in accordance with the summarized standards should be disclosed in the consolidated financial statements. In addition, IFRS 8 Amendment is to clarify that the adjustment information regarding the total assets of the reporting department consolidated to the total corporate assets should be disclosed only when the Company and its subsidiaries have department assets information provided to the major decision-maker periodically.

IFRS 13 Amendment is to clarify that after the application of IFRS 13, if the short-term accounts receivable and payable without interest rates defined are not significantly affected

  • 15 -

by the discount, they can still be measured in accordance with the original invoice amount.

IAS 24 Amendment “Disclosure of Related Party” is to clarify that the management entity providing services to the management of the Company and its subsidiaries is a related party of the Company and its subsidiaries. The paid and payable amount of the reporting entity arising from the services provided by the management entity to the senior management should be disclosed, but do not have to disclose the composition of the remuneration.

4. 2011~2013 Annual improvements

IFRS 13 Amendment is to adjust the exception (that is the “combination exception”) of the financial assets and financial liabilities measured at fair value on a net amount basis in order to clarify the scope of the exception including all contracts subject to the requirements of IAS 39 or IFRS 9, even if the contract does not comply with the definition of financial assets or financial liabilities in IAS 32 “Financial Instruments: Presentation.”

  1. IAS 16 Amendment “Clarification of acceptable methods of depreciation and amortization”

Enterprises should adopt appropriate depreciation method to reflect the expected consumption of future economic benefits of the property, plant, and equipment.

IAS 16 Amendment “Property, Plant, and Equipment” is to clarify that income is not an appropriate basis for measuring the depreciation expense of property, plant, and equipment; also, the Amendment does not provide a justification for the exception of basing depreciation expense appropriation on income.

The aforementioned amendments can be applied by deferral starting from the period after the effective date and can be applied ahead of the schedule.

  1. IFRS 15 “Revenue from contracts with customers”

IFRS 15 is to stipulate the principle of recognition for the revenue generated from the contracts signed with customers; also, IFRS 15 will replace IAS 18 “Revenue,” IAS 11 “Construction Contracts,” and related interpretations.

The Company and its subsidiaries have revenue recognized in accordance with the following steps when subject to IFRS 15:

  • (1) Identifying contracts with customers;

  • (2) Identifying the performance obligations in the contract;

  • (3) Determining transaction price;

  • (4) Amortizing transaction price to each performance obligation in the contract; and

  • (5) Recognizing revenue upon fulfilling performance obligations;

When IFRS 15 is valid, the Company and its subsidiaries may choose to have it applied retroactively to the comparing period or to have the first-time adoption cumulative effect recognized in the first-time application date.

7. 2012~2014 Annual improvements

IFRS 7 Amendment provides additional guidance to clarify whether the service contracts are continuously applicable to the transferred financial assets

8. IAS 1 Amendment “Disclosure Plan”

IAS 1 Amendment states that the consolidated financial report is to disclose material information; also, material information different in nature or function should be disclosed separately and may not be disclosed comprehensively with non-material information in order to enhance the understandability of the consolidated financial statements.

In addition, IAS 1 Amendment clarifies that the Company and its subsidiaries should consider the understandability and comparability of the consolidated financial statements in order to have notes prepared systematically.

  • 16 -

Further to the aforementioned influence, the Company and its subsidiaries continued to assess the influence of other IFRS, IAS, IFRIC and SIC on the financial position and performance to the date this consolidated financial statement was presented to the Board. Related influence will be disclosed after the completion of the assessment.

IV. Material accounting polices summary

(I) Statement of compliance

This consolidated financial statement was compiled in compliance with the amended Criteria for the Compilation of Financial Statements and IAS 34 “Interim Financial Reporting” approved by FSC, but does not cover all IFRSs disclosure as required for the report covering the whole fiscal period.

  • (II) Preparation basis

Further to the financial instrument at fair value, this consolidated financial statement was compiled based on historical cost.

The assessment of fair value could be classified from Class 1 to Class 3 by observable degree and importance:

  1. Class 1 input value: the quotes (before adjustment) from active market of the same assets or liabilities available on the assessment day.

  2. Class 2 input value: direct (price) or indirect (inferable from price) observable input value of assets or liabilities further to the quotes in Class 1.

  3. Class 3 input value: unobservable input value of assets or liabilities.

  4. (III) Consolidation basis

The detail, proportion of shareholding, and business items of the subsidiaries are stated in Note 15 and Table 7.

  • (IV) Note to other major accounting policy

Further to the note specified below, the accounting policy applied to this consolidated financial statements is identical with the policy used in FY2014.

  1. Benefit after discharge in determined benefits

The determined benefit cost of determined benefit retirement plan (including service cost, net interest, and reassessment value) is based on the actuarial unit benefit method in calculation. Service cost and net benefit liabilities (assets) net interest shall be recognized as employee benefit expenses at the time of recognition. Reassessment value (including profit/loss under actuarial calculation, the change in the effect of upper limit of assets, and the return on assets of plan net of interest) shall be recognized as other comprehensive income and entered as retained earnings at the time of recognition, and will not be reclassified as income in subsequent periods.

Net determined benefit liabilities (assets) shall be the amount short (surplus) of appropriation of funds to determined benefit retirement plan. Net determined benefit assets shall not exceed the present value of the refund from the plan or the reduction of fund for appropriation in the future.

The pension cost in the period is based on the pension cost rate determined under actuarial calculation on the ending day of the previous fiscal period, and on the basis from the beginning to the ending of the period with adjustment in line with significant market fluctuation, major reduction, settlement or other major one-time events.

  1. Income tax

Income tax expense equals to the sum of the current income tax and deferred income tax. The income tax in the period is based on assessment of the fiscal period with anticipation of the applicable tax rate on the total earnings of the period with calculation of earnings before

  • 17 -

taxation in the interim period.

V. Main source of material accounting judgment, estimation, and assumption uncertainty

The primary source of uncertainty of significant accounting judgment, estimate, and assumption adopted by this consolidated financial statements is identical with the source for the consolidated financial statement in FY2014.

VI. Cash and cash equivalent

Cash and cash equivalent
Cash on hand and revolving fund
Bank checks and demand deposits
Cash equivalent
Bank time deposits with the original maturity
date due in three months or less
Commercial paper		 September 30
2015
$ 335
842,090
103,520
–
$ 945,945		 December 31,
2014		 September 30
2014
$ 330

274,274


–
$ 274,604
$ 331

439,912

158,250

499,435
$ 1,097,928

VII. Financial instruments measured at fair value through profit and loss - Current

VIII. Financial assets measured at fair value through
profit and loss		 September 30
2015






December 31,
2014
$ 753,478

72,601

29,769

855,848

255,288

235,468

490,756
$ 1,346,604
December 31,
2014		 September 30
2014
$ 523,950
72,217
29,347
625,514
53,192
220,625
273,817
$ 899,331
September 30
2015
$ 147,509

$ 352,565

78,078
$ 430,643















$ 952,594

61,447

29,894

1,043,935

262,837

226,600

489,437
$ 1,533,372
September 30
2014
Non-derivative financial assets
Fund beneficiary certificate
Credit linked note
Domestic listed stock
Held-for-tradingfinancial assets

Non-derivative financial assets
Fund beneficiary certificate
Domestic listed stock
Available-for-sale financial assets
Current
Domestic investment
Listed stock
Noncurrent
Domestic investment
Emerging stock
Unlisted (Non-OTC) stock




$ 220,684

$ 440,981

84,260
$ 525,241



$ 220,673
$ 408,480
88,278
$ 496,758
  • 18 -

IX. Held-to-maturity financial assets

Held-to-maturity financial assets
Noncurrent
Foreign investment
Structured bonds		 September 30
2015		 December 31,
2014
$ 108,860
 September 30
2014
$ 113,056
 $ 104,630

The investment in foreign structured bond by the Company and its subsidiaries at the balance sheet date is as follows:

sheet date is as follows:
Investment face amount (US$ Thousands)
Coupon rate (%)
Average maturity date		 September 30
2015		 December 31,
2014
$ 3,440
7~9
11~14 years		 September 30
2014
$ 3,440 $ 3,440
7~9
10~13 years		 7~9
11~14 years

From 2012 onwards, the issuers have retired the investment of structured note before maturity. The amount of disposal is not significant but fell beyond the control of the Company and its subsidiaries. This change did not affect the continued classification of these assets as financial assets held to maturity. As of September 30 2015 and September 30 2014, the accumulated amount of disposition of the Company and its subsidiaries in the previous 3 fiscal years amounting to NT$85,482 thousand (USD2,770 thousand) and NT$84,263 thousand (USD2,770 thousand), respectively, which accounted for 28% of the investment held to maturity, respectively.

X. Bond investment without market price - noncurrent

Subordinated bonds - Taiwan Business Bank
Subordinated bonds - Sunny Bank
Subordinated bonds - AN Z Bank
Corporate Bond -Cayman Ton Yi Industrial
Holdings Limited
Corporate bond – Road King Infrastructure
Limited
Corporate bond – Vneshtorgbank
Corporate bond - Russian Agricultural Bank
Corporate bond - GAZPROM BANK
Corporate Bond – Shimao Property Holdings Ltd.		 September 30
2015
$ 100,000
20,000
4,434
45,441
10,344
10,251
9,764
6,705

–
$ 206,939		 December 31,
2014

$ 100,000

20,000

4,270

–

10,183

10,083

9,604

6,457

–

$ 160,597		 September 30
2014

$ 100,000

20,000

4,104

–

–

9,775

–

6,206

14,953

$ 155,038

The subsidiary purchased the bond issued by Cayman Ton Yi Industrial Holdings Limited amounted to CNY9,000 thousand in February 2015 with maturity in February 2018 at interest rate of 4.2% per annum.

  • 19 -

XI. Notes receivable and accounts receivables – net (including the related party)

September 30 September 30 September 30 September 30
2015 December 31, 2014 2014
Note receivable
arising from business operation $ 14,643
$		 7,054
 $ 7,502
Accounts receivable $ 452,960
$		 546,417
 $ 725,918

The Company and its subsidiaries have granted an average period of 30 days ~ 90 days for credit sales of goods. The Company and its subsidiaries have allowance for bad debt assessed by referring to the doubtful account aging analysis, historical experience, and the current financial situation of the client and any change in the client’s credit quality in order to estimate the non-performing loan amount.

The balance of delinquent account receivables without being recognized for provision for bad debts as of the balance sheet date is shown below. In consideration of no significant change in asset quality and no worry in recovery, the Company and subsidiaries did not hold any collaterals or other credit reinforcement for protection.

No impairment in the account receivables for the Company and its subsidiaries and the analysis of the aging account is shown below:

September 30 December 31, September 30
2015 2014 2014
Not overdue $ 445,567 $ 528,148
$ 714,896
Under 30 days 7,393 11,995
10,997
31 days ~ 60 days – 6,274
25
$ 452,960 $ 546,417
$ 725,918

XII. Inventories

Inventories
September 30 December 31, September 30
2015 2014 2014
Finished goods $ 213,528 $ 290,589 $ 322,215
Work-in-process goods 95,031 93,460 90,943
Raw material 33,406 15,781 3,547
Substances 37,731 41,075 43,291
Instruments 29,711 5,722 1,854
$ 409,407 $ 446,627 $ 461,850

As of September 30 2015, December 31 2014, and September 30 2014, the provision for devaluation of inventory and idle inventory amounted to NT$66,897 thousand, NT$70,579 thousand, and NT$75,579 thousand, respectively.

The cost of sales related to inventory in the periods of from July 1 to September 30, 2015 and January 1 to September 30, 2015, and July 1 to September 30, 2014 and January 1 to September 30, 2014, amounted to NT$1,003,856 thousand, NT$1,524,783 thousand, NT$3,244,670 thousand, NT$4,714,521 thousand, respectively, which included provisions for devaluation of inventory and idle inventory amounting to NT$2,991 thousand, NT$2,346 thousand, NT$12,383 thousand, and NT$16,455 thousand, respectively.

  • 20 -

XIII. Available-for-sale noncurrent assets – December 31, 2014

Available-for-sale noncurrent assets–December 31, 2014
Available-for-sale property, plant, and equipment
Accumulated depreciation
Available-for-sale land		 Amount
$ 13,719
( 13,719 )
–
32,058
$ 32,058

The Company sold investment property to affiliates in February 2015. The said property (land) was previously procured for commercial leasing purpose. On December 31 2014, this investment property was classified as non-current assets held for disposal without recognition for impairment loss. The proceeds for disposition and impairment were specified in Note XXIX.

XIV. Other financial assets - current

Other financial assets-current
Time deposits with the original maturity date
exceeding three months
Annual interest rate (%)		 September 30
2015
$ 174,600
1.345~1.36		 December 31,
2014
$ 233,300
1.13 ~1.36		 September 30
2014
$ 271,600
1.13 ~1.36

XV. Subsidiaries

The main business entities of the consolidated financial statements:

InvestingCompany Subsidiaries Nature of business

General investment
business
International trade
General investment
business
General investment
business

Processing and sale of
mesophase carbon
microspheres
Products		 Shareholdingratio Shareholdingratio Shareholdingratio
Septemb
er 30
2015		 December
31,2014		 Septembe
r 30 2014
The Company


Ever Wealthy
International Co., Ltd.


China Steel Chemical
Material Technology
Company (CSCMTC)
 Ever Wealthy
International Co.,
Ltd. (Ever Wealthy)
Ever Glory
International Co., Ltd.
(EGI)
Ever Glory Investment
Co. (Ever Glory)
China Steel Chemical
Material Technology
Company
(CSCMTC)
Changzhou China Steel
Chemical Material
Technology
Company
(Changzhou
CCSCMTC)		 100
100
–
100
100
100

100

51

100

100
100

100

51

100

100

Ever Glory was dissolved under a resolution of the General Meeting of shareholders held on September 30 2014 with completion of liquidation procedures on April 24 2015.

The aforementioned subsidiary is not an essential subsidiary and its financial statements were

  • 21 -

unaudited. The total assets amounted to NT$1,910,414 thousand and NT$1,915,221 thousand; also, the total liabilities amounted to NT$101,265 thousand and NT$18,269 thousand as of September 30, 2015 and 2014, respectively. The consolidated profit and loss amounted to NT$40,761 thousand in loss, NT$103,321 thousand in profit, NT$55,286 thousand in loss, and NT$188,951 thousand in profit on July 1 to September 30, 2015 and 2014; also, January 1 to September 30, 2015 and 2014, respectively.

XVI. Investment under the equity method

The Company and its subsidiaries have had investments in the associated companies under the equity method as follows:

equity method as follows:
Associates of significant influence
CHC Resources Corporation (CHC)
Yun Hung Investment Company
Separate associates of insignificant influence		 September 30
2015		 December 31,
2014

$ 275,203

532,774

807,977

572,361

$ 1,380,338		 September 30
2014
$ 250,632
382,427		 $ 257,017

526,172
633,059
514,311
783,189

560,925
$ 1,147,370 $ 1,344,114

(I) Associates of significant influence

Associates of significant influence
Company Proportion of
September 30
2015
 shareholding and voting rights (%)
December 31, 2014
September 30
2014

6
6

9
9
CHC Resources
Yun Hung		 6
9
6

9
6

9

The business nature, principal place of business and country of incorporation of the aforementioned associates are shown in Table 7 “Information on Investees”.

Information on Class 1 fair value of quote from open market of the associates is shown below:

below:
CHC Resources September 30
2015

$ 813,775		 December 31, 2014

$ 962,603
September 30
2014

$ 980,353

The Company and its associates adopted the equity method for the measurement of the aforementioned associates. The following financial information was compiled based on the consolidated financial information of all associates in accordance with IFRSs and has reflected the adjustment under the equity method.

CHC Resources

CHC Resources

Current assets
Noncurrent assets
Current liabilities		 September 30 2015
$ 1,853,654
4,678,077
(
1,817,830 )
December 31,
2014

$ 1,928,291
4,505,402

( 1,291,894 )		 September 30 2014
$ 1,801,248

4,183,165
(
1,471,962 )

(Continuing)

  • 22 -

(Continued)

d)
September 30 2015
December 31,2014
September 30 2014
Noncurrent liabilities
( $ 449,766 ) ( $ 458,109 ) ( $ 146,122 )
Equity
4,264,135
4,683,690
4,366,329
Non-controlling interests
(
114,602 ) (
127,356 ) (
111,089 )
$ 4,149,533 $ 4,556,334
$ 4,255,240
The proportion of shareholding by the Company
and its subsidiaries (%)
6
6
6
Equity entitled to the Company and its
subsidiaries
$ 250,632 $ 275,203
$ 257,017
Book amount
$ 250,632 $ 275,203
$ 257,017
July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Operating income
$ 1,784,097 $ 1,668,722 $ 5,675,154 $ 5,055,304
Net income
$ 215,695 $ 271,235 $ 677,652 $ 751,479
Other comprehensive income (loss)
(
78,737 )
15,104 (
120,373 )
4,147
Total comprehensive income
$ 136,958 $ 286,339 $ 557,279 $ 755,626
Yun Hung
September 30 2015
December 31,2014
September 30 2014
Current assets
$ 19,524 $ 575
$ 2,790
Noncurrent assets
4,961,071
6,832,189
6,754,092
Current liabilities
(
823,782 ) (
1,041,742 ) (
1,037,614 )
Equity
$ 4,156,813 $ 5,791,022
$ 5,719,268
The proportion of shareholding by the Company
and its subsidiaries (%)
9
9
9
Equity entitled to the Company and its
subsidiaries
$ 382,427 $ 532,774
$ 526,172
Book amount
$ 382,427 $ 532,774
$ 526,172
July 1 to September
30,2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Operating income
$ 260,663
$ 178,414 $ 260,670 $ 178,753
Net income
$ 254,583
$ 171,759 $ 242,022 $ 159,124
Other comprehensive income (loss)
(
1,440,205 )
366,162 (
1,876,231 ) (
122,098 )
Total comprehensive income
( $ 1,185,622 )
$ 537,921 ( $ 1,634,209 ) $ 37,026		 December 31,2014 September 30 2014
$ 260,670

)
)		 $ 178,753
$ 159,124
(
122,098 )
$ 37,026
  • 23 -

(II) Information on separate associates of insignificant influence

The proportion entitled to the
Company and subsidiaries
Net income
Other comprehensive income
(loss)
Total comprehensive income		 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 329,390
(
103,791 )
$ 225,599
($ 60,638 )
(
65,753 )
($ 126,391 )		 $ 87,011
(
217,995 )
( $ 130,984 )		 $ 27,992
(
480,507 )
( $ 452,515 )

The investment under the equity method as of September 30, 2015 and 2014, respectively and the profit and loss and other consolidated profit and loss of the Company and the subsidiaries, except for CHC, TTMC, CSSC, and USID were audited in accordance with the audited financial statements and found not in conformity with the audited financial statements. The investment under the equity method amounted to NT$667,434 thousand and NT$860,186 thousand as of September 30, 2015 and 2014, respectively. The profit and loss of the related enterprises and jointed ventures under the equity method amounted to NT$13,125 thousand in loss, NT$21,808 thousand in profit, NT$29,143 thousand in profit, and NT$40,439 thousand in profit as of July 1 to September 30, 2015 and 2014 and January 1 to September 30, 2015 and 2014, respectively. The other profit and loss under the equity method amounted to NT$ 151,035 thousand in loss, NT$28,401 thousand in profit, NT$211,451 thousand in loss, and NT$16,409 thousand in loss.

The Company and its subsidiaries hold more than 20% of the shares of the investees and the CSC and affiliates, and are accounted for under the equity method.

XVII. Property, plant, and equipment

January 1 to September 30, 2015

Cost Land House and
building		 Machinery
equipment		 Transportation
equipment		 Miscellaneous
equipment		 Construction
inprogress
$ 170,724

45,375

–

–
$ 216,099
$ –

–

–

–
$ –
$ 170,724
$ 216,099
Total








$ 60,698
–
–

–		 $ 399,522

60,710

–

–		 $ 3,338,563

40,267
(
14,664 )

637
$ 3,364,803
$ 2,408,172

169,104
(
13,861 )

54
$ 2,563,469
$ 930,391
$ 801,334		 $ 91,638

6,158
(
2,793 )

24
$ 95,027
$ 55,953

9,751
(
2,532 )

10
$ 63,182
$ 35,685
$ 31,845		 $ 80,614
14,192
(
716 )

49
$ 94,139
$ 55,681

6,253
(
716 )

12
$ 61,230
$ 24,933
$ 32,909










$ 4,141,759

166,702
(
18,173 )

710
$ 4,290,998
$ 2,710,360

201,697
(
17,109 )

76
$ 2,895,024
$ 1,431,399
$ 1,395,974
Balance- January 1 2015
Addition
Disposal
Exchange difference - net
Balance- September 30,
2015
Accumulated depreciation
$ 60,698 $ 460,232

$ –
–
–

–		 $ 190,554

16,589

–

–
Balance- January 1 2015
Depreciation
Disposal
Exchange difference - net
Balance- September 30,
2015
Net amount – December
31, 2014
Net amount – September
30, 2015
$ – $ 207,143
$ 60,698 $ 208,968
$ 60,698 $ 253,089
  • 24 -

January 1 to September 30, 2014

Cost Land House and
building		 Machinery
equipment		 Transportation
equipment		 Miscellaneous
equipment		 Construction
inprogress
Total
$ 428,720

–

–
(
29,198 )

–
$ 399,522
$ 198,756

15,798

–
(
29,198 )

–
$ 185,356
$ 214,166		 $ 3,155,639

144,185
(
8,175 )

–

–
$ 3,291,649
$ 2,181,573

180,244
(
5,379 )

–

–
$ 2,356,438
$ 935,211		 $ 82,364

6,612
(
1,575 )

–

13
$ 87,414
$ 45,471

8,738
(
1,380 )

–

1
$ 52,830
$ 34,584		 $ 73,861

1,699
(
619 )

–

3
$ 74,944
$ 50,068

4,843
(
573 )

–

1
$ 54,339
$ 20,605











$ 99,762

30,763

–

–

70		 $ 3,945,070

183,259
(
10,369 )
(
73,224 )

86
$ 4,044,822
$ 2,475,868

209,623
(
7,332 )
(
29,198 )

2
$ 2,648,963
$ 1,395,859
$ 130,595
$ –

–

–

–

–
$ –
$ 130,595

The Company and its subsidiaries have the depreciation of the property, plant, and equipment appropriated in accordance with the straight-line method and the respective years of useful life as follows:

ollows:
House and building
Main structure of the house 10~50 years
Ancillary equipment of the house 5~25 years
Machinery equipment
Power machinery equipment 3~15 years
Test and examination equipment 3~5 years
Computer equipment 3~10 years
Transportation equipment
Transportation equipment 3~5 years
Telecommunication equipment 3~10 years
Miscellaneous equipment
Firefighting equipment 5~8 years
Air-conditioning and water and electricity facilities 3~10 years
Monitoring, operating, and other equipment 3~10 years

XVIII Investment property

January 1 to September 30, 2015

IInvestment property
January 1 to September 30, 2015
Cost Land

$ 561,813
10,525
$ 572,338		 House and building Total
$ 47,665
–
$ 47,665		 $ 609,478
10,525
$ 620,003
Balance- January 1 2015
Addition
Balance- September 30, 2015

(Continuing)

  • 25 -

(Continued)

Accumulated depreciation and depletion
Balance- January 1 and September 30, 2015
Net amount – December 31, 2014
Net amount – September 30, 2015
January1 to September 30,2014		 Land House and
building		 Total


$ 8,825
$ 552,988
$ 563,513		 $ 47,665
$ –
$ –		 $ 56,490
$ 552,988
$ 563,513
Cost
Balance – January 1, 2014
Reclassification
Balance- September 30, 2014
Accumulated depreciation and depletion
Balance – January 1, 2014
Reclassification
Balance- September 30, 2014
Net amount – September 30, 2014		 Land House and
building		 Total




$ 549,845
44,026
$ 593,871
$ 8,825
–
$ 8,825
$ 585,046		 $ 32,186
29,198
$ 61,384
$ 32,186
29,198
$ 61,384
$ –



$ 582,031
73,224
$ 655,255
$ 41,011
29,198
$ 70,209
$ 585,046

The Company and its subsidiaries have the depreciation of the invested property of house and building appropriated in accordance with the straight line method and the useful life of 20~50 years.

The fair value as of September 30 2015, December 31 2014, and September 30 2014 was NT$808,704 thousand, NT$796,377 thousand, and NT$886,650 thousand, respectively. The fair value of investment in real property was assessed based on the appraisal value presented by real property appraiser under Class 3 input value and with reference to comparison of the transaction price in the real estate market, the income method, and the land development analysis method. The significant and unobservable input value includes the rate of capitalization of return and related fee rates in March 2015, December 2013, and March 2013.

The investment property is proprietary interest of the Company and its subsidiaries.

Please refer to Note XXIX for the lease transactions conducted with the related party.

XIX Loans

  • (I) Short-term loans
s
Short-term loans
Unsecured loans
Letter of credit loans		 September 30
2015
$ 124,470
 December 31,
2014
$ 100,441		 September 30
2014

$ 46,671

The interest rate for the financing of the aforementioned L/C was 1.3312%~1.695%, 1.33%~1.56%, and 1.2%~1.43% as of September 30 2015, December 31 2014, and September 30 2014, respectively.

  • 26 -

(II) Short-term bills payable

The payable commercial papers before maturity are:

September 30 2015

September 30 2015
Guarantor/underwriter Face amount Discount
amount		 Book amount
Interest rate
interval
(%)		 Name of
collaterals
China Bills
Mega Bills

$ 300,000
475,000
$ 775,000

$ –

–
$ –

$ 300,000
475,000
$ 775,000
1.098
1.098~1.108
 None

None

XX. Other payables

Other payables
Salaries and incentives payable
Employee bonus and directors and supervisors
remuneration payable
Repair materials fee payable
Equipment payable
Dividend payable
Others (mainly freight, commission, and insurance
expense)		 September 30
2015		 December 31,
2014
$ 113,232
125,509
44,700
7,900
4,336
60,359
$ 356,036		 September 30
2014

$ 92,755
67,812
50,323
5,593
4,245
52,362
$ 273,090





$ 86,970
103,895
33,060
1,894
4,404
51,386
$ 281,609

XXI Post-employment benefit plan

Determined benefit plan related pension expense recognized in the period of July 1 to September 30, 2015 and 2014, and January 1 to September 30, 2015 and 2014, was based on the pension cost rate under actuarial calculation as of December 31 2015 and December 31 2014, respectively, which amounted to NT$2,102 thousand, NT$2,103 thousand, NT$6,307 thousand, and NT$6,309 thousand, respectively.

XXII Equity

(I) Common stock capital

ity
Common stock capital
Rated number of shares (thousand shares)
Rated capital stock
Number of shares issued and proceeds
collected (Thousand shares)
Capital stock issued		 September 30
2015

300,000
$ 3,000,000

236,904
$ 2,369,044
 December 31,
2014
300,000
$ 3,000,000
236,904
$ 2,369,044		 September 30
2014

300,000
$ 3,000,000

236,904
$ 2,369,044

The face value of outstanding common stock is NT$10/share and the holder of each share is entitled to one voting rights and entitlement to dividend.

  • 27 -

(II) Additional paid-in capital

Additional paid-in capital
September 30 September 30
2015 December 31, 2014 2014
Applied to make up loss, distribute cash, or
replenish capital stock (Note)
Stock issued with premium
 $ 218 $ 218
 $ 218
Treasury stock trading 647,548 509,996 483,488
Inapplicable for any purpose
Changes in net equity of associated
company under the equity method 2,499 4,809 4,707
$ 650,265 $ 515,023
 $ 488,413
  • Note: This type of capital surplus could be appropriated for covering loss carried forward. If there is no loss, the Company may pay out as cash dividend or capitalize as equity capital. For capitalization of capital surplus, the upper limit is at certain percentage of the paid-in capital.

The issuance of stock at premium was the assignment of treasury shares by parent company in 2009, China Steel Corporation, to the employees of the subsidiaries whereby the Company recognized for service cost and capital surplus amounting to NT$161 thousand. In July 2011, parent company China Steel Corporation raised capital by issuing new shares and had reserved 10% for the subscription of employees (including the employees of subsidiaries) as required by the Company Act. The Company recognized service cost and capital surplus amounting to NT$ 57 thousand.

(III) Retained earnings and dividend policy

Annual earnings (if any loss, it refers to the balance after making up all losses) are distributed in accordance with the Articles of Association as follows:

  1. Appropriate 10% of the earnings as legal reserve.

  2. Special reserve is appropriated in accordance with the operating needs, laws, and regulations of the year.

  3. The balance will be distributed pending on the resolution of the General Meeting of shareholders with 1% for remuneration to directors and supervisors and 5% as employee bonus.

The Company is currently in a growing industry environment and the Company intends to take advantage of the economic environment to seek for a sustainable operation. The Company’s dividend policy is to focus on dividend stability and growth by referring to future operating conditions; also, the Company should have not less than 50% of the distributable earnings, if any, distributed, of which, cash dividend may not be less than 50% of the amount distributed.

The aforementioned distributions should be admitted in the shareholders’ meeting of the following year and presented in the current financial statements.

According to the amendment to the Company Act in May 2015, dividend and bonus are only for shareholders. Employees are not the beneficiaries of distribution of earnings. The Company plans to amend the articles of incorporation in the regular session of the General Meeting of shareholders for FY2016 in line with the aforementioned amendment of law. The estimates of employee bonus and remuneration to directors and shareholders in the periods of July 1 to September 30, 2015 and 2014, and January 1 to September 30, 2015 and 2014 and the actual distribution amount for FY2014 and FY2013 were specified in Note XXIV (IV)

  • 28 -

Employee Benefits.

The Company has special reserve appropriated and reversed in accordance with FSC Certificate Far.Tzi No. 1010012865 Letter, FSC Certificate Far.Tzi No. 1010047490 Letter, and the “Special Reserves Q&A after Adopting IFRSs.” The subsequently reversed amount of the debit balance of other shareholders’ equity can be distributed accordingly.

The Company may have legal reserve appropriated until it is equivalent to the amount of paid-in capital. Legal reserve can be used to make up losses. If the Company has no loss, the portion of the legal reserve exceeding 25% of the total paid-in capital can be applied to replenish capital stock and distribute cash.

For the distribution of unappropriated earnings, except for the shareholders who are not a resident of the ROC, all shareholders are entitled to the shareholder tax credit that is calculated in accordance with the tax credit rate on the dividend distribution date.

The Company has held regular sessions of General Meeting of shareholders in June 2015 and June 2014 with resolutions of the distribution of earnings for FY2014 and FY2013 as follows:

ows:
Legal reserve
Cash dividend		 Dividendper share of earnings distribution(NT$)
2014
2013
2014
2013
$ 218,719
$ 220,991
1,966,307
1,966,307
$ 8.3
$ 8.3
$ 2,185,026
$ 2,187,298
2014 2013 2014 2013

$ 218,719

1,966,307
$ 2,185,026
 $ 220,991
1,966,307
$ 2,187,298

$ 8.3 $ 8.3

(IV) Other equity items

  1. Exchange difference from financial statement conversion of foreign operation
Balance at beginning of period
Exchange difference arising from the
conversion of the net assets of
foreign operating
Exchange difference share of the
associated company under the
equity method
Balance at ending of period		 January 1 to September 30,
2015
$ 27,989
14,836
8,271
$ 51,096		 January 1 to September 30,
2014
( $ 2,154 )
7,906
1,176
$ 6,928
  1. Unrealized profit and loss of the available-for-sale financial assets
Balance at beginning of period
Unrealized gain (loss) of the
disposition of financial assets
The disposition of financial assets
available for sale was reclassified as
profit or loss
Unrealized profit and loss share of the
available-for-sale financial assets of
the associated company under the
equity method
Balance at ending of period		 January 1 to September
30,2015
$ 289,056
(
152,673 )
344
(
218,553 )
( $ 81,826 )		 January 1 to September 30,
2014
$ 160,969
110,574
–
(
17,846 )
$ 253,697
  • 29 -

(V) Non-controlling interests

Non-controlling interests
Balance at beginning of period
Attributable to non-controlling
interests share
Net income
Unrealized gain (loss) of the
disposition of financial assets
Subsidiary’s dividend distribution
Disposition of equities of subsidiaries
Balance at ending of period		 January 1 to September
30,2015
$ 150,840
53
331
–
(
151,224 )
$ –		 January 1 to September
30,2014
$ 161,259
2,388
(
120 )
(
11,760 )
–
$ 151,767

(VI) Treasury stock

Ever Wealthy International Co., Ltd., the subsidiary, held the Company’s stock shares for investing and financial purpose; therefore, it was process in accordance with the accounting for Treasury stock. The Company’s stock shares held by Ever Wealthy International Co., Ltd. is disclosed as follows (Unit: Thousand shares).

January 1 to September 30, 2015

January 1 to September 30, 2015
At beginningofperiod
Sold		 in currentperiod Endingofperiod
Selling Market
Shares
Book value
Shares
 Book value
price		 Shares Book value price
6,548 $ 162,034
720		 $ 17,818 $ 107,002 5,828 $ 144,216 $
591,495
January 1 to September 30, 2014
At beginningofperiod
Sold		 in currentperiod Endingofperiod
Selling Market
Shares
Book value
Shares
 Book value price Shares Book value price
6,752 $ 167,082
–		 $
–		 $ – 6,752 $ 167,082 $ 1,205,149

Subsidiary Ever Wealthy sold the shares of the Company under its holding in the period of January 1 to September 30, 2015 for the proceeds of NT$107,002 thousand.

The Company’s stock shares held by the subsidiary is deemed as treasury stock for process, which is entitled to the rights same as shareholders except for not eligible to participate in the cash capitalization of the Company and voting.

  • 30 -

XXIII. Income

XXIII.
Income
July 1 to
September 30,
2015
July 1 to
September 30,
2014
Sales income
$ 1,366,021 $ 2,259,761
Labor service income
16,776
20,078
Dividend income
17,348
20,768
Net income (loss) from
held-for-trading financial
assets
(
6,103 ) (
2,922 )
Net loss of financial assets
measured at fair value
through profit and loss
–
–
Associated companies and
joint ventures profit share
under the equity method
–
4,003
Profit from financial assets
sold
–
–
$ 1,394,042 $ 2,301,688
XXIV.Net income before tax
Net income before tax includes the following items:
(I)
Other income		 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 4,498,572

56,617

17,348

–

–

–

–
$ 4,572,537		 $ 6,969,737

55,229

21,468

5,348
(
69 )

8,383

33,754
$ 7,093,850
(I)
Other income
Rent income (Note XXIX)
Dividend income
Interest income
Others
(II) Other profit and loss
Foreign exchange profit - net
Profit (loss) from the disposal of
property, plant, and equipment
Capital gains from disposition of
non-current assets for disposal
Net profit (loss) of financial assets
measured at fair value through profit
and loss
Loss from the valuation of the
held-for-trading financial assets
Profit from the valuation of the
held-for-trading financial liabilities
Profit from the disposal of investment
Other losses
 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014

$ 3,613
3,897
1,834
8,948
$ 18,292
July 1 to
September 30,
2015



$ 3,985

2,539

3,249

2,792
$ 12,565
July 1 to
September 30,
2014		 $ 11,076


3,897

7,600
16,028
$ 38,601

January 1 to
September 30,
2015
$ 31,505
(
417 )

66,609

2,795

–

–

–
(
346 )
$ 100,146		 $ 11,076


3,897

7,600
16,028
$ 38,601

January 1 to
September 30,
2015
$ 11,529
2,539
13,043
8,379
$ 35,490
January 1 to
September 30,
2014
$ 42,736
(
573 )
–
(
4,704 )
–
–

–
(
10 )
$ 37,449		 $ 5,586

252

–
(
4,972 )
(
260 )

–

–

–
$ 606






$ 5,401
171
–
19,394
–
91
356
–
$ 25,413
  • 31 -

The net foreign exchange profit (loss) referred to above includes:

Total foreign exchange profit
Total foreign exchange loss
Net exchange profit (loss)
(III) Depreciation and amortization
Property, plant, and equipment
Long-term prepaid rent
Depreciation summarized by
function
Operating cost
Operating expense
Amortization summarized by
function
Operating cost
Operating expense
(IV) Employee benefit expense
Short-term employee benefits
Salary

Labor and health insurance
Others
Post-employment welfare (Note
XXI)
Defined contribution plan
Defined benefit plan

Summarized by function
Operating cost

Operating expense
 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015
$ 51,577

( 20,072 )
$ 31,505

January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 43,840

(
1,104 )
$ 42,736

July 1 to
September 30,
2015
$ 66,238
882
$ 67,120
$ 59,188
7,050
$ 66,238
$ 882
–
$ 882
July 1 to
September 30,
2015		 $ 5,586

–
$ 5,586
July 1 to
September 30,
2014		 $ 5,586

–		 $ 12,049
(
6,648 )
$ 5,401
January 1 to
September 30,
2014
$ 5,586

$ 71,490

1,048
$ 201,697

2,469		 $ 209,623

3,161

$ 72,538
$ 204,166		 $ 212,784

$ 67,409

4,081
$ 184,766

16,931		 $ 197,756

11,867

$ 71,490
$ 201,697		 $ 209,623

$ –

1,048
$ 2,469

–		 $ –

3,161

$ 1,048
$ 2,469		 $ 3,161
July 1 to
September 30,
2014
$ 112,173

3,298

3,714

119,185

796

2,103

2,899
$ 122,084
$ 63,302

58,782
$ 122,084		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 99,370
5,466
2,681
$ 302,724

12,510

7,924
$ 339,927

12,073

11,511
107,517
323,158
363,511
1,085
2,102
3,120

6,307
2,369

6,309
3,187
9,427
8,678
$ 110,704
$ 332,585
$ 372,189
$ 64,751
45,953
$ 206,298

126,287
$ 207,132

165,057
$ 110,704
$ 332,585
$ 372,189
  • 32 -

According to the amendment to the Company Act in May 2015, the fixed amount of profit for current period or the proportion for employee remuneration must be explicitly stated in the articles of incorporation. However, the Company has not yet revised the policy of employee remuneration in line with the aforementioned amendment of law. The Company estimates employee bonus and remuneration to directors and supervisors based on the amount of distribution in the past, which was 5% and 1%, respectively. The estimates are:

Employee bonus
Remuneration to directors and
supervisors		 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 13,789
3,324
$ 28,272

5,654
$ 54,153

10,831
$ 86,580

17,315

In case of significant change in the amount for distribution as resolved by the Board at the end of the fiscal year and before the day the financial statements were approved for announcement, such change will be adjusted as the expense for the year of recognition. If there is still a significant change in the amount after the financial statements of the year were approved and announced, proceeding to accounting estimate for change and booked for adjustment in the year of decision by the General Meeting of shareholders.

The Company has held regular sessions of General Meeting of shareholders in June 2015 and June 2014 with resolutions of the distribution of employee bonus and remuneration to directors and shareholders (in cash) for FY2014 and FY2013 as follows:

Employee bonus
Remuneration to directors and supervisors		 FY2014
$ 104,591

20,918		 FY2013
$ 104,591
20,918

The aforementioned amount of employee bonus and remuneration to directors and supervisors proposed by the Board and resolved by the regular session of the General Meeting of shareholders was identical with the amount of employee bonus and remuneration to directors and shareholders recognized in the consolidated financial statements of FY2014 and FY2013.

For information on the proposal of the Board and the resolution of the General Meeting of shareholders on employee bonus and remuneration to directors and shareholders, please visit the “MOPS” website of TWSE

XXV Income tax

  • (I) Income tax recognized in profit and loss

Income tax expenses include the following:

Current income tax
Generated in current period
Unappropriated earnings
additional tax levy
Tax adjustment of prior
periods		 July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
$ 314,225

2,645
( $ 193 )

$ 45,096
–
–
$ 99,194

–

–		 $ 168,012

–
( $ 7,572)

(Continuing)

  • 33 -

(Continued)

July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Deferred income tax
Generated in current period $ 3,161 $ 958 $ 3,845 ( $ 143 )
$ 48,257 $ 100,152 $ 164,285 $ 316,534
(II) Income Tax Integration
September 30
2015
December 31,
2014
September 30
2014
Unappropriated earnings
Unappropriated earnings after 1998 $ 1,076,718 $ 2,215,199 $ 1,866,133
Shareholder tax credit account balance
$ 137,534 $ 204,245 $ 16,851
FY2014(actual)
FY2013(actual)
Tax credit ratio of earnings distribution
(%)
18.29
18.63		 July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Deferred income tax
Generated in current period $ 3,161 $ 958 $ 3,845 ( $ 143 )
$ 48,257 $ 100,152 $ 164,285 $ 316,534
(II) Income Tax Integration
September 30
2015
December 31,
2014
September 30
2014
Unappropriated earnings
Unappropriated earnings after 1998 $ 1,076,718 $ 2,215,199 $ 1,866,133
Shareholder tax credit account balance
$ 137,534 $ 204,245 $ 16,851
FY2014(actual)
FY2013(actual)
Tax credit ratio of earnings distribution
(%)
18.29
18.63		 July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Deferred income tax
Generated in current period $ 3,161 $ 958 $ 3,845 ( $ 143 )
$ 48,257 $ 100,152 $ 164,285 $ 316,534
(II) Income Tax Integration
September 30
2015
December 31,
2014
September 30
2014
Unappropriated earnings
Unappropriated earnings after 1998 $ 1,076,718 $ 2,215,199 $ 1,866,133
Shareholder tax credit account balance
$ 137,534 $ 204,245 $ 16,851
FY2014(actual)
FY2013(actual)
Tax credit ratio of earnings distribution
(%)
18.29
18.63		 July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Deferred income tax
Generated in current period $ 3,161 $ 958 $ 3,845 ( $ 143 )
$ 48,257 $ 100,152 $ 164,285 $ 316,534
(II) Income Tax Integration
September 30
2015
December 31,
2014
September 30
2014
Unappropriated earnings
Unappropriated earnings after 1998 $ 1,076,718 $ 2,215,199 $ 1,866,133
Shareholder tax credit account balance
$ 137,534 $ 204,245 $ 16,851
FY2014(actual)
FY2013(actual)
Tax credit ratio of earnings distribution
(%)
18.29
18.63		 July 1 to
September 30,
2015
July 1 to
September 30,
2014
January 1 to
September 30,
2015
January 1 to
September 30,
2014
Deferred income tax
Generated in current period $ 3,161 $ 958 $ 3,845 ( $ 143 )
$ 48,257 $ 100,152 $ 164,285 $ 316,534
(II) Income Tax Integration
September 30
2015
December 31,
2014
September 30
2014
Unappropriated earnings
Unappropriated earnings after 1998 $ 1,076,718 $ 2,215,199 $ 1,866,133
Shareholder tax credit account balance
$ 137,534 $ 204,245 $ 16,851
FY2014(actual)
FY2013(actual)
Tax credit ratio of earnings distribution
(%)
18.29
18.63		 January 1 to
September 30,
2014
( $ 143 )
$ 316,534
September 30
2014
18.29 18.63

According to the Income Tax Act, shareholders who are nationals of the ROC are entitled to deductible amount of taxation for shareholders based on the tax deduction rate as of the dividend day at the time the Company distributes earnings for FY1998 and beyond.

(III) Tax audit

Until FY2010, the declaration of income tax by subsidiaries Ever Wealthy and Ever Glory to FY2013 have been approved by the taxation authorities.

XXVI. Earnings per share

The earnings and weighted average common stock shares for the calculation of earnings per share are as follows:

Net income

ncome
Net income attributable to the Company’s
shareholders		 July 1 to
September 30,
2015		 July 1 to
September
30, 2014		 January 1 to
September
30, 2015		 January 1 to
September
30, 2014
$ 301,418 $ 607,660 $ 1,046,545 $ 1,829,543
  • 34 -

Shares

es
The weighted average common stock
shares issued
Less: the holding of treasury stocks of the
Company by subsidiaries
Calculation of the basic earnings per share
of the weighted average quantity of
shares
Add: Potential common stock shares with
dilution effect – employee bonus
Calculation of the diluted earnings per
share of the weighted average quantity
of shares		 July 1 to
September
30, 2015		 July 1 to
September
30, 2014		 Unit: In Thousands shares
January 1 to
September
30, 2015
January 1 to
September
30, 2014

236,904
236,904

6,119
6,752

230,785
230,152

1,025
856

231,810
231,008
236,904
5,828
236,904

6,752
236,904

6,119
231,076
556
230,152

505
230,785

1,025
231,632
230,657
231,810

The Company may have employee bonus distributed in the form of stock dividend or cash dividend. While calculating diluted earnings per share, assume that stock dividend is distributed as employee bonus and such potential common shares with dilution effect should be included in the weighted average shares in circulation in order to calculate the diluted earnings per share. The dilution effect of such potential common stock shares should be considered continuously when calculating diluted earnings per share before the stock dividend to employees resolved in the shareholders’ meeting in the following year.

XXVII Capital risk management

The capital management of the Company and its subsidiaries is for effective use of capital and ensuring a smooth operation by having the debt and equity balance optimized. The overall strategy of the Company and its subsidiaries was without any change made in January 1 to September 30, 2015. The capital structure of the Company and its subsidiaries is composed of net liabilities and equity without the need of complying with other external capital requirements. The Company and its subsidiaries have capital structure reviewed on a quarterly basis, including the consideration of capital costs and related risks. Currently, the equity in the capital structure is far greater than liabilities and it will be used to pay for dividend or debt; also, added with the investment in financial instruments to improve the Company’s profits and to manage the capital structure.

XXVIII Financial instruments

  • (I) Information on fair value – financial instruments not at fair value

Financial assets that are with material difference between book value and fair value:

Financial assets
Held-to-maturity
financial assets		 September 30 2015 September 30 2015 December 31, 2014 December 31, 2014 September 30 2014
Book value Fair value
$ 104,630 $ 87,550
Book value Fair value Book value Fair value Book value
$ 113,056 $ 88,022 $ 108,860 $ 90,968 $ 104,630

  • 35 -

  • (II) Information on fair value – financial instrument at fair value

  • Fair value Level

Fair value Level
September 30 2015 Level 1
$ 577,142
249,972
–
$ 827,114
$ 147,509
–
$ 147,509
$ 1,008,766
265,237
–
$ 1,274,003
$ 220,684
–
–
$ 220,684
$ 1,215,431
256,494
–
$ 1,471,925
$ 220,673
–
$ 220,673		 Level 2 Level 3 Total

$ –

–

72,217
$ –

–

–
$ 577,142

249,972

72,217
Financial assets measured at fair
value through profit and loss
Fund beneficiary
certificate
Domestic listed stock
Credit linked note
Available-for-sale financial
assets
Domestic listed stock
Emerging stock
Domestic unlisted
(Non-OTC) stock
December 31,2014

$ 72,217
$ –
$ 899,331

$ –

–
$ –

352,565
78,078
$ 147,509

352,565

78,078

$ –
$ 430,643
$ 578,152

$ –

–

72,601
$ –

–

–
$ 1,008,766

265,237

72,601
Financial assets measured at fair
value through profit and loss
Fund beneficiary
certificate
Domestic listed stock
Credit linked note
Available-for-sale financial
assets
Domestic listed stock
Emerging stock
Domestic unlisted
(Non-OTC) stock
September 30 2014

$ 72,601
$ –
$ 1,346,604

$ –

–

–
$ –

440,981

84,260
$ 220,684

440,981

84,260

$ –
$ 525,241
$ 745,925

$ –

–

61,447
$ –

–

–
$ 1,215,431

256,494

61,447
Financial assets measured at fair
value through profit and loss
Fund beneficiary
certificate
Domestic listed stock
Credit linked note
Available-for-sale financial
assets
Domestic listed stock
Emerging stock
Domestic unlisted
(Non-OTC) stock

$ 61,447
$ –
$ 1,533,372

$ –

–
$ –

408,480
88,278
$ 220,673

408,480

88,278

$ –
$ 496,758
$ 717,431

Level 1 and Level 2 fair value measurement inter-transfer had not occurred in January 1 to September 30, 2015 and 2014.

  • 36 -

  • Adjustment of the financial assets with Level 3 fair value measurement

Adjustment of the financial assets with Level 3 fair value measurement with Level 3 fair value measurement
Balance at beginning of period
Recognized in other comprehensive
income (loss)
Addition
Disposal
Balance at ending of period		 Available-for-sale assets without marketprice
Financial investments equityinstruments investment
January 1 to September 30,
2015
$525,241
(
93,248 )
–
(
1,350 )
$430,643		 January 1 to September 30,
2014
$317,062
157,349
57,600
(
35,253 )
$496,758

All profits or losses recognized in other comprehensive income are related to the unquoted equity instruments at the balance sheet date and are recognized in the available-for-sale financial assets unrealized profit and loss under other equity account.

  1. The valuation techniques and input value of measurement of Class 3 fair value

    • (1) If the stocks traded in the emerging stock market have an active market for transaction, the fair value of which shall be the closing price as of the balance sheet date adjusted for liquidity risk premium or based on the appraisal report of external experts in the field.

    • (2) The fair value of stocks not listed in TWSE (GTSM) shall be assessed with reference to the nearest net value or transaction price.

  2. (II) Types of financial instruments

Types of financial instruments
Financial assets September 30
2015		 December 31,
2014
$ 490,756

855,848

745,925

108,860

2,433,959

737,099		 September 30
2014
$ 273,817
625,514
578,152
113,056
1,941,658
1,410,267		 $ 489,437

1,043,935

717,431

104,630

1,783,127

684,260
Measured at fair value through profit and
loss
Held-for-trading financial assets
Designated to be measured at fair
value through profit and loss
Available-for-sale financial assets
(including noncurrent)
Held-to-maturity investments
Loans and receivables (Note 1)
Financial liabilities
Measured at amortized cost (Note 2)

  • Note 1: Balance shall cover the loan assets and receivables on the amortized cost of cash and cash equivalents, other financial assets, investment in debt instruments with no active market, note receivables, account receivables (related parties), other receivables, and refundable security deposits.

  • Note 2: The balance amount of financial liabilities, including short-term loans, short-term bills payable, accounts payable (including related party), and other payables, is measured at amortized cost.

  • (III) Financial risk management purpose and policy

The primary financial instruments of the Company and its subsidiaries include the investment in equity and bonds, account receivables, account payables, short-term loans, and payable short-term notes. The financial management function provides services for all related

  • 37 -

functional departments and coordinates the operation in the domestic and international financial markets. Through the analysis of risk intensity and scope and the execution of internal risk reporting and supervision of the management of the financial risk the Company and its subsidiaries exposed, the risk entails market risk (exchange risk, interest risk, and other risk from pricing), credit risk, and liquidity risk.

The Company and its subsidiaries avoid risk exposure through derivative financial instruments to mitigate the impact of those risks. The use of derivative financial instruments is regulates by the policies approved by the Board of Directors of the Company and its subsidiaries, which includes exchange rate risk, interest rate risk, credit risk, and the use of derivative financial instruments and non-derivative financial instruments; also, the written investment principles of residual liquidity. Internal auditors continue to review the compliance of policies and limit of risk exposure. The Company and its subsidiaries did not conduct any financial instruments (including derivative financial instruments) transaction for investment purpose.

1. Market risk

The main financial risks of the Company and its subsidiaries arising from operating activities include foreign exchange rate risk and interest rate risk. The Company and its subsidiaries have not had the market risk exposure of financial instruments and the management and measurement methods for such risk exposure changed.

  • (1) Exchange rate risk

The non-functional currency denominated transactions conducted by the Company and its subsidiaries are with exchange rate risk exposure resulted. The Company and its subsidiaries have nearly 35% of the operating income denominated in non-functional currencies that is within the scope of the Company’s policy for the management of exchange rate risk exposure; also, utilize forward foreign exchange contracts to manage risk or mitigate exchange rate risk exposure with the future receivables and payables denominated in the same currency.

For information on the monetary assets and liabilities denominated in non-functional currencies as of the balance sheet date of the Company and its subsidiaries, refer to Note 31.

Sensitivity analysis

The Company and its subsidiaries are mainly affected by the fluctuations of USD and RMB exchange rate. The table below shows the sensitivity analysis of any change in the exchange rate between the functional currency and other relevant currencies by±3%, which is the tolerable range of reasonable exchange fluctuation of the Company and its subsidiary in the assessment.

The sensitivity analysis includes only the outstanding foreign monetary items at each balance sheet date. Scenario 1 in the following table indicates the profit and loss of the Company and its subsidiaries when the functional currency against the USD and RMB appreciated by 3%. Scenario 2 in the following table indicates the profit and loss of the Company and its subsidiaries when the functional currency against the USD and RMB depreciated by 3%.

Profit and loss in
Scenario 1
Profit and loss in
Scenario 2		 USD effect (Note)
January 1 to
September 30,
2015
January 1 to
September 30,
2014
($ 19,746 ) ($ 3,656 )
19,746
3,656		 USD effect (Note)
January 1 to
September 30,
2015
January 1 to
September 30,
2014
($ 19,746 ) ($ 3,656 )
19,746
3,656		 RMB effect (Note)
January 1 to
September 30,
2015
January 1 to
September 30,
2014
($ 3,803 ) ($ 3,163 )
3,803
3,163		 RMB effect (Note)
January 1 to
September 30,
2015
January 1 to
September 30,
2014
($ 3,803 ) ($ 3,163 )
3,803
3,163
($ 19,746 )
19,746		 ($ 3,656 )

3,656		 ($ 3,803 )
3,803		 ($ 3,163 )

3,163

  • 38 -

  • Note: It is mainly derived from the cash and cash equivalents, receivables, bond investment without market price, other receivables, and other payables denominated in foreign currency without cash flow hedging arranged at each balance sheet date by the Company and its subsidiaries.

The exchange rate sensitivity of the Company and its subsidiaries in January 1 to September 30, 2015 was increased mainly due to the increase of USD and RMB assets. The management believes that the sensitivity analysis is not representative of the inherent risk of exchange rate since the foreign currency risk exposure at balance sheet date does not reflect the interim risk exposure; also, the sales denominated in USD will be affected by customer orders and shipping schedules; furthermore, the RMB exchange rate will vary depending on the assets investment position.

(2) Interest rate risk

The loans of the Company and its subsidiaries are mainly short-term loans with an interest rate based on the NTD market interest rates, since the loan term is limited to six months; therefore, the interest rate sensitivity is low. In addition, the cash and cash equivalent of the Company and its subsidiaries is much greater than liabilities and bank loan can be settled at any time; therefore, interest rate risk has little impact on the Company and its subsidiaries.

The book amount of the financial assets and financial liabilities with interest rate risk exposure at the balance sheet date of the Company and its subsidiaries is as follows:

With fair value interest rate risk
Financial assets
Financial liabilities
With cash flow interest rate risk
Financial assets
Financial liabilities		 September 30
2015		 December 31,
2014		 September 30
2014
$228,120
775,000
843,695
124,470
$ 790,985

–

787,101

100,441
$ 171,650

–

638,826

46,671
  • (3) Other price risk

The risk exposure of position from the investment of stocks, fund certificates issued by listed companies and securities circulated in the emerging stock market by the Company and its subsidiaries has been managed by different risk investment portfolios and assets allocations. The equity price of the Company and its subsidiaries is concentrated at the stocks and funds market of Taiwan and valuation has been made monthly on the basis of the closing price of the equity securities and the net asset value of the funds.

Sensitivity analysis

The following sensitivity analysis is performed in accordance with the equity price risk exposure at the balance sheet date. Considering the market price fluctuation of the Company’s main investment targets, the fluctuation range of 6% is the base for the sensitivity analysis of equity securities.

If there is a change in the equity price by ±6%, and on the basis of the position of equity securities investment of NT$1,327,188 thousand on September 30 2015, earnings before taxation will increase or decrease by NT$49,627 thousand due to the fair value of financial assets at fair value through profit and loss;

Other equity will increase/decrease by NT$30,004 thousand due to the fair value of

  • 39 -

the financial assets available for sale. Earnings before taxation will increase/decrease by NT$88,316 thousand due to the fair value of the financial assets at fair value through profits and loss based on the position of equity securities investment amounting to NT$2,101,078 thousand as of September 30 2014. Other equity will increase/decrease by NT$37,749 thousand due to the fair value of financial assets available for sale.

2. Credit risk

Credit risk refers to the financial losses of the Company and its subsidiaries arising from the default or bankruptcy of the counterparty. The maximum risk comes from the delinquent accounts receivables of the customers. The main customers of the Company and its subsidiaries are with good credit; also, a credit rating company is commissioned annually to investigate the credit status of the customers with a credit report issued. The business unit bases on the credit report to have customers classified with credit line granted. In addition, the credit rating company will have the customer credit status composed into a weekly report for the reference of the business units, if necessary; the customers will be requested to provide collaterals or to pay cash for each transaction. The business units through external credit investigation and industry visitation control and understand the credit status of customers. The Company and its subsidiaries have not experienced any bad debt in the past five years; therefore, the credit risk is insignificant.

The notes receivables and accounts receivables of the customers with high credit risk of the Customer and its subsidiaries are as follows:

Customer A
Customer B
Customer C
Customer D		 September 30
2015		 December 31, 2014

$ 127,634

66,816

72,071

39,156

$ 305,677
 September 30 2014 September 30 2014
$ 65,612
52,591
35,589
45,324
$ 199,116



$ 149,780
166,984
117,821
79,951
$ 514,536

3. Liquidity risk

The Company and its subsidiaries have supported business operation through management and maintaining sufficient position of cash equivalent or easily realizable financial instruments. In addition, sign a credit contract with financial institutions to maintain appropriate amount in order to support the business operation of the Company.

The equity in the capital structure of the Company and its subsidiaries is far greater than the liabilities; also, cash and cash equivalent is sufficient to repay bank loans and the banking facilities of the Company and its subsidiaries; also, the bank credit line and remaining credit amount is sufficient; therefore, there is not any liquidity risk.

Loan from banks is a vital source of liquidity to the Company and its subsidiaries. Until September 30 2015, December 31 2014, and September 30 2014, the available short-term credit limit from banks to the Company and its subsidiaries was NT$4,306,780 thousand, NT$ 3,993,754 thousand and NT$ 4,061,939 thousand, respectively.

  • 40 -

XXIX. Related party transactions

The transactions conducted between the Company and its subsidiaries with related party are as follows:

(I) Operating income

ws:
Operating income
Account Relatedparty Type July 1 to
September
30, 2015
July 1 to
September
30, 2014
January 1 to
September
30, 2015
January 1 to
September
30, 2014
Sales income



Labor service income		 Other related
party
Parent
company
Sister
company
Parent
company

$ 242,761
2,647
3,887		 $ 473,683

3,831

3,830		 $ 832,046

11,315

10,452		 $ 1,521,242

13,099

15,621
$ 249,295 $ 481,344 $ 853,813 $ 1,549,962
$ 16,775 $ 20,078 $ 56,617 $ 55,229

(II) Purchase

Purchase
Type of relatedparty July 1 to
September 30,
2015		 July 1 to
September 30,
2014		 January 1 to
September 30,
2015		 January 1 to
September 30,
2014
Parent company
Sister company		 $ 426,082
174,101		 $ 776,928

302,603		 $ 1,401,203

556,041
$ 2,397,971

929,054
$ 600,183 $ 1,079,531 $ 1,957,244
$ 3,327,025

The Company and the parent company had a purchase contract for Naphtha products and coal tar signed in March 2013 and July 2010, respectively. In addition, the Company and the sister company had a purchased contract for Naphtha products and coal tar signed in May 2008 for a period of 5 years; also, the contract will be extended automatically for five years each time upon maturity if there is not any objection raised by either party. The price of coal tar purchase is based on the parent company’s purchase cost of coal, oil price, and monthly exchange rate. The purchase price of Naphtha products is mainly based on the benzene price of CPC Corporation, Taiwan. The purchases referred to above are paid with a letter of credit at sight issued; also, for any price adjustment according to market price, it will be settled separately. Some sales to the parent company and sister company will be charged at the cost plus additional percentage; also, the sales to other related party is charged in accordance with the agreed pricing formula. The sales and purchases referred to above of the Company, except for the labor service income from the parent company, are without similar transactions for comparison; also, are not significantly different from regular trading.

In addition, the Company had signed a contract with the parent company in January 2008 for fine coke processing for a period of five-year; also, the contract will be extended automatically for 5-year each time upon maturity if there is not any objection raised by either party.

  • 41 -

(III) Accounts receivable from related party (excluding lending of fund to the related party)

Account Type of relatedparty
Parent company
Sister company
Other related party
Parent company
Sister company		 September 30
2015
$ 6,618
1,506
65,612
$ 73,736
$ 57,849
3,768
$ 61,617		 December 31,
2014		 September 30
2014
Accounts receivable
Other receivables
$ 8,249

1,123

127,634

$ 137,006

$ 69,601

995

$ 70,596		 $ 8,174

2,510

149,780
$ 160,464
$ 42,576

718
$ 43,294

The outstanding receivable from related party is without collateral collected. No provision for bad debts for the receivables from related parties in the periods of January 1 to September 30, 2015 and 2014.

  • (IV) Payables to related party
2015 and 2014.
Payables to related party
Account

Accounts payable


Other payables

 Type of relatedparty September 30
2015		 December 31,
2014
$ 255,415

683
$ 256,098
$ 14,558

5,224
$ 19,782		 September 30
2014
Parent company
Sister company
Parent company
Sister company		 $ 214,192
4		 $ 322,894

1,455
$ 214,196 $ 324,349
$ 4,893
2,273		 $ 7,214

2,990
$ 7,166 $ 10,204

The outstanding payables to related party are without any collateral collected.

  • (V) Long-term prepaid rent
Long-term prepaid rent
Relatedparty
Sister company		 Type September 30
2015
$ 32,589		 December 31,
2014

$ 33,454		 September 30
2014

$ 35,280

The Company prepaid rent for the plant to its affiliates and the lease term is 45 years (Until January 2059) for using the plant site. The rent for the periods of July 1 to September 30, 2015 and January 1 to September 30, 2015, and July 1 to September 30, 2014 and January 1 to September 30, 2014, amounted to NT$1,087 thousand, NT$1,048 thousand, NT$3,245 thousand and NT$3,161 thousand, respectively, until January 2034.

  • (VI) Acquisition of investment property
Acquisition of investment property
Type of relatedparty Proceeds for acquisition
January 1 to September 30,
2015
$ 10,525
Disposalprofit
$ 66,609

(VII) Capital gain from the disposition of real property

  • 42 -

(VIII)Lending of fund to related party (book in “Other receivables”)

Type of relatedparty September 30
2015		 December 31,
2014		 September 30 2014
Parent company $ – $ 300,000 $ 300,000

The Company provides short-term loans to the parent company; also, the loan interest rate is calculated in accordance with the purchase of short-term time deposit denominated in the same currency from general financial institutions within 30-day from the interest accrual date or the repurchase interest rate in a secondary money market. Interest rate was 0.57%~0.69% on December 31 and September 30, 2014, respectively.

The loan to parent company in the period of July 1 to September 30, 2014, and from January 1 to September 30, 2015 and 2014, were unsecured loans. Related interest incomes amounted to NT$227 thousand, NT$112 thousand, and NT$1,161 thousand, respectively.

  • (IX) Other related party transactions

1. Leased land and factories

The Company lease the plant site from the parent company under three lease agreements and the annual rent was based on 3% of the announced present value or 6% of the total announced land price. The agreements have terms of 5 years (until December 2015), 5 years (until December 2017), and 10 years (until June 2019), respectively. Rent will be paid once semi-annually. The rent for the periods of July 1 to September 30, 2015 and 2014, and from January 1 to September 30, 2015 and 2014, amounted to NT$3,918 thousand, NT$3,161 thousand, NT$11,755 thousand, and NT$9,485 thousand, respectively.

The Company also leased the coke plant from the parent company with lease term ends in December 2017. Rent is payable once semi-annually. The rent for the periods of July 1 to September 30, 2015 and 2014, and from January 1 to September 30, 2015 and 2014, amounted to NT$606 thousand, NT$597 thousand, NT$1,832 thousand, and NT$1,854 thousand, respectively.

The Company has entered into a lease agreement on land and warehouse space with its affiliates and the lease term ends in August 2017. The rent for the periods of July 1 to September 30, 2015 and 2014, and from January 1 to September30, 2015 and 2014, amounted to NT$300 thousand, NT$360 thousand, NT$981 thousand, and NT$1081 thousand, respectively.

The Company and other non-related party have no similar transactions available for comparison.

2. Leased office building

The Company has leased office buildings and office from the parent company for a period up to October and December 2016, respectively; also, the annual rent expense was NT$1,568 thousand, NT$1,558 thousand, NT$4,686 thousand and NT$4,673 thousand, in July 1 to September 30, 2015 and January 1 to September 30, 2015, and July 1 to September 30, 2014, respectively. The Company and other non-related party have no similar transactions available for comparison.

3. Rent income

The Company and the parent company have signed a land lease contract (located in Shout-Kong District, Kaohsiung City) with the rent advanced once every six-month and for a period up to December 2015. The annual rental income (included in non-operating income - other income) was NT$2,980 thousand, NT$2,607 thousand, NT$8,940 thousand and NT$7,822 thousand in July 1 to September 30, 2015 and January 1 to September 30, 2015,

  • 43 -

and July 1 to September 30 30, 2014 and January 1 to September 30, 2014, respectively. The Company has entered into lease agreement on land, housing, and equipment with affiliates. Rent is payable once semi-annually. The rent (recognized as non-operating income – other incomes) for the periods of July 1 to September 30, 2014, and from January 1 to June 30, 2015 and 2014, amounted to NT$675 thousand, NT$240 thousand, and NT$2,025 thousand, respectively.

4. Public fluid and reservoir

The Company’s factory located inside the parent company’s plant; also, the primary energy needed for production is supplied by the parent company. The Company is to pay the parent company on a monthly basis for public fluid and reservoir rent, including electricity, wastewater treatment, waste gas treatment, consumption of steam, and coke ovens, in accordance with the market price or with the cost plus percentage. The aforementioned expenses for the periods of July 1 to September 30, 2015 and 2014, and from January 1 to September 30, 2015 and 2014, amounted to NT$102,275 thousand, NT$131,578 thousand, NT$309,464 thousand, and NT$372,656 thousand, respectively. The Company does not have any transactions with non-related parties that could be used for comparison.

5. Technical service fees

The Company has appointed the parent company to provide technical services in the development and application of graphite blocks and high softening point asphalt. The fee for the service in the periods of January 1 to September 30, 2015 and 2014 amounted to NT$5,000 thousand and NT$5,000 thousand, respectively.

(VIII) Reward to the management

July 1 to July 1 to July 1 to July 1 to January 1 to January 1 to January 1 to January 1 to
September 30, September 30, September 30, September 30,
2015 2014 2015 2014
Short-term employee benefits $
9,593		 $ 17,572 $ 32,359 $ 45,595
Post-employment benefits 112 106 335 320
$
9,705		 $ 17,678 $ 32,694 $ 45,915

The remuneration to the directors and the management is determined by the Remuneration Committee in accordance with the personal performance evaluation and market trends.

XXX. Significant contingent liabilities and unrecognized contractual commitments

The Company had had the following significant commitments as of September 30, 2015:

  • (I) The balance of unused L/C of the Company for buying materials and merchandises amounted to NT$347,120 thousand.

  • (II) The contract sum for the construction work of fixed assets bound by agreement amounted to NT$245,978 thousand and the portion of contract sum not being performed amounted to NT$162,691 thousand.

  • (III) The Company for setting up a new plant had acquired the Land Lot 1-69, Pingnan section, Fangliao Village, Pingtung County from an unrelated party at the end of July 2015 for an amount of NT$1,083,260 thousand. Four payments are to be made according to the sale contract. An amount of NT$700,000 thousand has been paid so far with an unpaid balance of NT$383,260 thousand.

  • 44 -

XXXI. Exchange rate of financial assets and financial liabilities in foreign currency

The following information is presented based on the currencies beyond the functional currency of respective entities and the disclosed exchange rates referred to the conversion rate between respective foreign currencies to the functional currency. Information on assets and liabilities denominated in foreign currencies with significant influence:

Unit: Foreign currency in Thousands / NT$ Thousands


September 30 2015		 Foreign currency
Exchange rate		 Book amount
(NTD)
$ 22,598
15,978
8,512
28,178
6,117
481
2,091
14,403
419
8,335
7,178
53,841
34,492
293
949
32.87
(USD：NTD)

5.176
(RMB：NTD)

0.1575
(RMB：USD)

0.0304
(NTD：USD)

5.176
(RMB：NTD)

32.87
(USD：NTD)

6.350
(USD：RMB)

31.65
(USD：NTD)

6.215
(USD：RMB)

0.1609
(RMB：USD)

5.092
(RMB：NTD)

0.2646
(Japanese yen：NTD)

0.0316
(NTD：USD)

31.65
(USD：NTD)

6.215
(USD：RMB)		 $ 742,781
82,700
44,060
28,178
31,659
15,826
68,729
455,858
13,248
42,441
36,549
14,246
34,492
9,288
30,043
Financial assets
Monetary items
USD
RMB
RMB
Non-monetary items
Designated through
profit or loss
Financial assets not
measured at fair
value
NTD
RMB
Financial liabilities
Monetary items
USD
USD
December 31,2014
Financial assets
Monetary items
USD
USD
RMB
RMB
Japanese yen
Non-monetary items
Designated through
profit or loss
Financial assets not
measured at fair
value
NTD
Financial liabilities
Monetary items
USD
USD

(Continuing)

  • 45 -

(Continued)


September 30 2014
Financial assets
Monetary items
USD
USD
RMB
RMB
NTD
Non-monetary items
Designated through
profit or loss
Financial assets not
measured at fair
value
NTD
Financial liabilities
Monetary items
USD		 Foreign currency Exchange rate Book amount
(NTD)
$ 3,432
1,090
13,070
8,302
1,756
28,661
515
30.42
(USD：NTD)

6.165
(USD：RMB)

4.934
(RMB：NTD)

0.162
(RMB：USD)

0.0329
(NTD：USD)

0.0329
(NTD：USD)

30.42
(USD：NTD)		 $ 104,400
33,151
64,490
40,963
1,756
28,661
15,679

The exchange profit from the exchange of foreign currencies (realized and unrealized) by the Company and its subsidiaries in the periods of January1 to September 30, 2015 and 2014, was NT$31,505 thousand and NT$5,401 thousand, respectively. There is a great variety of the functional currencies for the Company and its subsidiaries in foreign exchange transactions and it is not possible to disclose the gain or loss from the exchange of all foreign currencies without significant influence.

XXXII. Supplementary disclosures

  • (I) Significant transactions and (II) Transfer investment business information

  • Lending of fund: Attachment I.

  • Making of endorsement: None

  • The holding of securities at the end of the period (excluding the holding of the investees and associates): Attachment II.

  • The cumulative buying and selling of particular security amounting to NT$300 million or more than 20% of the paid-in capital: Attachment III.

  • The acquisition of real property for an amount more than NT$300 million or more than 20% of the paid-in capital: Attachment IV.

  • The disposal of real property for an amount more than NT$300 million or more than 20% of the paid-in capital: None

  • The amount of purchase from and selling of products to related parties amounting to NT$100 million or more than 20% of the paid-in capital: Attachment V.

  • The receivable from the related party for an amount more than NT$100 million or more than 20% of the paid-in capital: None.

  • Derivatives transaction: None.

  • Others: The business relationship and material transactions and transaction amount conducted between the parent company and its subsidiaries and between the subsidiaries:

  • 46 -

Attachment VI.

  1. Information related to the invested company: Attachment VII.

  2. (III) Investment in Mainland China

  3. Name of the invested company in Mainland China, major business operation, paid-in capital, investment method, funds inward and outward remittance, shareholding ratio, investment profit and loss, book amount of investment at yearend, and investment gains and losses remitted inward and limit of investment in Mainland China: Attachment VIII.

  4. The following significant transactions occurred with the invested company in Mainland China directly or indirectly by the third region, and the price, payment terms, and unrealized gains and losses:

    • (1) Purchase amount and percentage and the balance of prepayments and percentage at the end of the year: In the periods of January 1 to September 30, 2015, the Company has purchased from CSCC (Changzhou), a subsidiary, amounting to NT$57,542 thousand (or 3% of consolidated purchase). The transaction price is relevant with the price with unrelated parties and the term is prepayment before shipment. There is no significant unrealized gain and the aforementioned transaction has been settled at the time of compiling the consolidated financial statement.

    • (2) Sale amount and percentage and the related accounts receivable balance and percentage at yearend: The Company had made sales to Changzhou China Steel Chemical Material Technology Company, the subsidiary, for an amount of NT$49,085 thousand (accounted for 1% of the net consolidated operating income) in January 1 to September 30, 2015; the transaction price is equivalent to the practice with the non-related party; also, a payment term of OA/330days (open account) without any significant unrealized gains and losses. The accounts receivable for an amount of NT$68,729 thousand (accounted for 15% of the consolidated accounts receivable) was to be collected as of September 30, 2015 and the transaction referred to above had been written-off at the time of preparing the consolidated financial statements.

    • (3) Property transaction amount and the profit and loss amount resulted: None

    • (4) The ending balance of endorsement and guarantee of check or collaterals being pledged, and the purpose: None.

    • (5) The upper limit of financing, ending balance, interest range, and total interest in current period: Attachment I.

    • (6) Other transactions that significantly affect the current profit or loss or financial position: None

XXXIII. Department Information

The information is provided to the decision-maker of operation for the allocation of resources and assessment of department performance, focusing on the type of every payment made or labor service provided. The reporting departments of the Company and subsidiary are as follows:

  • (I) China Steel Chemical Corporation (CSCC) / Changzhou China Steel Chemical Material Technology Company (CCSCMTC) - Production and marketing of chemical products

  • (II) EGI – Trade of chemical products.

  • (III) Ever Wealthy International Co., Ltd. / Ever Glory Investment Co. / China Steel Chemical Material Technology Company (CSCMTC) - Investments

  • 47 -

(IV) The analysis of the revenue of the Company and its subsidiaries and the result of operation by segment is shown below:

January 1 to September
30,2015		 CSCC /
CCSCMTC		 EGI Ever Wealthy /
Ever Glory /
CSCMTC		 Adjustment and
written-off
$ 4,338,692
318,910
$ 4,657,602
$ 1,012,081
4,436
64,147
29,782
(
2,245 )
103,801
1,212,002
(
159,811 )
$ 1,052,191
$ 6,654,870		 $ 241,719

–
$ 241,719
$ 305

1,560

–

940

–
(
3,407 )
(
602 )

–
( $ 602 )
$ 370,096		 ( $ 7,874 )

143,254
$ 135,380
$ 138,814

1,944

–

1,505
(
278 )
(
248 )

141,737
(
4,474 )
$ 137,263
$ 68,884		 $ –
(
462,164 )
( $ 462,164 )
( $ 147,674 )
( $ 340 )

6,646
( $ 1,226 )

340

–
( $ 142,254 )

–
( $ 142,254 )
$ –
Income from customers
other than the
Company and
subsidiaries
Income from the
Company and
subsidiaries
Total income
Department interest
Interest income
Portion of earnings from
associates recognized
under the equity
method
Other income
Interest expense
Other profit and loss
Consolidated net
income (loss) before
tax
Income tax expense
Consolidated net
income (loss) after tax
January 1 to September
30,2014
Income from customers
other than the
Company and
subsidiaries
Income from the
Company and
subsidiaries
Total income
Department interest
Interest income
Portion of earnings from
associates recognized
under the equity
method
Other income
Interest expense
Other profit and loss
Consolidated net income
before tax
Income tax expense
Consolidated net income
$ 366,646
$ 7,021,516
$ 1,943,858
5,858
136,119
22,006
(
1,889 )
26,620
2,132,572
(
312,131 )
$ 1,820,441		 $ –
$ 370,096
$ 332

5,332

–

–

–
(
1,207 )

4,457

–
$ 4,457		 $ 49,421
$ 118,305
$ 116,371

1,853

–

2,077
(
84 )

–

120,217
(
4,403 )
$ 115,814		 ( $ 416,067 )
( $ 416,067 )
( $ 47,784 )

–
(
59,361 )
(
1,636 )

–

–
(
108,781 )

–
( $ 108,781 )

Earnings by segment refer to the profit earned by respective functional departments, excluding the allocation of management cost from the corporate headquarters and remuneration

  • 48 -

to directors and shareholders, rental income, interest income, disposition of real property, profit or loss of plant and equipment, the capital gain from the disposition of non-current assets, capital gains from investment held for disposal, net exchange gain/loss from foreign currencies, valuation gain/loss of financial instruments, interest expense, and income tax expense. This measurement amount is provided to the decision-maker of operation for allocating resources to each department and assessing its performance.

(V) Total assets and liabilities of each department

Department assets
Chemicals department
Production and sale
Trading
Investment department
Department liabilities
Chemicals department
Production and sale
Trading
Investment department		 September 30
2015
$ 5,766,038
434,621
1,761,398
$ 7,962,057
$ 1,534,183
16,872
80,483
$ 1,631,538		 December 31,
2014
$ 6,766,202

434,502

1,484,699
$ 8,685,403
$ 1,069,699

15,420

4,448
$ 1,089,567		 September 30
2014
$ 5,118,689

396,104

2,616,045
$ 8,130,838
$ 952,603

14,855

3,761
$ 971,219
  • 49 -

China Steel Chemical Corporation (CSCC) and Subsidiaries Lending of Funds

January 1 to September 30, 2015

Attachment I

Unit: NT$ Thousands, unless otherwise stated

No. LendingCompany Borrower Account Relatedparty Current highest
balance amount		 Balance at ending of
period
Actual credit amount
implemented
Interest rate
interval
(%)		 Nature of lending
of funds
Transaction
amount		 Reason for needing
short-term loans		 Amount of
allowance for bad
debt		 Collateral Collateral Lending of fund limit
for each individual		 Total limit of financing
to thirdparties
Title Value
0
1		 The Company
Ever Wealthy
International Co.,
Ltd.		 China Steel
Corporation
Changzhou China
Steel Chemical
Material
Technology
Company		 Other
receivables
Other
receivables		 Yes
Yes		 $ 300,000
34,500
(RMB 6,900
thousand
$ –

34,500
(CNY6,900
thousand)
$ –

33,694


(RMB 6,900
thousand
(Note 4)		 0.57 ~0.69
0.88 ~1.37
 Note 1
Note 1		 $ –
–
Working capital

Working capital		 $ –
–		 None
None		 $ –
–		 $ 633,052 (Note
2)
221,204 (Note
3)		 $ 1,266,104 (Note
2)
442,407 (Note
3)

Note 1: It is necessary to arrange short-term loans.

Note 2: According to the Procedures for Lending of Funds by the Company, the total loan amount and lending of fund to individual is limited to 20% and 10% of the net value of the Company, respectively. Note 3: According to the Procedures for Lending of Funds by the subsidiaries, the total loan amount and lending of fund to individual is limited to 20% and 10% of the net value of the subsidiaries, respectively. Note 4: It has been written-off at the time of preparing the consolidated financial statements.

  • 50 -

China Steel Chemical Corporation (CSCC) and Subsidiaries Marketable Securities Held at Yearend

September 30, 2015

Attachment II

Unit: NT$ Thousands, unless otherwise stated

HoldingCompany Type and name of marketable securities Relationship with
marketable securities issuer		 Account End ofperiod End ofperiod Remark
Shares or units Book amount Shareholding
ratio		 Market price or net
equity
The Company Common stock
China Development Financial Holding
Corporation
Beneficiary certificate
PineBridge Taiwan Money Market Securities
Investment Trust Fund
PineBridge Emerging Market Asia-Pacific
Strategic Bond Fund
Shin Kong Global ETF Fund
Taishin Emerging Markets Bond Fund
JIH SUN Global Emerging Bond Fund
Prudential Bond Fund
TCB Fund of Emerging Markets Bond
Taishin RMB Money Market Fund
Alliance Money Market Fund
Allianz Global Investors Taiwan Money
Market
Mega Bank strategic ETF fund portfolio
Union Bank global ETF fund portfolio
JP Morgan Emerging Dual-Profit Balanced
Fund
Manulife Financial USD High Yield Bond
Fund
Sinopac RMB Bond Fund		 Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
throughprofit and loss - current		 132,000
2,969,130
2,884,901
1,000,000
1,000,000
2,893,025
1,855,804
1,913,217
300,000
2,540,995
2,428,501
998,512
1,000,000
1,500,000
2,000,000
2,000,000		 $ 1,168
$ 40,200
30,369
10,000
9,799
30,000
19,509
19,108
16,095
30,012
30,004
9,793
9,694
12,982
19,237
19,298		 $ 1,168
$ 40,200
30,369
10,000
9,799
30,000
19,509
19,108
16,095
30,012
30,004
9,793
9,694
12,982
19,237
19,298

(Continuing)

  • 51 -

(Continued)

HoldingCompany Type and name of marketable securities Relationship with
marketable securities issuer		 Account End ofperiod End ofperiod Remark
Shares or units Book amount Shareholding
ratio		 Market price or net
equity
Yuanta China High Yield Dim Sum Bond
Fund
Yuanta S&P GSCI Gold ER Futures ETF
Prudential Financial Asia Bond
Cathay Emerging China Bond
Hua Nan Kirin Money Market Fund
Jih Sun China High Yield Bond Fund
Alliance Bernstein Global High Yield
Bond Fund
Jih Sun China Money Market Fund
Prudential Financial RMB Money Market
Fund
Structured instruments
Yuanta Securities – Pan Jit 7th linked notes
Yuanta Securities - Rongcheng 2nd
structured debt
Yuanta Securities – Acer 1st linked notes
Preferred stock
China Steel Corporation
Common stock
ADIMMUNE Corporation
Asia Pacific Telecom
China Steel Corporation
Financial bond
Taiwan Business Bank Subordinated Debt
Parent company
Parent company		 Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Available-for-sale financial assets -
current
Available-for-sale financial assets -
current
Available-for-sale financial assets -
current
Available-for-sale financial assets -
current
Bond investment without market price -
noncurrent		 300,000
784,929
928,031
966,950
1,693,311
2,000,000
1,000,000
2,000,000
3,000,000
229,000
1,498,747
1,000,000
2,556,915
 $ 15,564
10,118
10,490
10,871
20,020
20,717
9,480
20,722
31,260
$ 455,342
$ 17,034
20,109
35,074
$ 72,217
$ 8,645
32,672
9,570
49,093
$ 99,980
$ 50,000		 $ 15,564
10,118
10,490
10,871
20,020
20,717
9,480
20,722
31,260
$ 455,342
$ 17,034
20,109
35,074
$ 72,217
$ 8,645
32,672
9,570
49,093
$ 99,980
$ 50,000

(Continuing)

  • 52 -

(Continued)

HoldingCompany Type and name of marketable securities Relationship with
marketable
securities issuer		 Account End of period period Remark
Shares or units Book amount Shareholding
ratio		 Market price or net
equity
Ever Wealthy International Co., Ltd. Common stock
Taiwan Business Bank
Taiwan Cogeneration Corporation
Ta Chen Stainless Pipe Co., Ltd.
Bank of Kaohsiung
Hua Nan Financial Holding Company
Mega Financial Holding Company
Taichung Commercial Bank
Taishin Financial Holding Co, Ltd.
Beneficiary certificate
Yuanta S&P GSCI Gold ER Futures ETF
Pinebridge China Balanced Fund
Fubon China New Balanced Income Fund
Common stock
CCSC
China Steel Corporation
Asia Pacific Telecom
Common stock
TA CHEN International Steel Corp.
Huasheng Venture Capital Company
Zu-Kao Engineering Company
Lianshensun Venture Capital Company
E-ONE MOLI ENERGY CORP.
Yung Loong Engineering Corp.
National Kaohsiung First University of Science
and Technology Entrepreneurship
Asia Hepato Gene Co.
Kai Yi Technology Industrial Company		 Parent company
Ultimate parent
company		 Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Financial assets measured at fair value through
profit and loss - current
Available-for-sale financial assets - current
Available-for-sale financial assets - current
Available-for-sale financial assets - current
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent
Available-for-sale financial assets - noncurrent		 2,857,521
84,145
431,466
677,528
3,515,432
2,000,000
2,128,000
5,500,000
2,000,000
2,000,000
1,000,000
5,827,537
2,226,265
500,000
17,762,500
1,214,514
1,476,892
450,000
40,463
1,540,000
300,000
133,300
275,000		 $ 23,346
1,775
6,472
5,759
53,786
45,600
19,812
64,075
$ 220,625
$ 25,780
18,055
9,357
$ 53,192
$ 591,495
42,744
4,785
$ 639,024
$ 335,259
13,248
17,306
7,074
156
54,600
3,000
–
–		 3
2
7
1
–
4
9
1
18		 $ 23,346
1,775
6,472
5,759
53,786
45,600
19,812
64,075
$ 220,625
$ 25,780
18,055
9,357
$ 53,192
$ 591,495
42,744
4,785
$ 639,024

$ 335,259

13,248

17,306

7,074

156

54,600

3,000

–


–
 Note 3
Note 2
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Full appropriation
for impairment loss
Full appropriation
for impairment loss

(Continuing)

  • 53 -

(Continued)

HoldingCompany Type and name of marketable securities Relationship with
marketable securities
issuer		 Account End ofperiod End ofperiod Remark
Shares or units Book amount Shareholding
ratio		 Market price or net
equity
Ever Glory International Co., Ltd. Rentian Technology Holdings Limited
Financial bond
Taiwan Business Bank Subordinated Debt
Sunny Bank Subordinated Debtrice -
noncurrent
Unsecured Corporate Bond issued by Ton Yi
Enterprise Holding (Caymans) Limited.
Common stock
Taiwan Cooperative Bank
Beneficiary certificate
INVESTCO US SENIOR LOAN FUND
ING(L) Renta Asian Bond Fund
Structured instruments
Industrial Bank of Taiwan–Hybrid Dual Range
Accrual Note (Underlying AUD / US)
Industrial Bank of Taiwan–Hybrid Dual Range
Accrual Note (Underlying JPY / US)
Industrial Bank Co.–Hybrid Dual Range
Accrual Note (Underlying EUR / US)
Financial bond
Russian Agricultural Bank Bond
Vneshtorgbank Corporate Bond
GAZPROM BANK Corporate Bond
Australia and New Zealand Banking Group
Bond
Road King Infrastructure Limited Corporate
Bond		 Available-for-sale financial assets -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Financial assets measured at fair value
through profit and loss - current
Held-to-maturity financial assets -
noncurrent
Held-to-maturity financial assets -
noncurrent
Held-to-maturity financial assets -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent
Bond investment without market price -
noncurrent		 5,985



2,071,942
10,925
301

2,000

20,000

2,000

2,000

2,000,000







$ –
$ 430,643
$ 50,000
20,000
45,441
$ 115,441
$ 28,179
$ 52,500
16,108
$ 68,608
$ 49,206
47,826
16,024
$ 113,056
$ 9,764
10,251
6,705
4,434
10,344
$ 41,498		 –
$ –

$ 430,643
$ 50,000
20,000
45,441
$ 115,441
$ 28,179
$ 52,500
16,108
$ 68,608
$ 37,787
37,102
13,133
$ 88,022
$ 9,764
10,251
6,705
4,434
10,344
$ 41,498		 Full appropriation
for impairment loss

Note 1: It is based on the most recent net equity unaudited by a CPA. Note 2: It is based on the price in the appraisal report issued by an external expert.

Note 3: It has been written-off at the time of preparing the consolidated financial statements.

  • 54 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Cumulative purchase or sale of the same marketable security for an amount more than NT$300 million or more than 20% of the paid-in capital

January 1 to September 30, 2015

Attachment III

Unit: NT$ Thousands, unless otherwise stated

Buyer or Seller Type and name of
marketable securities		 Account Counterparty Relationship At beginningofperiod At beginningofperiod Purchase(Note) Purchase(Note) Sale Sale Endingofperiod Endingofperiod Remark
Shares Amount Shares Amount Shares Selling price Book cost Disposal profit
(loss)		 Shares Amount
The Company Hua Nan Phoenix
Money Market Fund
Cooperative Bank
Money Market Fund
Financial assets
measured at
fair value
through profit
and loss -
current

Financial assets
measured at
fair value
through profit
and loss -
current		 –
–
$ –

–		 22,853,308
32,973,121		 $ 366,000

330,000		 22,853,308
32,973,121		 $ 366,543

330,196
$ 366,000

330,000
$ 543

196
–

–
$ –

–

Note: The purchase amount of the current includes proceeds and profit and loss in valuation.

  • 55 -

China Steel Chemical Corporation

The acquisition of real property for an amount more than NT$300 million or more than 20% of the paid-in capital January 1 to September 30, 2015

Attachment IV

Unit: NT$ Thousands, unless otherwise stated

Acquisition of
subsidiaries		 Asset title Trade date
or event date
Transaction
amount		 Payment status Counterparty Relationship If the counterparty is a related party, the information on
previous transaction		 If the counterparty is a related party, the information on
previous transaction		 If the counterparty is a related party, the information on
previous transaction		 If the counterparty is a related party, the information on
previous transaction		 Reference for price
determination
Purpose of
acquisition and the
state of use		 Other
stipulations
of the
transaction
Owner Relationship
with issuer
Date of
transfer		 Amount
The Company Land (Land Lot
1-69, Pingnan
Section, Fangliao
Village, Pingtung
County)

104.07.31		 $ 1,083,260 Payment is made
in accordance
with the terms of
the contract and
payment
schedule.		 Kao Hsing
Chang Iron &
Steel Corp.		 Non-related
parties		 – – – $ –
 Refer to the
appraisal report
issued by the
appraisal
company and the
market price of
the objects in the
peripheral area.
Object acquisition
for operation
purpose		 –
  • 56 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

The purchase and sale conducted with the related party for an amount more than NT$100 million or more than 20% of the paid-in capital

January 1 to September 30, 2015

Attachment V

Unit: NT$ Thousands, unless otherwise stated

Buyer(Seller) Counterparty Relationship Transaction Transaction The reasons for the trade terms
different from regular
transactions		 The reasons for the trade terms
different from regular
transactions		 Notes and accounts receivable
(payable)		 Notes and accounts receivable
(payable)		 Remark
Balance Percentage
of notes and
accounts
receivable
(payable)
Purchase(Sale) Amount Percentage
of total
purchase
(sale) (%)		 Creditperiod
Unitprice Credit
period
The Company
Ever Glory
International Co.,
Ltd.		 China Steel Corporation
China Synthetic Rubber
Corporation
Ever Glory International Co.,
Ltd.
Dragon Steel Corporation.
The Company		 Parent company
Other related party
Subsidiary
Sister company
Parent company		 Purchase
Sale
Sale
Purchase
Purchase		 $ 1,401,203
(
832,046 )
(
212,283 )
552,914
212,283
62
(
18 )
(
5 )

24

100		 Letter of Credit at sigh
Monthly open account
Monthly open account
Letter of Credit at sigh
Monthly open account
Note 1

Note 1

–

Note 1

–		 Note 1
Note 1
–
Note 1
–		 ( $ 214,192 )
65,612
15,987
–
( 15,987 )		 (
90 )
12
3
–
( 100 )		 Note 2
Note 2

Note 1: Please refer to Note XXIX.

Note 2: It has been written-off at the time of preparing the consolidated financial statements.

  • 57 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

The business relationship and material transactions conducted between the parent company and its subsidiaries

January 1 to September 30, 2015

Attachment VI

Unit: NT$ Thousands, unless otherwise stated

No. Trader Counterparty Relationshipwith Trader Transaction Transaction
Account Amount Sales term Percentage of
consolidated
operating
income or total
assets(%)
0 The Company Ever Glory International Co., Ltd.
Changzhou China Steel Chemical
Material Technology Company
Changzhou China Steel Chemical
Material Technology Company		 Parent company v. subsidiary
Parent company v. subsidiary
Parent company v. subsidiary
Sale

Sale

Purchase		 $ 212,283
49,085
57,542		 Cost plus percentage
Cost plus percentage
Cost plus percentage		 5
1
1
  • 58 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Information related to the invested company

January 1 to September 30, 2015

Attachment VII

Unit: NT$ Thousands, unless otherwise stated

InvestingCompany Invested Company Location Main business operation Original investment amount Original investment amount Held at the end ofperiod. Held at the end ofperiod. Held at the end ofperiod. Held at the end ofperiod. Current profit (loss)
of the invested
company		 Current investment
profit (loss)
recognized		 Remark
End of September
2015		 December 31,2014 Shares Ratio
(%)		 Book amount
The Company
Ever Wealthy International
Co., Ltd.		 Ever Glory International Co., Ltd.
Ever Wealthy International Co., Ltd.
HIMAG
Li Qinglong Investment Company
Gao Rui Investment Company
Shang Yang Venture Capital
Company
CHC RESOURCES
CORPORATION
TAIAN TECHNOLOGIES
CORPORATION
Yun Hung Investment Company
Chi Hong Venture Capital Company
United Steel International
Development Co.
China Steel Structure Co., Ltd.
(CSSC)
Hong Chuan Investment Company
Shenlida Investment Company
PROTOP TECHNOLOGY CO.,
LTD.
TTMC
HIMAG
China Steel Structure Co., Ltd.
(CSSC)
Ever Glory Investment Co.
China Steel Chemical Material
Technology Company
(CSCMTC)		 British
Cayman
Islands
Kaohsiung
City
Pingtung
County
Kaohsiung
City
Kaohsiung
City
Kaohsiung
City
Kaohsiung
City
Taipei City
Kaohsiung
City
Taipei City
British Virgin
Islands(BVI)
Kaohsiung
City
Kaohsiung
City
Kaohsiung
City
Kaohsiung
City
Kaohsiung
City
Pingtung
County
Kaohsiung
City
Kaohsiung
City
Samoa		 International trade
General investment business
Magnetic core and magnetic powder
production and sales
General investment business
General investment business
General investment business
Blast furnace cement and slag production
and sales and industrial waste treatment
Biotechnology services
General investment business
General investment business

General investment business
Steel structure design, production, and sales
General investment business
General investment business
General investment business
Target and bimetallic tube sales
Magnetic core and magnetic powder
production and sales
Steel structure design, production, and sales
General investment business
General investment business		 $ 39,920
300,083
47,950
7,000
15,070
23,520
91,338
2,295
450,000
50,000
68,838

13,675
9,000
8,400
10,495
45,987
33,015

56,667
–
79,572
$ 39,920

300,083

47,950

7,000

15,070

23,520

91,338

2,295

450,000

50,000

68,838

13,675

9,000

8,400

10,495

45,987

33,015

56,667

153,000

79,572
1,300,000

104,574,982


2,161,203

700,000

1,196,000

2,352,000

13,653,947

222,400

60,594,905

5,000,000

2,450,000

600,069

900,000

840,000

897,000

6,119,748

1,584,731

2,000,896

–

6,506,000
 100
100
8
35
40
6
6
5
9
5
5
–
45
35
30
8
6
1
–
100		 $ 401,851
1,322,443
43,655
11,360
21,570
37,389
250,632
3,492
382,427
64,197
99,472
13,101
$ 2,651,589
$ 14,577
13,863
13,967
94,637
32,002
51,029
–
198,599
$ 418,674		 ( $ 602 )
131,509
33,455
1,416
4,733
55,985
662,388
13,797
242,022
77,105
( 133,157 )
129,616
1,353
2,786
3,570
( 131,204 )
33,455
129,616
108
5,646		 ( $ 602 )
(
6,044 )
4,233
496
1,893
3,593
40,037
690
22,266
3,855
(
6,658 )
388
$ 64,147
$ 609
975
1,071
(
12,193 )
3,104
483
55

5,646

( $ 250 )		 Subsidiary
(Note)
Subsidiary
(Note)
Subsidiary
(Note)
Subsidiary
(Note)

Note: It has been written-off at the time of preparing the consolidated financial statements.

  • 59 -

China Steel Chemical Corporation (CSCC) and Subsidiaries

Investment in Mainland China

January 1 to September 30, 2015

Attachment VIII

Unit: NT$ Thousands, unless otherwise stated

Invested Company in
Mainland China		 Main business operation
Paid-in capital		 Investment method Accumulated
outward remittance
of investment from
Taiwan at the
beginning of
period.
(Note 1)		 Accumulated
outward remittance
of investment from
Taiwan at the
beginning of
period.
(Note 1)
Investment amount remitted outward
or inward of the current
Investment amount remitted outward
or inward of the current		 Cumulative
investment amount
remitted outward
from Taiwan at the
end of period (Note
1)		 Current profit
(loss) of the
invested
company		 Shareholding
ratio of direct
or indirect
investment –
ending (%)
(%)
Current
investment profit
(loss) recognized
(Note 2)		 Book value of
investment at the
end ofperiod.		 Repatriated
return on
investment by
the end of the
period.
Outward
remittance		 Inward
remittance
Ningbo Huayang Aluminum
Ltd.
Changzhou China Steel
Chemical Material
Technology Company		 Manufacturing,
processing, and
developing new alloy
materials and selling
self-manufactured
products
Processing and sale of
mesophase carbon
microspheres Products		 USD
NT$49,000
thousand

USD
NT$6,506
thousand

Investment in
Mainland China
with remittance via
third region


Investment in
Mainland China
with remittance via
third region
$ 80,532
(US$2,450
thousand
)

87,303
(US$2,656
thousand
)
$ –

126,549
(US$3,850
thousand
)
$ –

–
$ 80,532
(US$2,450
thousand
)

213,852
(US$6,506
thousand
)
($ 129,787)

5,646		 5

100		 ($ 6,489) (1)
5,646 (2)
(Note 4)
$ 98,320

198,600

(Note 4)		 $ 5,439
–
Accumulated investment
to Mainland China at
(Note		 remitted from Taiwan
the end of period
1)
 Investment amount approved by the Investment
Commission, MOEA
(Note 1)
Investment in Mainland China subject to the
investment limits set by the Investment
Commission, MOEA
(Note 3)
$294,384
(US$8,956 thousand)		 $294,384
(US$8,956 thousand)		 $3,798,311

Note 1: The aforementioned USD was based on the exchange rate with NTD at 32.87 as of September 30 2015.

  • Note 2: The basis for recognition of investment gain/loss is classified as follows: (1) the audited financial statements of the parent company in Taiwan; (2) the unaudited financial statements compiled by the investees in Mainland China.

  • Note 3: The investment limit amount is calculated in accordance with the “Investment or Technical Cooperation in Mainland China Review Principle” of the Investment Commission, MOEA dated 08.29.2008 as follows: Equity $6,330,519x60% = $3,798,311

Note 4: It has been written-off at the time of preparing the consolidated financial statements.

  • 60 -

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