Macronix — Interim / Quarterly Report 2015

Nov 12, 2015

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2015 and 2014 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and the Stockholders Macronix International Co., Ltd.

We have reviewed the accompanying consolidated balance sheets of Macronix International Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of June 30, 2015 and 2014 and the related consolidated statements of comprehensive income for the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, and the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

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

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

As disclosed in Note 3 to the consolidated financial statements, the Group applies the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC starting in 2015. As a result of this retrospective application of the accounting policy, the consolidated financial statements as of December 31, 2014 , June 30, 2014 and January 1, 2014 have been restated.

July 22, 2015

Notice to Readers

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

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

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 6 and 34) Financial assets at fair value through profit or loss - current (Notes 7 and 34) Notes receivable and trade receivables, net (Notes 10 and 34) Receivables from related parties, net (Notes 34 and 35) Other receivables (Notes 10, 34 and 35) Inventories (Note 11) Other financial assets - current (Notes 17 and 34) Other current assets (Notes 16 and 18) Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Notes 8 and 34) Financial assets measured at cost - non-current (Notes 9 and 34) Investments accounted for using equity method (Note 13) Property, plant and equipment (Notes 14 and 36) Intangible assets (Note 15) Deferred tax assets (Notes 4 and 27) Other financial assets - non-current (Notes 17, 34 and 36) Other non-current assets (Notes 16 and 18) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 34) Financial liabilities at fair value through profit or loss - current (Notes 7 and 34) Notes payable and trade payables (Notes 20 and 34) Payables to related parties (Notes 34 and 35) Other payables (Notes 21 and 34) Other payables to related parties (Notes 34 and 35) Payables for purchase of equipment (Note 34) Current tax liabilities (Notes 4 and 27) Provisions - current (Note 22) Current portion of long-term borrowings (Notes 19 and 34) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 19 and 34) Net defined benefit liabilities (Notes 4 and 23) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT (Note 24) Share Capital Ordinary shares Capital stock to be cancelled Total share capital Capital surplus Retained earnings Accumulated deficit Other equity Treasury shares Equity attributable to shareholders of the parent NON-CONTROLLING INTERESTS (Note 24) Total equity TOTAL		June 30, 2015 (Reviewed) Amount % $ 3,810,809 10 44 - 3,021,490 8 252,824 1 152,967 - 10,411,874 26 16,865 - 556,253 1 18,223,126 46 1,294,036 3 91,829 - 25,405 - 18,950,785 47 166,565 1 910,472 2 180,905 1 128,139 - 21,748,136 54 $ 39,971,262 100 $ 2,331,144 6 - - 1,960,968 5 63,188 - 1,044,506 3 4,654 - 188,339 1 186,099 - 173,100 - 3,317,918 8 67,992 - 9,337,908 23 8,323,432 21 1,116,767 3 4,592 - 9,444,791 24 18,782,699 47 35,587,740 89 (14,540) - 35,573,200 89 627,284 2 (15,392,564) (39) 525,768 1 (159,061) - 21,174,627 53 13,936 - 21,188,563 53 $ 39,971,262 100	December 31, 2014 (Audited after Restated) Amount % $ 7,636,201 17 95 - 2,699,155 6 483,179 1 161,304 1 9,301,643 21 - - 578,319 1 20,859,896 47 1,243,142 3 113,399 - 38,599 - 21,128,358 47 238,343 1 912,178 2 182,657 - 126,003 - 23,982,679 53 $ 44,842,575 100 $ 2,134,039 5 7,113 - 1,996,003 5 63,185 - 1,682,698 4 - - 475,285 1 302,416 1 150,617 - 12,143,430 27 74,315 - 19,029,101 43 2,073,506 5 1,116,508 2 17,930 - 3,207,944 7 22,237,045 50 35,587,740 79 - - 35,587,740 79 241,652 - (13,812,749) (31) 734,847 2 (159,061) - 22,592,429 50 13,101 - 22,605,530 50 $ 44,842,575 100	June 30, 2014 (Reviewed after Restated) Amount % $ 7,443,310 16 913 - 3,238,795 7 313,308 1 136,315 - 9,656,168 20 - - 602,693 1 21,391,502 45 1,189,978 3 111,472 - 55,609 - 23,607,337 49 344,436 1 910,275 2 184,307 - 116,893 - 26,520,307 55 $ 47,911,809 100 $ 788,780 2 - - 1,821,127 4 70,652 - 1,599,327 3 3,328 - 202,638 - 298,706 1 127,675 - 5,231,357 11 62,602 - 10,206,192 21 10,940,387 23 978,602 2 16,103 - 11,935,092 25 22,141,284 46 35,214,730 74 - - 35,214,730 74 344,201 1 (10,349,330) (22) 697,022 1 (159,061) - 25,747,562 54 22,963 - 25,770,525 54 $ 47,911,809 100	January 1, 2014 (Audited after Restated)	January 1, 2014 (Audited after Restated)
						Amount % $ 11,978,574 22 1,358 - 2,822,661 5 458,302 1 147,208 - 8,795,383 17 - - 525,959 1 24,729,445 46 951,333 2 114,888 - - - 26,728,291 49 316,358 1 910,037 2 185,715 - 93,934 - 29,300,556 54 $ 54,030,001 100 $ 566,577 1 - - 2,004,696 4 90,570 - 2,226,702 4 14 - 432,797 1 355,427 1 143,399 - 7,648,233 14 71,689 - 13,540,104 25 10,935,406 20 927,210 2 3,087 - 11,865,703 22 25,405,807 47 35,214,730 65 - - 35,214,730 65 344,166 1 (7,280,502) (14) 457,785 1 (159,061) - 28,577,118 53 47,076 - 28,624,194 53 $ 54,030,001 100

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

(With Deloitte & Touche review report dated July 22, 2015)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

NET OPERATING REVENUE (Notes 25 and 35) OPERATING COSTS (Notes 11, 23, 26 and 35) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GAIN TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 23, 26 and 35) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 26) Other gains and losses (Notes 26 and 30) Finance costs (Note 26) Share of loss of associates Total non-operating income and expenses LOSS BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 27) NET LOSS FOR THE PERIOD OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 24) Unrealized gain on available-for-sale financial assets (Note 24) Share of the other comprehensive loss of associates accounted for using the equity method (Note 24) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		For the Three Mon	th	s Ended June 30		For the Six Mont	**hs **	Ended June 30
		2015 (Reviewed)		2014 (Reviewed after Restated)		2015 (Reviewed)		2014 (Reviewed after Restated)
		Amount % $ 4,975,229 100 4,366,925 88 608,304 12 - - 6 - 608,310 12 244,314 5 381,346 8 1,154,002 23 1,779,662 36 (1,171,352) (24) 49,947 1 (15,591 ) - (73,312 ) (2 ) (6,958) - (45,914) (1) (1,217,266 ) (25 ) 5,201 - (1,222,467) (25) (16,924 ) - (185,762 ) (4 ) (18) - (202,704) (4) $ (1,425,171) (29)		Amount % $ 4,972,711 100 4,663,762 94 308,949 6 - - 13 - 308,962 6 264,260 5 410,506 8 1,430,043 29 2,104,809 42 (1,795,847) (36) 71,547 1 3,242 - (70,280 ) (1 ) (6,926) - (2,417) - (1,798,264 ) (36 ) 1,980 - (1,800,244) (36) (32,532 ) (1 ) 8,410 - (851) - (24,973) (1) $ (1,825,217) (37)		Amount % $ 9,681,503 100 8,422,521 87 1,258,982 13 (35 ) - - - 1,258,947 13 490,257 5 748,842 8 2,438,645 25 3,677,744 38 (2,418,797) (25) 1,024,961 11 (25,631 ) - (138,374 ) (2 ) (13,121) - 847,835 9 (1,570,962 ) (16 ) 7,981 - (1,578,943) (16) (47,277 ) (1 ) 52,503 1 (37) - 5,189 - $ (1,573,754) (16)		Amount % $ 9,762,774 100 8,566,486 88 1,196,288 12 - - 13 - 1,196,301 12 529,603 6 795,082 8 2,936,651 30 4,261,336 44 (3,065,035) (32) 93,701 1 37,902 - (140,330 ) (1 ) (6,926) - (15,653) - (3,080,688 ) (32 ) 3,092 - (3,083,780) (32) 2,577 - 238,276 3 (851) - 240,002 3 $ (2,843,778) (29) (Continued)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

NET LOSS ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests LOSS PER SHARE (Note 28) Basic Diluted			For the Three Mon	th	s Ended June 30	s Ended June 30			For the Six Mont	**hs **	Ended June 30	Ended June 30
			2015 (Reviewed)		2014 (Reviewed after Restated)				2015 (Reviewed)		2014 (Reviewed after Restated)
		$	Amount % (1,220,566 ) (25 ) (1,901) - (1,222,467) (25) (1,423,218 ) (29 ) (1,953) - (1,425,171) (29) $ (0.35) $ (0.35)		$	Amount % (1,794,417 ) (36 ) (5,827) - (1,800,244) (36) (1,820,136 ) (37 ) (5,081) - (1,825,217) (37) $ (0.51) $ (0.51)		$	Amount % (1,575,284 ) (16 ) (3,659) - (1,578,943) (16) (1,569,980 ) (16 ) (3,774) - (1,573,754) (16) $ (0.45) $ (0.45)		$	Amount % (3,068,828 ) (32 ) (14,952) - (3,083,780) (32) (2,829,591 ) (29 ) (14,187) - (2,843,778) (29) $ (0.87) $ (0.87)
		$			$			$			$
		$			$			$			$
		$			$			$			$

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

(With Deloitte & Touche review report dated July 22, 2015)

(Concluded)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

BALANCE AT JANUARY 1, 2014 Effect of retrospective application and retrospective restatement Balance at January 1, 2014 as restated Net loss for the six months ended June 30, 2014 Other comprehensive income for the six months ended June 30, 2014, net of income tax Total comprehensive income (loss) for the six months ended June 30, 2014 Issue of ordinary shares under employee share options plans Increase (decrease) in non-controlling interests BALANCE AT JUNE 30, 2014 BALANCE AT JANUARY 1, 2015 Effect of retrospective application and retrospective restatement Balance at January 1, 2015 as restated Net loss for the six months ended June 30, 2015 Other comprehensive income (loss) for the six months ended June 30, 2015, net of income tax Total comprehensive income (loss) for the six months ended June 30, 2015 Issue of restricted stock to employees Compensation cost of restricted stock for employees Retirement of restricted stock for employees Difference between purchase price and carrying amount arising from capital injection of subsidiaries Increase in non-controlling interests BALANCE AT JUNE 30, 2015			**Equity **	**Equity **	Attributable to Shareholders of the Parent	Attributable to Shareholders of the Parent	Attributable to Shareholders of the Parent		Total Non-controlling Interests $ 28,678,777 $ 47,021 (101,659) 55 28,577,118 47,076 (3,068,828 ) (14,952 ) 239,237 765 (2,829,591) (14,187) - 45 35 (9,971) $ 25,747,562 $ 22,963 $ 22,765,127 $ 13,101 (172,698) - 22,592,429 13,101 (1,575,284 ) (3,659 ) 5,304 (115) (1,569,980) (3,774) - - 156,674 - - - (4,531 ) 4,531 35 78 $ 21,174,627 $ 13,936	Total Equity $ 28,725,798 (101,604) 28,624,194 (3,083,780 ) 240,002 (2,843,778) 45 (9,936) $ 25,770,525 $ 22,778,228 (172,698) 22,605,530 (1,578,943 ) 5,189 (1,573,754) - 156,674 - - 113 $ 21,188,563
			Capital Stock Share Capital Capital Stock to be Cancelled Capital Surplus $ 35,214,730 $ - $ 344,166 - - - 35,214,730 - 344,166 - - - - - - - - - - - - - - 35 $ 35,214,730 $ - $ 344,201 $ 35,587,740 $ - $ 241,652 - - - 35,587,740 - 241,652 - - - - - - - - - - - 371,057 - - - - (14,540 ) 14,540 - - - - - 35 $ 35,587,740 $ (14,540) $ 627,284		Retained Earnings Accumulated Deficit $ (7,178,843 ) (101,659) (7,280,502) (3,068,828 ) - (3,068,828) - - $ (10,349,330) $ (13,640,051 ) (172,698) (13,812,749) (1,575,284 ) - (1,575,284) - - - (4,531 ) - $ (15,392,564)		Other Equity	Employee Unearned Compensation Treasury Shares $ - $ (159,061 ) - - - (159,061) - - - - - - - - - - $ - $ (159,061) $ (209,813 ) $ (159,061 ) - - (209,813) (159,061) - - - - - - (371,057 ) - 156,674 - - - - - - - $ (424,196) $ (159,061)
							Exchange Differences on Unrealized Translating Gain from Foreign Operations Available-for-sale Financial Assets $ (49,141 ) $ 506,926 - - (49,141) 506,926 - - 961 238,276 961 238,276 - - - - $ (48,180) $ 745,202 $ 27,223 $ 917,437 - - 27,223 917,437 - - (47,199) 52,503 (47,199) 52,503 - - - - - - - - - - $ (19,976) $ 969,940
		Share (Thousands) 3,521,473 - 3,521,473 - - - - - 3,521,473 3,558,774 - 3,558,774 - - - - - - - - 3,558,774

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

(With Deloitte & Touche review report dated July 22, 2015)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax Adjustments for: Depreciation expense Amortization expense Impairment loss recognized on trade receivables Finance costs Interest income Dividend income Compensation cost of employee share options Compensation cost of employee restricted shares Share of loss of associates (Gain) loss on disposal of property, plant and equipment Gain on disposal of investments Unrealized gain on the transactions with associates Realized gain on the transactions with associates Loss on foreign currency exchange Changes in operating assets and liabilities Decrease in financial assets held for trading Increase in notes receivable and trade receivables Decrease in receivables from related parties Decrease in other receivables Increase in inventories Decrease (increase) in other current assets Decrease in financial liabilities held for trading Decrease in notes payable and trade payables Increase (decrease) in payables to related parties Decrease in other payables Increase in other payables to related parties Increase (decrease) in provisions Decrease in other current liabilities Increase in net defined benefit liabilities Cash used in operations Interest received Dividend received Interest paid Income tax paid Net cash used in operating activities		Six Months Ended June 30
		2015 (Reviewed) 2014 (Reviewed after Restated) $ (1,570,962) $ (3,080,688) 2,887,083 3,665,516 92,160 122,559 - 271 138,374 140,330 (18,418) (33,443) (35,399) (47,877) - 45 156,674 - 13,121 6,926 (4,655) 9,853 (7,491) (21,213) 35 - - (13) 59,533 4,195 51 445 (386,858) (405,268) 216,905 162,572 5,945 6,921 (1,110,231) (863,197) 22,062 (80,877) (7,113) - (7,365) (186,202) 1,805 (13,805) (635,409) (626,143) 4,654 3,314 22,483 (14,251) (6,009) (8,025) 259 51,392 (168,766) (1,206,663) 19,661 33,878 35,398 47,877 (138,603) (143,175) (122,559) (60,051) (374,869) (1,328,134) (Continued)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on sale of financial assets measured at cost Proceeds from return of capital on financial assets measured at cost Disposal of subsidiaries (Note 30) Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Increase in other financial assets Increase in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Increase in other non-current liabilities Decrease in other non-current liabilities Increase in non-controlling interests Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		Six Months Ended June 30
		2015 (Reviewed) 2014 (Reviewed after Restated) $ - $ 5,735 28,209 3,481 - (50,687) (1,011,856) (788,246) 5,402 14 (16,004) (466) 15,724 434 (20,546) (150,678) (16,090) (209) (2,054) (22,766) (1,017,215) (1,003,388) 5,434,900 791,663 (5,243,320) (603,590) 8,872,827 2,222,372 (11,444,508) (4,633,565) 36 - (13,214) - - 227 (194) - 113 101 (2,393,360) (2,222,792) (39,948) 19,050 (3,825,392) (4,535,264) 7,636,201 11,978,574 $ 3,810,809 $ 7,443,310

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 22, 2015)

(Concluded)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Macronix International Co., Ltd. (the “Company”) was incorporated in the Republic of China (“ROC”) on December 9, 1989 and commenced business in December 1989. The Company operates principally as a designer, manufacturer and supplier of integrated circuits and memory chips. The Company also performs design, research and development, consultation and trade of relevant products.

The Company’s shares have been listed on the Taiwan Stock Exchange (TSE) since March 15, 1995. The Company listed a portion of its shares on the NASDAQ Stock Market in the form of American Depositary Shares (ADSs) in May 1996 but delisted on October 29, 2007.

The consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s Board of Directors and authorized for issue on July 22, 2015.

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

• a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the Financial Supervisory Commission (FSC).

Rule No.1030029342 and Rule No.1030010325 issued by the FSC on April 3, 2014, stipulated that the Group should apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers starting January 1, 2015.

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 IFRSs version would not have any material impact on the Group’s accounting policies:

1) IFRS 10 “Consolidated Financial Statements”

IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation - Special Purpose Entities”. The Group considers whether it has control over other entities for consolidation. The Group has control over an investee if and only if it has i) power over the investee; ii) exposure, or rights, to variable returns from its involvement with the investee and iii) the ability to use its power over the investee to affect the amount of its returns. Additional guidance has been included in IFRS 10 to explain when an investor has control over an investee.

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• 2) IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than in the current standards.

• 3) Revision to IAS 28 “Investments in Associates and Joint Ventures”

Revised IAS 28 requires when a portion of an investment in an associate meets the criteria to be classified as held for sale, that portion is classified as held for sale. Any retained portion that has not been classified as held for sale is accounted for using the equity method. Under current IAS 28, when a portion of an investment in associates meets the criteria to be classified as held for sale, the entire investment is classified as held for sale and ceases to apply the equity method.

• 4) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required by the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

The fair value measurements under IFRS 13 will be applied prospectively from January 1, 2015. Refer to Note 34 for related disclosures.

• 5) Amendment to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendment to IAS 1 requires items of other comprehensive income to be grouped into those items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified subsequently to profit or loss. Income taxes on related items of other comprehensive income are grouped on the same basis. Under current IAS 1, there were no such requirements.

The Group retrospectively applied the above amendments starting in 2015. Items not expected to be reclassified to profit or loss are remeasurements of the defined benefit plans. Items expected to be reclassified to profit or loss are the exchange differences on translating foreign operations, unrealized gain (loss) on available-for-sale financial assets, and share of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates accounted for using the equity method. However, the application of the above amendments will not have any impact on the net profit for the period, other comprehensive income for the period (net of income tax), and total comprehensive income for the period.

6) Revision to IAS 19 “Employee Benefits”

Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the “corridor approach” permitted under current IAS 19 and accelerate the recognition of past service costs. The revision requires all remeasurements of the defined benefit plans to be recognized immediately through other comprehensive income in order for the net pension asset or liability to reflect the full value of the plan deficit or surplus. Remeasurement of the defined benefit plans is presented separately as accumulated deficits.

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Furthermore, the interest cost and expected return on plan assets used in current IAS 19 are replaced with a “net interest” amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. In addition, the revised IAS 19 introduces certain changes in the presentation of the defined benefit cost, and also includes more extensive disclosures.

In addition, revised IAS 19 changes the definition of short-term employee benefits. The revised definition is “employee benefits (other than termination benefits) that are expected to be settled wholly within twelve months after the end of the annual reporting period in which the employees render the related service”. The Group’s unused annual leave, which can be carried forward through 36 months after the end of the annual period in which the employee renders service and which is currently classified as short-term employee benefits, is classified as other long-term employee benefits under revised IAS 19. Related defined benefit obligation of such other long-term benefit is calculated using the Projected Unit Credit Method. However, this change does not affect unused annual leave to be presented as a current liability in the consolidated balance sheet.

On initial application of the revised IAS 19, the changes in cumulative employee benefit costs as of December 31, 2013 resulting from the retrospective application are adjusted to net defined benefit liabilities, deferred tax assets and retained earnings; the carrying amounts of inventories are not adjusted. In addition, in preparing the consolidated financial statements, the Group elected not to present comparative information about the sensitivity of the defined benefit obligation.

The impact on the current period is set out below:

	June 30,	June 30,
Impact on Assets, Liabilities and Equity		2015
Decrease in net defined benefit liabilities	$	2,840
Decrease in accumulated deficit	$	2,840
	For the Six
	Months Ended
	June 30,
Impact on Total Comprehensive Income		2015
Decrease in operating costs	$	1,606
Decrease in operating expenses		1,234
Decrease in net loss for the period	$	2,840
	For	the Three
	Months Ended
	June 30,
Impact on Total Comprehensive Income		2015
Decrease in operating costs	$	800
Decrease in operating expenses		620
Decrease in net loss for the period	$	1,420

• 10 -

The impact on the prior reporting periods is set out below:

Impact on Assets, Liabilities and Equity December 31, 2014 Accrued pension liabilities Accumulated deficit June 30, 2014 Accrued pension liabilities Accumulated deficit Non-controlling interests January 1, 2014 Accrued pension liabilities Accumulated deficit Non-controlling interests Impact on Total Comprehensive Income For the six months ended June 30, 2014 Operating costs Operating expenses Total effect on net loss for the period Total effect on total comprehensive loss for the period Impact on net loss attributable to: Shareholders of the parent Non-controlling interests Impact on total comprehensive loss attributable to: Shareholders of the parent Non-controlling interests	As Originally Stated $ 943,810 $ (13,640,051) $ 880,696 $ (10,251,369) $ 22,908 $ 825,606 $ (7,178,843) $ 47,021 As Originally Stated $ 8,568,579 $ 4,262,941 $ (3,087,478) $ (2,847,476) $ (3,072,526) (14,952) $ (3,087,478) $ (2,833,289) (14,187) $ (2,847,476)	Adjustments Arising from Initial Application $ 172,698 $ (172,698) $ 97,906 $ (97,961) $ 55 $ 101,604 $ (101,659) $ 55 Adjustments Arising from Initial Application $ (2,093) $ (1,605) $ 3,698 $ 3,698 $ 3,698 - $ 3,698 $ 3,698 - $ 3,698	Restated $ 1,116,508 $ (13,812,749) $ 978,602 $ (10,349,330) $ 22,963 $ 927,210 $ (7,280,502) $ 47,076 Restated $ 8,566,486 $ 4,261,336 $ (3,083,780) $ (2,843,778) $ (3,068,828) (14,952) $ (3,083,780) $ (2,829,591) (14,187) $ (2,843,778) (Continued)

• 11 -

Impact on Total Comprehensive Income For the three months ended June 30, 2014 Operating costs Operating expenses Total effect on net loss for the period Total effect on total comprehensive loss for the period Impact on net loss attributable to: Shareholders of the parent Non-controlling interests Impact on total comprehensive loss attributable to: Shareholders of the parent Non-controlling interests	As Originally Stated $ 4,664,799 $ 2,105,621 $ (1,802,093) $ (1,827,066) $ (1,796,266) (5,827) $ (1,802,093) $ (1,821,985) (5,081) $ (1,827,066)	Adjustments Arising from Initial Application $ (1,037) $ (812) $ 1,849 $ 1,849 $ 1,849 - $ 1,849 $ 1,849 - $ 1,849	Restated $ 4,663,762 $ 2,104,809 $ (1,800,244) $ (1,825,217) $ (1,794,417) (5,827) $ (1,800,244) $ (1,820,136) (5,081) $ (1,825,217) (Concluded)

7) Amendments to IFRS 7 “Disclosure - Offsetting Financial Assets and Financial Liabilities”

The amendments to IFRS 7 require disclosure of information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under enforceable master netting arrangements and similar arrangements. Refer to Note 34 for related disclosure.

• 8) Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities”

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-off” and “simultaneous realization and settlement”.

• 9) Annual Improvements to IFRSs: 2009-2011 Cycle

Several standards including IFRS 1 “First-time Adoption of International Financial Reporting Standards”, IAS 1 “Presentation of Financial Statements”, IAS 16 “Property, Plant and Equipment”, IAS 32 “Financial Instruments: Presentation” and IAS 34 “Interim Financial Reporting” were amended in this annual improvement.

The amendments to IAS 1 clarify that an entity is required to present a balance sheet as at the beginning of the preceding period when a) it applies an accounting policy retrospectively, or makes a retrospective restatement or reclassifies items in its financial statements, and b) the retrospective application, restatement or reclassification has a material effect on the information in the balance sheet at the beginning of the preceding period. The amendments also clarify that related notes are not required to accompany the balance sheet at the beginning of the preceding period.

• 12 -

The amendments to IAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be recognized in accordance with IAS 16 when they meet the definition of property, plant and equipment and otherwise as inventory.

The amendments to IAS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 “Income Taxes”.

The amendments to IAS 34 clarify that a measure of total liabilities for a reportable segment would be disclosed in interim financial reporting when such amounts are regularly provided to the chief operating decision maker of the Group and there has been a material change from the amounts disclosed in the last annual financial statements for that reportable segment. Refer to Note 40.

The initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 IFRSs version in 2015 has material effect on the consolidated balance sheet. The Group would present the consolidated balance sheet as of January 1, 2014 in accordance of the above amendments to IAS 1 and disclose related information in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, but not required to make disclosures about the line items of the balance sheet as of January 1, 2014.

• b. New IFRSs in issue but not yet endorsed by FSC

The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the FSC. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced their effective dates.

New IFRSs Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 10, IFRS 12 and IAS 28“'Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” IFRS 15 “Revenue from Contracts with Customers” Amendment to IAS 1 “Disclosure Initiative” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”

Effective Date Announced by IASB (Note 1)

July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 4) January 1, 2018 January 1, 2018 January 1, 2016 (Note 3) January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2017 January 1, 2016 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014

• 13 -

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

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

• Note 3: Prospectively applicable to transactions occurring in annual periods beginning on or after January 1, 2016.

• Note 4: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

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

• 1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

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

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

• a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

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

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

• 14 -

The impairment of financial assets

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

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

2) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only when an impairment loss has been recognized or reversed during the period. Furthermore, the Group is required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

3) IFRIC 21 “Levies”

IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government. It addresses the accounting for a liability whose timing and amount is certain and the accounting for a provision whose timing or amount is not certain. The Group accrues related liability when the transaction or activity that triggers the payment of the levy occurs. Therefore, if the obligating event occurs over a period of time (such as generation of revenue over a period of time), the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold (such as a minimum amount of revenue or sales generated), the liability is recognized when that minimum threshold is reached.

• 4) Annual Improvements to IFRSs: 2010-2012 Cycle

Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement.

The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Group or another entity in the same group or the market price of the equity instruments of the Group or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Group, but also of other entities outside the Group.

• 15 -

IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss.

The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker.

IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of not discounting is immaterial.

IAS 24 was amended to clarify that a management entity providing key management personnel services to the Group is a related party of the Group. Consequently, the Group is required to disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

• 5) Annual Improvements to IFRSs: 2011-2013 Cycle

Several standards, including IFRS 3, IFRS 13 and IAS 40 “Investment Property”, were amended in this annual improvement.

IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangements in the financial statements of the joint arrangement itself.

The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required to determine whether the investment property acquired is acquisition of an asset or a business combination.

• 6) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization”

The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.

The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement.

The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances:

• 16 -

• a) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or

• b) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

An entity should apply the aforementioned amendments prospectively for annual periods beginning on or after the effective date.

• 7) IFRS 15 “Revenue from Contracts with Customers”

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

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

• Identify the contract with the customer;

• Identify the performance obligations in the contract;

• Determine the transaction price;

• Allocate the transaction price to the performance obligations in the contracts; and

• Recognize revenue when the entity satisfies a performance obligation.

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

• 8) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulated that, when an entity sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate, the gain or loss resulting from the transaction is recognized in full. Also, when an entity loses control of a subsidiary that contains a business but retains significant influence, the gain or loss resulting from the transaction is recognized in full.

Conversely, when an entity sells or contributes assets that do not constitute a business to an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated. Also, when an entity loses control of a subsidiary that does not contain a business but retains significant influence in an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated.

• 9) Annual Improvements to IFRSs: 2012-2014 Cycle

Several standards including IFRS 5 “Non-current assets held for sale and discontinued operations”, IFRS 7, IAS 19 and IAS 34 were amended in this annual improvement.

IFRS 5 was amended to clarify that reclassification between non-current assets (or disposal group) “held for sale” and non-current assets “held for distribution to owners” does not constitute a change to a plan of sale or distribution. Therefore, previous accounting treatment is not reversed. The amendment also explains that assets that no longer meet the criteria for “held for distribution to owners” and do not meet the criteria for “held for sale” should be treated in the same way as assets that cease to be classified as held for sale.

• 17 -

The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset. In addition, the amendments clarify that the offsetting disclosures are not explicitly required for all interim periods.

IAS 19 was amended to clarify that the depth of the market for high quality corporate bonds used to estimate discount rate for post-employment benefits should be assessed by the market of the corporate bonds denominated in the same currency as the benefits to be paid, i.e. assessed at currency level (instead of country or regional level).

IAS 34 was amended to clarify that other disclosure information required by IAS 34 should be included in interim financial statements. If the Group includes the information in other statements (such as management commentary or risk report) issued at the same time, it is not required to repeat the disclosure in the interim financial statements. However, it is required to include a cross-reference from the interim financial statements to that issued statements that is available to users on the same terms and at the same time as the interim financial statements.

10) Amendment to IAS 1 “Disclosure Initiative”

The amendment clarifies that the consolidated financial statements should be prepared for the purpose of disclosing material information. To improve the understandability of its consolidated financial statements, the Group should disaggregate the disclosure of material items into their different natures or functions, and disaggregate material information from immaterial information.

The amendment further clarifies that the Group should consider the understandability and comparability of its consolidated financial statements to determine a systematic order in presenting its footnotes.

• 11) Amendments to IFRS 10, IFRS 12 and IAS 28 “'Investment Entities: Applying the Consolidation Exception”

The amendments clarified that when the Group (non-investment entity) applies the equity method to an associate or a joint venture that is an investment entity, the Group may retain the fair value measurements that the associate or joint venture used for its subsidiaries.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

• a. Statement of compliance

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

b. Basis of consolidation

See Note 12 and Table 4 for the detailed information of subsidiaries (including the percentage of ownership and main business).

• 18 -

c. Other important accounting policies

The accounting policies described in the consolidated financial statements were consistent with those applied in the consolidated financial statements for the year ended December 31, 2014, except for the following:

1) Employee benefits

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur and is reflected immediately in accumulated deficit and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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

2) Taxation

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

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The same critical accounting judgments and key sources of estimation uncertainty of consolidated financial statements have been followed in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the year ended December 31, 2014.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits	June 30, 2015 December 31, 2014 $ 320 $ 452 1,844,016 1,893,935 1,966,473 5,741,814 $ 3,810,809 $ 7,636,201	June 30, 2014 $ 388 1,228,901 6,214,021 $ 7,443,310

• 19 -

The market rate intervals of cash in bank at the end of the reporting period were as follows:

7.

June 30, 2015 December 31, 2014 June 30, 2014 Bank balance 0.001%-3.70% 0.001%-1.36% 0.001%-1.36% FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS June 30, 2015 December 31, 2014 June 30, 2014 Financial assets at FVTPL Financial assets held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts $ 44 $ 95 $ 913 Financial liabilities at FVTPL Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts $ - $ 7,113 $ -

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

				Contract Amount
	Contract	Currency	Maturity Date	(In Thousands)
June	30, 2015
Sell		USD/NTD	2015.07	USD1,000/NTD30,960
December 31, 2014
Sell		USD/NTD	2015.01	USD18,000/NTD562,947
June	30, 2014
Sell		USD/NTD	2014.07	USD6,000/NTD179,969

The Group entered into foreign exchange forward contracts during the six months ended June 30, 2015 and 2014 to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities.

• 20 -

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Non-current Domestic investments Listed shares Foreign investments Listed shares FINANCIAL ASSETS MEASURED AT COST Non-current Domestic unlisted common shares Overseas unlisted common shares Classified according to financial asset measurement categories Available-for-sale financial assets	June 30, 2015 December 31, 2014 $ 997,729 $ 982,975 296,307 260,167 $ 1,294,036 $ 1,243,142 June 30, 2015 December 31, 2014 $ 58,500 $ 79,217 33,329 34,182 $ 91,829 $ 113,399 $ 91,829 $ 113,399	June 30, 2014 $ 1,006,328 183,650 $ 1,189,978 June 30, 2014 $ 79,218 32,254 $ 111,472 $ 111,472

9. FINANCIAL ASSETS MEASURED AT COST

Management believed that the fair value of the above unlisted equity investments held by the Group cannot be reliably measured due to the significant range of reasonable fair value estimates, therefore, they were measured at cost less impairment at the end of the reporting period.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Operating Trade receivables Operating Less: Allowance for impairment loss	June 30, 2015 December 31, 2014 $ 268 $ 790 3,021,493 2,698,636 271 271 3,021,222 2,698,365 $ 3,021,490 $ 2,699,155	June 30, 2014 $ 992 3,240,050 2,247 3,237,803 $ 3,238,795 (Continued)

• 21 -

Other receivables Tax receivable Others	June 30, 2015 December 31, 2014 $ 102,377 $ 148,843 50,590 12,461 $ 152,967 $ 161,304	June 30, 2014 $ 120,511 15,804 $ 136,315 (Concluded)

• a. Trade Receivables

The average credit period for sales of goods was 60 days. In determining the recoverability of a trade receivable, the Group evaluates each customer’s credibility and financial position and considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period.

Before accepting any new customer, the Group uses an internal credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer.

Of the trade receivables balance (see aging analysis below) that were past due at the end of the reporting period, the Group had not recognized an allowance for impaired notes receivables and trade receivables, because there had not been a significant change in credit quality and the amounts were still considered recoverable.

The aging of receivables was as follows:

Less than 60 days 61-120 days Over 121 days	June 30, 2015 December 31, 2014 $ 2,990,896 $ 2,690,795 29,401 6,315 1,196 1,526 $ 3,021,493 $ 2,698,636	June 30, 2014 $ 3,059,759 359 179,932
		$ 3,240,050

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

Past due but not impaired Less than 60 days 61-120 days Over 121 days	June 30, 2015 December 31, 2014 $ 39,553 $ 54,113 29,401 6,315 925 1,255 $ 69,879 $ 61,683	June 30, 2014 $ 46,379 359 177,685 $ 224,423

The above aging schedule was based on the past due date.

As of June 30, 2015, the Group did not hold collateral for most of the receivables.

• 22 -

Movements in the allowance for impairment loss recognized on trade receivables were as follows:

Individually Assessed for Impairment Assembly Assessed for Impairment Balance at January 1, 2014 $ 1,976 $ - Add: Impairment losses recognized on receivables 271 - Balance at June 30, 2014 $ 2,247 $ - Balance at January 1, 2015 and June 30, 2015 $ 271 $ -	Total $ 1,976 271 $ 2,247 $ 271

• b. Notes Receivable and other receivables

No allowance for impairment loss of notes receivable and other receivables was recognized since the notes receivable and other receivables of the Group were not past due and the Group assessed that there was no uncertainty of recoverability.

11. INVENTORIES

Finished goods and merchandise Work in progress Raw materials	June 30, 2015 $ 1,426,354 8,693,289 292,231 $ 10,411,874	December 31, 2014 $ 1,156,530 7,857,969 287,144 $ 9,301,643	June 30, 2014 $ 957,457 8,408,790 289,921 $ 9,656,168

The cost of inventories recognized as cost of goods sold for the three months ended June 30, 2015 and 2014 included inventory write-downs of NT$138,591 thousand and NT$548,997 thousand, respectively, and the cost of inventories recognized as cost of goods sold for the six months ended June 30, 2015 and 2014 included inventory write-downs of NT$286,745 thousand and NT$809,380 thousand, respectively.

12. SUBSIDIARIES

Subsidiary included in consolidated financial statements

As of June 30, 2015, the Company has direct and indirect majority ownership in the following subsidiaries: Run Hong Investment, Ltd. (“Run Hong”), Hui Ying Investment, Ltd. (“Hui Ying”), Mxtran Inc. (“Mxtran”), Infomax Communication Co., Ltd. (“INFOMAX”), Macronix America Inc. (“MXA”), Macronix (BVI) Co., Ltd. (“MXBVI”), Mxtran Holding (Samoa) Co., Ltd. (“Mxtran Samoa”), Mxtran (H.K.) Holding Co., Limited (“Mxtran HK”), Maxtran Technology Co., Ltd. (“Maxtran Beijing”), Infomax Holding Co., Ltd. (“Infomax Samoa”), Infomax Holding Company Limited (“Infomax HK”), Infomax Communication (Suzhou) Co., Ltd. (“Infomax SU”), New Trend Technology Inc. (“NTTI”), Macronix (Asia) Limited (“MX Asia”), Macronix Pte. Ltd. (“MPL”), Macronix Europe NV. (“MXE”), Macronix (Hong Kong) Co., Ltd. (“MXHK”) and Macronix Microelectronics (Suzhou) Co., Ltd. (“MXm”).

• 23 -

Investor Investee Main Business The Company Run Hong Investment company The Company Hui Ying Investment company The Company and Run Hong Magic Pixel Inc. (“MPI”) Fabless multimedia system on chip The Company and Run Hong Mxtran Combi-SIM IC and the related service The Company and Run Hong INFOMAX Baseband chip, analog baseband chip, and power management chip The Company MXA Sales and marketing The Company MXBVI Investment company MPI Magic Pixel Inc. (“MPI Samoa”) Investment company MPI Samoa Magic Pixel Holding Company Limited (“MPI HK”) Investment company MPI HK Magic Pixel (Shen Zhen) Co., Ltd. (“MPI SZ”) Sales and technical support of fabless multimedia system on chip Mxtran Mxtran Samoa Investment company Mxtran Samoa Mxtran HK Investment company Mxtran HK Maxtran Beijing Technical support of Combi-SIM IC INFOMAX Infomax Samoa Investment company Infomax Samoa Infomax HK Investment company Infomax HK Infomax SU Software, rendering and technical service MXBVI NTTI IC design MXBVI MX Asia Investment company MXBVI MPL After-sales service MXBVI MXE After-sales service MXBVI MXHK Sales and marketing MXHK MXm Development of integrated circuit system and software

% of Ownership June 30, 2015 December 31, 2014 June 30, 2014 Remark 100.00 100.00 100.00 - 100.00 100.00 100.00 - - - 83.11 Note 94.84 94.15 94.15 - 99.02 99.02 99.02 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - Note Note 100.00 - Note Note 100.00 - Note Note 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 - 100.00 100.00 100.00 -

Note : On August 28, 2014, the Group entered into a sale agreement to dispose of MPI. On September 10, 2014, the disposal was completed. The Group also determined it lost control over MPI and its subsidiaries and therefore did not include this investee in the consolidated financial statements; MPI merged with MoDioTek in November, 2014, and MoDioTek was a surviving company.

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates

June 30, 2015 December 31, 2014 Associates MoDioTek $ 25,405 $ 38,599 % of Ownership Name of Associate Main Business Principal Place of Business June 30, 2015 December 31, 2014 MoDioTek Wi-Fi video transmission IC and smart security systems Hsinchu City 23.39 23.39	June 30, 2015 December 31, 2014 Associates MoDioTek $ 25,405 $ 38,599 % of Ownership Name of Associate Main Business Principal Place of Business June 30, 2015 December 31, 2014 MoDioTek Wi-Fi video transmission IC and smart security systems Hsinchu City 23.39 23.39	June 30, 2015 December 31, 2014 Associates MoDioTek $ 25,405 $ 38,599 % of Ownership Name of Associate Main Business Principal Place of Business June 30, 2015 December 31, 2014 MoDioTek Wi-Fi video transmission IC and smart security systems Hsinchu City 23.39 23.39	June 30, 2014 $ 55,609
	June 30, 2015 23.39	December 31, 2014 23.39	June 30, 2014 23.39

• 24 -

14. PROPERTY, PLANT AND EQUIPMENT

Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and Impairment Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at June 30, 2015				Six Months Ended June 30, 2015	Six Months Ended June 30, 2015
		Balance, Beginning of Period $ 1,294,628 23,088,007 80,734,087 6,322,265 30,323 41,247 1,198,945 1,804,262 114,513,764 393,380 17,930,640 70,414,495 3,520,962 22,073 26,909 1,076,947 93,385,406 $ 21,128,358	Additions $ - - - 4,325 - - 5,468 715,117 $ 724,910 $ - 612,287 1,902,115 333,245 1,815 2,687 34,934 $ 2,887,083	Disposals E $ - 12,655 182,329 7,044 900 2,419 8,547 - $ 213,894 $ - 12,655 182,328 6,865 465 2,419 8,415 $ 213,147	ffect of Foreign Currency Exchange Differences $ (17,386 ) (6,168 ) - (895 ) (41 ) (1,103 ) (3,691 ) (55) $ (29,339) $ 9,819 915 - 548 37 750 2,617 $ 14,686	Reclassification Balance, End of Period $ - $ 1,277,242 597,753 23,666,937 1,943,979 82,495,737 (1,225,068 ) 5,093,583 900 30,282 3,230 40,955 4,933 1,197,108 (1,325,727) 1,193,597 $ - 114,995,441 $ - 383,561 - 18,529,357 597,284 72,731,566 (597,284 ) 3,249,510 - 23,386 - 26,427 - 1,100,849 $ - 96,044,656 $ 18,950,785

Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and impairment Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at June 30, 2014				Six Mont	**hs Ended June 30, **	2014
		Balance, Beginning of Period $ 1,254,023 22,684,751 78,439,414 6,229,051 30,816 45,496 1,201,836 3,289,120 113,174,507 370,449 16,721,347 65,465,651 2,780,190 19,831 26,528 1,062,220 86,446,216 $ 26,728,291	Additions $ - - - 2,393 - - 8,800 546,894 $ 558,087 $ - 605,499 2,553,516 457,318 2,007 2,695 44,481 $ 3,665,516	Disposals $ - 9,198 65,021 2,538 - 4,657 41,628 - $ 123,042 $ - 6,989 57,378 2,538 - 4,657 41,613 $ 113,175	Effect of Foreign Currency Exchange Differences $ 1,320 (1,712 ) - (235 ) (11 ) 229 11 9 $ (389) $ 745 (242 ) - (149 ) (10 ) 260 66 $ 670	Disposal of Subsidiaries $ - - - (4,713 ) - - (4,149 ) - $ (8,862) $ - - - (3,280 ) - - (2,983) $ (6,263)	Reclassification Balance, End of Period $ - $ 1,255,343 244,671 22,918,512 1,509,519 79,883,912 224,023 6,447,981 1,200 32,005 - 41,068 40,722 1,205,592 (2,020,135) 1,815,888 $ - 113,600,301 $ - 371,194 - 17,319,615 41,908 68,003,697 (41,908 ) 3,189,633 - 21,828 - 24,826 - 1,062,171 $ - 89,992,964 $ 23,607,337

The carrying amount of the freehold land in the U.S.A. which is unutilized by the Group as of June 30, 2015, December 31, 2014 and June 30, 2014 were US$9,579 thousand, respectively.

• 25 -

The above items of property, plant and equipment were depreciated on a straight-line basis over the following estimated useful life of the asset:

Buildings Main buildings 21-40 years Electronic equipment 11-20 years Facility equipment 6 years Landscape engineering 20 years Machinery equipment 4-6 years Research and development equipment 5-6 years Transportation equipment 5-6 years Leasehold improvements 3-16 years Miscellaneous equipment 2-16 years

Refer to note 36 for the carrying amount of property, plant and equipment that had been pledged by the Group to secure long-term bank loans granted to the Group.

15. INTANGIBLE ASSETS

Cost Software Licenses Mask Others Accumulated amortization Software Licenses Mask Others Carrying amounts at June 30, 2015			**Six Months EndedJune 30, **	**Six Months EndedJune 30, **	2015
		Balance, Beginning of Period $ 643,272 58,913 - 18,459 720,644 455,190 16,629 - 10,482 482,301 $ 238,343	Additions $ 14,244 2,859 2,535 908 $ 20,546 $ 79,973 9,084 634 2,469 $ 92,160	Disposals $ 290,285 - - 253 $ 290,538 $ 290,285 - - 253 $ 290,538	Effect of Foreign Currency Exchange Differences $ (804 ) - - (3) $ (807) $ (643 ) - - - $ (643)	Balance, End of Period $ 366,427 61,772 2,535 19,111 449,845 244,235 25,713 634 12,698 283,280 $ 166,565

Cost Software Licenses Mask Others			Six Months EndedJune 30, 2014	Six Months EndedJune 30, 2014
	Balance, Beginning of Period $ 579,412 38,151 8,028 11,545 637,136	Additions $ 113,857 35,802 84 935 $ 150,678	Disposals Disposal of Subsidiaries $ 11,047 $ - 5,866 (10,500 ) - (1,151 ) 432 - $ 17,345 $ (11,651)	Effect of Foreign Currency Exchange Differences Reclassificati on Balance, End of Period $ 914 $ 156 $ 683,292 - - 57,587 - - 6,961 (1,877) 3,966 14,137 $ (963) $ 4,122 761,977 (Continued)

• 26 -

Accumulated amortization Software Licenses Mask Others Carrying amounts at June 30, 2014			Six Months EndedJune 30, 2014	Six Months EndedJune 30, 2014
	Balance, Beginning of Period $ 289,649 26,780 1,857 2,492 320,778 $ 316,358	Additions $ 110,882 5,493 3,687 2,497 $ 122,559	Disposals Disposal of Subsidiaries $ 11,047 $ - 5,866 (8,653 ) - (898 ) 432 - $ 17,345 $ (9,551)	Effect of Foreign Currency Exchange Differences Reclassificati on Balance, End of Period $ 944 $ 156 $ 390,584 - - 17,754 - - 4,646 - - 4,557 $ 944 $ 156 417,541 $ 344,436 (Concluded)

The above items of other intangible assets were amortized on a straight-line basis over the following estimated useful life of the asset:

Software 1-6 years Licenses 1-3 years Mask 1-3 years Others 1-3 years

16. PREPAYMENTS FOR LEASE

Current asset (included in other current assets) Non-current asset (included in other non-current assets)	June 30, 2015 December 31, 2014 $ 571 $ 585 23,130 23,994 $ 23,701 $ 24,579	June 30, 2014 $ 549 22,791 $ 23,340

Prepaid lease payments include land use rights are located in Mainland China. The Group has obtained the land use right certificates.

17. OTHER FINANCIAL ASSETS

Current Refundable deposits Non-current Restricted time deposits (Note 36) Refundable deposits Long-term receivables	June 30, 2015 December 31, 2014 $ 16,865 $ - $ 166,951 $ 165,799 11,221 13,088 2,733 3,770 $ 180,905 $ 182,657	June 30, 2014 $ - $ 166,594 12,409 5,304 $ 184,307

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18. OTHER ASSETS

19.	Current Prepayments Spare parts Offset against business tax payable Prepayments for lease Others Non-current Prepayments for lease Prepayments BORROWINGS a. Short-term borrowings Unsecured borrowings Letter of credit loan OA loan Unsecured borrowings Interest rate b. Long-term borrowings Secured borrowings (Note 36) Bank loans Unsecured borrowings Bank loans	June 30, 2015 $ 339,170 186,141 30,371 571 - $ 556,253 $ 23,130 105,009 $ 128,139 June 30, 2015 $ 238,012 95,132 1,998,000 $ 2,331,144 1.08%-1.98% June 30, 2015 $ 9,585,569 2,086,667 11,672,236	December 31, 2014 $ 197,475 350,070 29,530 585 659 $ 578,319 $ 23,994 102,009 $ 126,003 December 31, 2014 $ 535,039 - 1,599,000 $ 2,134,039 1.09%-1.92% December 31, 2014 $ 9,822,258 4,405,000 14,227,258	June 30, 2014 $ 157,123 331,569 26,578 549 86,874 $ 602,693 $ 22,791 94,102 $ 116,893 June 30, 2014 $ 788,780 - - $ 788,780 1.41%-1.80% June 30, 2014 $ 11,196,852 4,986,667 16,183,519 (Continued)

• 28 -

June 30, 2015 Less: Current portion $ 3,317,918 Less: Syndicate loans arrangement fee 30,886 Long-term borrowings: Non-current $ 8,323,432 Interest rate 1.80%-2.52% Floating Rate Borrowings Repayment Terms And Maturity Date Secured syndicated loan denominated in NT$ Repayable semi-annually from June 2015 to June 2018. Unsecured bank borrowing denominated in NT$ Pay off in September 2015. Unsecured bank borrowing denominated in NT$ Repayable quarterly from December 2014 to March 2016. Secured bank borrowing denominated in NT$ Repayable quarterly from January 2015 to October 2018. Secured bank borrowing denominated in NT$ Repayable monthly from January 2014 to December 2018. Secured bank borrowing denominated in NT$ Repayable quarterly from January 2015 to July 2017. Secured bank borrowing denominated in NT$ Repayable quarterly from April 2016 to January 2020. Unsecured bank borrowing denominated in NT$ Repayable semi-annually from March 2013 to September 2014 and Repayable quarterly from December 2014 to September 2015. Unsecured bank borrowing denominated in NT$ Repayable semi-annually from March 2015 to September 2017. Secured bank borrowing denominated in JPY Repayable quarterly from June 2015 to March 2019. Secured bank borrowing denominated in NT$ Repayable monthly from May 2003 to April 2016. Unsecured bank borrowing denominated in NT$ Pay off in September 2014. Unsecured bank borrowing denominated in NT$ Pay off in September 2014. Unsecured bank borrowing denominated in NT$ Pay off in September 2014. Unsecured bank borrowing denominated in NT$ Pay off in March 2015. Unsecured bank borrowing denominated in NT$ Pay off in March 2015. Secured syndicated loan denominated in NT$ Pay off in June 2015. Unsecured syndicated loan denominated in NT$ Pay off in June 2015. Less: Current portion Syndicated loan arrangement fee Total long-term borrowings	June 30, 2015 $ 3,317,918 30,886	December 31, 2014 June 30, 2014 $ 12,143,430 $ 5,231,357 10,322 11,775 $ 2,073,506 $ 10,940,387 1.57%-2.52% 1.56%-2.15% (Concluded) June 30, 2015 December 31, 2014 June 30, 2014 $ 7,650,000 $ - $ - 1,000,000 - - 720,000 855,000 900,000 700,000 800,000 800,000 568,956 646,799 723,811 260,000 320,000 - 251,900 - - 200,000 600,000 1,000,000 166,667 200,000 - 97,726 109,280 121,670 56,987 91,179 125,371 - - 120,000 - - 66,667 - - 50,000 - 1,200,000 1,200,000 - 50,000 150,000 - 7,855,000 9,426,000 - 1,500,000 1,500,000 3,317,918 12,143,430 5,231,357 30,886 10,322 11,775 $ 8,323,432 $ 2,073,506 $ 10,940,387
	$ 8,323,432

To repay the vested liabilities, the company has entered into a 3-year syndicated loan agreement with 15 financial institutions including Taiwan Cooperative Bank in June 2015. The total amount of 7.65 billion of the syndicated loan has been fully used as of June 30, 2015.

The Group had provided notes used as refundable guarantees for borrowings that will be cancelled upon termination of the guarantee.

In addition, the Group’s interest bearing floating rate borrowing was reset every one to three months.

• 29 -

The loan agreement requires the maintenance of current ratio, debt ratio, and times interest earned ratio based on semi-annual and annual consolidated financial statements. For the six months ended June 30, 2015, the Group had met the financial ratio requirements.

The details of assets pledged as collaterals for long-term loans are shown in Note 36.

20. NOTES PAYABLE AND TRADE PAYABLES

Notes payable Operating Trade payables Operating	June 30, 2015 December 31, 2014 $ 15 $ 30 1,960,953 1,995,973 $ 1,960,968 $ 1,996,003	June 30, 2014 $ 15 1,821,112 $ 1,821,127

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

21. OTHER PAYABLES

Payable for maintenance and repair Bonus Payable for pension Payable for legal fees Payable for rework fees Payable for royalties Others PROVISIONS Current Employee benefits (a) Customer returns and rebates (b)	June 30, 2015 $ 203,153 140,442 56,838 51,575 39,506 18,116 534,876 $ 1,044,506 June 30, 2015 $ 78,966 94,134 $ 173,100	December 31, 2014 $ 183,195 282,949 58,305 561,109 41,172 18,937 537,031 $ 1,682,698 December 31, 2014 $ 76,761 73,856 $ 150,617	June 30, 2014 $ 186,948 153,437 59,040 8,800 433,439 278,687 478,976 $ 1,599,327 June 30, 2014 $ 70,942 56,733 $ 127,675

22. PROVISIONS

• 30 -

Balance at January 1, 2015 Additional provisions recognized Reversing un-usage balances/usage Effect of foreign currency exchange differences Balance at June 30, 2015	Employee Benefits Customer Returns and Rebates $ 76,761 $ 73,856 66,226 119,103 (63,772) (98,785) (249) (40) $ 78,966 $ 94,134	Total $ 150,617 185,329 (162,557) (289) $ 173,100

• a. The provision for employee benefits represents vested long service leave entitlements accrued.

• b. The provision of customer returns and rebates was based on historical experience, management's judgments and other known reasons estimated product returns and rebates may occur in the year. The provision was recognized as a reduction of operating income in the years of the related goods sold.

23. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company, Mxtran and Infomax of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Based on the LPA, the Group makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group’s subsidiary in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name and are managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

	December 31,	December 31,
		2014
Present value of defined benefit obligation	$	1,576,706
Fair value of plan assets		(839,728)
Net defined benefit liability	$	736,978

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Movements in net defined benefit liability were as follows:

Present Value Of Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2014 $ 1,466,736 $ 797,238 Service cost Current service cost 6,450 - Net interest expense 32,944 - Recognized in profit or loss 39,394 - Remeasurement Return on plan assets - 10,137 Actuarial loss - experience adjustments 76,340 6,287 Recognized in other comprehensive income 76,340 16,424 Contributions from the employer - 31,830 Benefits paid (5,764) (5,764) Balance at December 31, 2014 $ 1,576,706 $ 839,728

Net Defined Benefit Liability $ 669,498 6,450 32,944 39,394 (10,137) 70,053 59,916 (31,830) - $ 736,978

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General administration expenses Research and development expenses	Three Months Ended June 30 2015 2014 $ 3,311 $ 4,005 334 381 4,951 29,518 1,225 1,598 $ 9,821 $ 35,502	Three Months Ended June 30 2015 2014 $ 3,311 $ 4,005 334 381 4,951 29,518 1,225 1,598 $ 9,821 $ 35,502		Six Months Ended June 30	Six Months Ended June 30
		2015 $ 3,311 334 4,951 1,225 $ 9,821		2015 $ 6,646 667 11,296 2,440 $ 21,049	2014 $ 8,079 756 59,025 3,473 $ 71,333

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic/ foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government/corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

• 32 -

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

	December 31,
	2014
Discount rate	2.25%
Expected rate of salary increase	3.00%
Expected return on plan assets increase	1.25%
The average duration of the defined benefit obligation	7 years

The Company maintains a separate executive pension plan and the net periodic pension costs were $3,943 thousand and $28,367 thousand for the three months ended June 30, 2015 and 2014 and $9,292 thousand and $56,733 thousand for the six months ended June 30, 2015 and 2014.

24. EQUITY

• a. Share capital

1) Ordinary shares

Numbers of shares authorized (in thousand) Share authorized Numbers of shares issued and fully paid (in thousand) Shares issued	June 30, 2015 6,550,000 $ 65,500,000 3,558,774 $ 35,587,740	December 31, 2014 6,550,000 $ 65,500,000 3,558,774 $ 35,587,740	June 30, 2014 6,550,000 $ 65,500,000 3,521,473 $ 35,214,730

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

A total of 864,704 thousand shares and 650,000 thousand shares of the Company’s authorized shares were reserved for the issuance of convertible bonds and employee share options.

2) Global depositary receipts

On August 28, 2014, the Company’s board of directors resolved to issue GDRs. The Company will issue from 480,000 thousand to 600,000 thousand ordinary shares. On September 30, 2014, the above transaction was approved under Rule No.1030037906 issued by the FSC. On March 16, 2015, the board of directors resolved to cancel the issuance of GDRs. On March 23, 2015, the above resolution was approved under Rule No.1040008949 issued by the FSC.

• 33 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from employee share options Arising from donations May be used to offset a deficit only (2) Arising from changes in percentage of ownership interest in subsidiaries May not be used for any purpose Arising from treasury share transactions Arising from employee restricted shares	June 30, 2015 December 31, 2014 $ 317,204 $ 317,204 37 37 $ 317,241 $ 317,241 $ 696 $ 661 $ 26,502 $ 26,502 282,845 (102,752) $ 309,347 $ (76,250)	June 30, 2014 $ 317,204 37 $ 317,241 $ 458 $ 26,502 - $ 26,502

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

• 2) Such capital surplus arises from changes in capital surplus of subsidiaries accounted for by using equity method.

• c. Retained earnings and dividend policy

The Company’s Articles of Incorporation provide that any profit after annual closing should be used first to cover income tax and accumulated deficit and then make appropriation for legal reserve 10% of the remaining amount (until the amount of the legal reserve equals the amount of the Company’s paid-in capital) and special reserve in accordance with law. The remaining amount will be distributed in the following order:

• 1) Employee bonus - 15%;

• 2) Directors remuneration - 2%;

• 3) Shareholders’ dividends - any remaining amount will be added to the undistributed earnings from previous years.

The company is classified as capital intensive industry. In accordance with the long-term financial program of the company, the above shareholders’ dividends can retain as undistributed earnings, and distribute in future, as determined by the shareholders at Annual General Meeting.

Distributions take the form of cash dividend as the first choice. Nevertheless, it still depends on the Company’s financial, sales or operating condition. The Company’s Articles of Incorporation provide that no more than 50% of the current year’s total amount of distributable earnings can be distributed in the form of stock dividend.

• 34 -

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The Company have made consequential amendments to the Company’s Articles of Incorporation and be approved by the annual shareholders’ meeting on June 18, 2015. Due to the net loss for the three months ended June 30, 2015 and 2014 and the six months ended June 30, 2015 and 2014, there were no accrual for bonus to employees and remuneration to directors and supervisors.

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

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

Information on the bonus to employees, directors and supervisors proposed by the Company’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

• d. Others equity items

• 1) Exchange differences on translating foreign operations

Balance at January 1 Exchange differences arising on translation of foreign entities Balance at June 30 Unrealized gain on available-for-sale financial assets Balance at January 1 Unrealized gain on available-for-sale financial assets Balance at June 30		Six Months EndedJune 30	Six Months EndedJune 30
		2015 2014 $ 27,223 $ (49,141) (47,199) 961 $ (19,976) $ (48,180) Six Months EndedJune 30
		2015 $ 917,437 52,503 $ 969,940	2014 $ 506,926 238,276 $ 745,202

• 2) Unrealized gain on available-for-sale financial assets

• 3) Unearned employee benefit

In the meeting of shareholders on June 18, 2014, the shareholders approved a restricted share plan for employees. Refer to Note 29 for the information of restricted shares issued.

Balance at January 1 Issuance of shares Share-based payment expenses recognized Balance at June 30		Six Months EndedJune 30	Six Months EndedJune 30
		2015 $ (209,813) (371,057) 156,674 $ (424,196)	2014 $ - - - $ -

• 35 -

e. Non-controlling interests

Balance at January 1 Effect of retrospective application and retrospective restatement Attributable to non-controlling interests: Share of loss for the period Issue of employee share options by subsidiaries Exchange difference arising on translation of foreign entities Non-controlling interest arising from acquisition at a percentage different from its earlier ownership percentage of subsidiaries (Note 31) Non-controlling interest relating to outstanding vested share options held by the employees of subsidiaries Disposal of subsidiaries Balance at June 30		Six Months EndedJune 30	Six Months EndedJune 30
		2015 $ 13,101 - (3,659) - (115) 4,531 78 - $ 13,936	2014 $ 47,021 55 (14,952) 45 765 - 66 (10,037) $ 22,963

f. Treasury shares

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

		Number of
		Shares Held	Carrying
	Name of Subsidiary	(In Thousands)	Amount		Market Price
June 30, 2015
Hui Ying		3,899	$	159,061	$	23,279
December	31, 2014
Hui Ying		3,899		159,061		27,023
June 30, 2014
Hui Ying		3,899		159,061		28,699

The Company’s shares held by subsidiaries are regarded as treasury shares; shareholder’s rights are retained, except the rights to participate in any share issuance for cash and to vote.

25. REVENUE

Revenue from the sale of goods Royalty revenue and others		Three Months Ended June 30 2015 2014 $ 4,972,252 $ 4,969,163 2,977 3,548 $ 4,975,229 $ 4,972,711		Six Months Ended June 30	Six Months Ended June 30
		2015 $ 4,972,252 2,977 $ 4,975,229		2015 $ 9,673,166 8,337 $ 9,681,503	2014 $ 9,753,983 8,791 $ 9,762,774

The analysis of the Group’s revenue and main products was disclosed in Note 40.

• 36 -

26. NET LOSS

Net loss was attributable to:

a. Other income

Intellectual property rights income Interest income Dividend income Others	Three Months Ended June 30 2015 2014 $ - $ - 8,151 15,048 31,584 47,877 10,212 8,622 $ 49,947 $ 71,547	Three Months Ended June 30 2015 2014 $ - $ - 8,151 15,048 31,584 47,877 10,212 8,622 $ 49,947 $ 71,547		Six Months Ended June 30	Six Months Ended June 30
		2015 $ - 8,151 31,584 10,212 $ 49,947		2015 $ 951,300 18,418 35,399 19,844 $ 1,024,961	2014 $ - 33,443 47,877 12,381 $ 93,701

b. Other gains and losses

Net foreign exchange (losses) gains Net gains (losses) arising on financial assets designated as at FVTPL Gain on disposal investment Others	Three Months Ended June 30 2015 2014 $ (23,352) $ (23,582) 695 4,365 7,491 21,213 (425) 1,246 $ (15,591) $ 3,242	Three Months Ended June 30 2015 2014 $ (23,352) $ (23,582) 695 4,365 7,491 21,213 (425) 1,246 $ (15,591) $ 3,242	Six Months Ended June 30	Six Months Ended June 30	Six Months Ended June 30
		2015 $ (23,352) 695 7,491 (425) $ (15,591)		2015 $ (32,373) 124 7,491 (873) $ (25,631)	2014 $ 25,379 (4,795) 21,213 (3,895) $ 37,902

c. Finance costs

Interest on loans Less: Amounts included in the cost of qualifying assets	Three Months Ended June 30 2015 2014 $ 74,542 $ 75,950 1,230 5,670 $ 73,312 $ 70,280	Three Months Ended June 30 2015 2014 $ 74,542 $ 75,950 1,230 5,670 $ 73,312 $ 70,280		Six Months Ended June 30	Six Months Ended June 30
		2015 $ 74,542 1,230 $ 73,312		2015 $ 142,690 4,316 $ 138,374	2014 $ 153,892 13,562 $ 140,330

Information about capitalized interest was as follows:

Capitalized interest Capitalization rate	Three Months Ended June 30 2015 2014 $ 1,230 $ 5,670 1.44% 1.86%	Six Months Ended June 30
		2015 2014 $ 4,316 $ 13,562 1.72% 1.79%

• 37 -

d. Depreciation and amortization

Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Selling and marking expenses General administration expenses Research and development expenses e. Employee benefits expense Post-employment benefits (Note 23) Defined contribution plans Defined benefit plans Share-based payments Equity-settled share-based payments Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		Three Months Ended June 30 2015 2014 $ 1,446,021 $ 1,838,430 42,232 63,232 $ 1,488,253 $ 1,901,662 $ 1,254,167 $ 1,540,263 191,854 298,167 $ 1,446,021 $ 1,838,430 $ 27,674 $ 39,541 145 196 5,985 15,400 8,428 8,095 $ 42,232 $ 63,232 Three Months Ended June 30 2015 2014 $ 61,587 $ 62,942 9,821 35,502 71,408 98,444 104,214 23 1,464,103 1,427,894 $ 1,639,725 $ 1,526,361 $ 726,600 $ 728,425 913,125 797,936 $ 1,639,725 $ 1,526,361		Six Months Ended June 30
				2015 2014 $ 2,887,083 $ 3,665,516 92,160 122,559 $ 2,979,243 $ 3,788,075 $ 2,496,732 $ 3,071,245 390,351 594,271 $ 2,887,083 $ 3,665,516 $ 60,583 $ 75,237 296 341 14,710 30,606 16,571 16,375 $ 92,160 $ 122,559 Six Months Ended June 30
		2015 $ 61,587 9,821 71,408 104,214 1,464,103 $ 1,639,725 $ 726,600 913,125 $ 1,639,725	2015 2014 $ 124,191 $ 127,751 21,049 71,333 145,240 199,084 156,674 45 2,837,331 2,867,398 $ 3,139,245 $ 3,066,527 $ 1,455,738 $ 1,471,609 1,683,507 1,594,918 $ 3,139,245 $ 3,066,527

• 38 -

27. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Three Months Ended June 30 2015 2014 Current tax In respect of the current year $ 3,573 $ 2,054 In respect of prior years - 37 Deferred tax In respect of the current year 1,628 (111) Income tax expense recognized in profit or loss $ 5,201 $ 1,980 b. Integrated income tax June 30, 2015 Accumulated deficit Unappropriated earnings generated before January 1, 1998 $ - Unappropriated earnings generated on and after January 1, 1998 (15,392,564) $ (15,392,564) Balance of the imputation credit accounts $ 410,771	Three Months Ended June 30	Three Months Ended June 30	Six Months Ended June 30 2015 2014 $ 6,273 $ 3,204 1 126 1,707 (238) $ 7,981 $ 3,092 December 31, 2014 June 30, 2014 $ - $ - (13,812,749) (10,349,330) $ (13,812,749) $ (10,349,330) $ 289,482 $ 282,232	Six Months Ended June 30 2015 2014 $ 6,273 $ 3,204 1 126 1,707 (238) $ 7,981 $ 3,092 December 31, 2014 June 30, 2014 $ - $ - (13,812,749) (10,349,330) $ (13,812,749) $ (10,349,330) $ 289,482 $ 282,232
		2014 $ 2,054 37 (111) $ 1,980 June 30, 2015 $ - (15,392,564) $ (15,392,564) $ 410,771		2014 $ 3,204 126 (238) $ 3,092 June 30, 2014 $ - (10,349,330) $ (10,349,330) $ 282,232

No tax creditable ratios were calculated for accumulated deficit as of June 30, 2015, December 31, 2014 and June 30, 2014, respectively.

c. Income tax assessments

The Company’s tax returns through 2012 have been assessed by the tax authorities except 2010. The Company disagreed with the tax authorities’ assessment on its 2012 tax returns and had applied for re-examination. The Company was also not satisfied with the results of the review of the 2009 tax returns and had applied for appeal. Nevertheless, the Company has accrued extra income tax base on the assessment by the tax authorities.

28. LOSS PER SHARE

Basic and diluted loss per share	Three Months Ended June 30	Three Months Ended June 30	Three Months Ended June 30	Unit: NT$ Per Share Six Months Ended June 30 2015 2014 $ (0.45) $ (0.87)	Unit: NT$ Per Share Six Months Ended June 30 2015 2014 $ (0.45) $ (0.87)	Unit: NT$ Per Share Six Months Ended June 30 2015 2014 $ (0.45) $ (0.87)
		2015 $ (0.35)	2014 $ (0.51)		2015 $ (0.45)	2014 $ (0.87)

• 39 -

The amount of loss and weighted average number of ordinary shares outstanding used in the computation of loss per share from continuing operations were as follows:

Net Loss for the Period

Three Months Ended June 30 Six Months Ended June 30 2015 2014 2015 2014 Loss for the period attributable to owners of the parent $ (1,220,566) $ (1,794,417) $ (1,575,284) $ (3,068,828) Weighted average number of ordinary shares outstanding (in thousand shares): Three Months Ended June 30 Six Months Ended June 30 2015 2014 2015 2014 Weighted average number of ordinary shares in computation of basic and diluted loss per share 3,517,574 3,517,574 3,517,574 3,517,574		Six Months Ended June 30	Six Months Ended June 30
		2015 3,517,574	2014 3,517,574

As disclosed in Note 29 to the financial statements in determining whether the share-based payments are potential ordinary shares. The aforementioned stock options were not included in the calculation of diluted loss per share because they were antidilutive for the six months ended June 30, 2015 and 2014.

29. SHARE-BASED PAYMENT ARRANGEMENTS

• a. Employee share option plan

Mxtran

Approved by the Board of Directors of Mxtran on August 12, 2011, Mxtran was authorized to issue employee stock options for 2,344 thousand units. Each stock option may subscribe for one new share of common stock of Mxtran. The options are valid for six years and exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in Mxtran’s capital surplus, the exercise price is adjusted accordingly.

Information on employee share options was as follows:

Balance at January 1 Options cancelled Balance at June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
	2015 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 1,309 $ 10.00 (52) - 1,257 10.00	2014
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 1,732 $ 10.00 (155) - 1,577 10.00

• 40 -

As of June 30, 2015, information about Mxtran’s outstanding and exercisable option was as follows:

Range of Exercise Price (NT$) $10.00	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding Options (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 1,257 2.11 $10.00	Options Exercisable
		Number Exercisable Options (Thousand) Exercise Price (NT$/Per Share) 1,257 $10.00

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

Grant-date share price (NT$)	$	3.23
Exercise price (NT$)		10.00
Expected volatility		44.82%
Expected life (years)	4.25 years
Expected dividend yield		-
Risk-free interest rate		1.11%

For the three months ended June 30, 2015 and 2014, the compensation cost recognized was NT$0 and NT$23 thousand, respectively. For the six months ended June 30, 2015 and 2014, the compensation cost recognized was NT$0 and NT$45 thousand, respectively. As of June 30, 2015 and 2014, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were 2.3% and 6%, respectively.

INFOMAX

Approved by the Board of Directors of INFOMAX on December 21, 2007, April 2, 2010 and January 26, 2011, INFOMAX was authorized to issue employee stock options for 1,910 thousand units, 8,654 thousand units and 1,346 thousand units, respectively. Each stock option may subscribe for one new share of common stock of INFOMAX. The options authorized on December 21, 2007 are valid for eight years. The options authorized on April 2, 2010 and January 26, 2011 are valid for the earlier of six years to the grant dates or two months to the date of application for share listing on the TSE or GreTai Securities Market. The options granted are exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in INFOMAX’s capital surplus, the exercise price is adjusted accordingly.

INFOMAX made capital deduction and increased its share capital by 109,797 thousand shares and 100,000 thousand shares on December 1, 2012 and April 3, 2013, respectively. Each stock option has subscribed for 0.3 common stock share and the exercise price was subject to adjustments for any change of capital structure.

Information on employee share option was as follows:

Balance at January 1 Options cancelled Balance at June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
	2015 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 7,116 $ 31.87 (35) - 7,081 31.87	2014
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 7,341 $ 31.87 (40) - 7,301 31.87

• 41 -

As of June 30, 2015, information about INFOMAX’s outstanding and exercisable option was as follows:

Range of Exercise Price (NT$) $31.87 31.87 31.87	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding Options (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 1,111 0.47 $31.87 5,421 0.75 31.87 549 1.57 31.87 7,081	Options Exercisable
		Number Exercisable Options (Thousand) Exercise Price (NT$/Per Share) 1,111 $31.87 5,421 31.87 549 31.87 7,081

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

Grant-date share price (NT$)	$	5.17
Exercise price (NT$)		10.00
Expected volatility		37.82%
Expected life (years)	4.25 years
Expected dividend yield		-
Risk-free interest rate		0.91%

For the three months ended June 30, 2015 and 2014, and the six months ended June 30, 2015 and 2014, the compensation cost recognized both were NT$0. As of June 30, 2015 and 2014, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were both 3%.

b. Restricted Stock Plan for employees

In the shareholders’ meeting on June 18, 2014, the shareholders approved a restricted stock plan for employees of 2014, consisting of 123,251 thousand shares and issuance price of NT$ 0 per share, which has also been approved by the board of directors on July 24, 2014. On August 19, 2014, the FSC issued approval No. 1030031466 which approved this plan. The board of directors approved a restricted stock plan were as below:

Grant Date	Grant Shares	Fair	Value	Issued Date	Issued Shares
2014/08/28	38,365	$	7.76	2014/12/25	37,301
2015/03/16	62,213		6.82	Note	Note

Note: As of June 30, 2015, the date of issuance was not yet set.

To meet the vesting conditions, an employee has to meet performance and other conditions over the vesting period, as follows:

• 1) Remain employed by the Company within one year after the grant date; and has a current year’s performance rating of “successful” (or higher) - 40% of restricted shares will be vested;

• 2) Remain employed by the Company within two years after the grant date; and has a current year’s performance rating of “successful” (or higher) - 30% of restricted shares will be vested;

• 42 -

• 3) Remain employed by the Company within three years after grant date; and has a current year’s performance rating of “successful” (or higher) - 30% of restricted shares will be vested.

In addition to the vesting conditions, the limitations are as follows:

• 1) Employees, except for inheritance, should not sell, transfer, pledge, donate or in any other way dispose of the shares.

• 2) The shares should be held in stock trust.

• 3) Except for the above two paragraphs, other rights of restricted stock plan for employees, including but not limited to, dividends, bonuses, the distribution rights of legal reserve and capital surplus, share options of cash capital and voting rights of shareholders, etc. are the same as the Group’s issued ordinary shares.

• 4) The dividends of restricted stock plan for employees are not restricted by existing conditions.

When employees do not reach the vesting conditions of restricted stock plan for employees during the year, the Company will recover and cancel the shares.

Information on restricted stock plan for employees was as follows:

Balance at January 1 Granted (Note 1) Cancelled (Note 2) Balance at June 30		Number of Shares (In Thousands)	Number of Shares (In Thousands)
		Six Months Ended June 30
		2015 $ 37,301 62,213 (1,454) $ 98,060	2014 $ - - - $ -

Note 1: The given shares in this year have not issued yet.

Note 2: The cancelled shares in this year are capital stock to be cancelled.

The compensation cost recognized was $104,214 thousand for the three months ended June 30, 2015 and $156,674 thousand for the six months ended June 30, 2015.

30. DISPOSAL OF SUBSIDIARIES

On April 23, 2014, the Group did not participate in MoDioTek’s capital increase. Since the Group has lost control over MoDioTek, it was no longer consolidated. MoDioTek was required to be recognized on the same basis as if it had been disposed of.

• 43 -

a. Analysis of assets and liabilities on the date control was lost

Current assets Cash and cash equivalents Trade receivables Other receivables Inventories Others Non-current assets Property, plant and equipment Intangible assets Others Current liabilities Trade payables Other payables Others Net assets disposed of Gain on disposal of subsidiary Fair value of interest retained Net assets disposed of Non-controlling interests Gain on disposal	April 23, 2014 $ 50,687 4,163 3,538 2,412 603 2,599 2,100 1,665 (2,948) (4,464) (2,449) $ 57,906 For the Six Months Ended June 30	April 23, 2014 $ 50,687 4,163 3,538 2,412 603 2,599 2,100 1,665 (2,948) (4,464) (2,449) $ 57,906 For the Six Months Ended June 30
		2014 $ 64,205 (57,906) 9,179 $ 15,478

b. Gain on disposal of subsidiary

31. EQUITY TRANSACTIONS WITH NONCONTROLLING INTERESTS

On April 30, 2015, the Group subscribed for additional new shares of Mxtran at a percentage different from its exiting ownership percentage, raising its continuing interest from 94.15% to 94.84%.

The above transactions were accounted for as equity transactions since the Group did not cease to have control over the subsidiary.

Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary Difference arising from equity transactions Line items adjusted for equity transaction Accumulated deficits	Mxtran $ (89,995) 85,464 $ (4,531) $ (4,531)

• 44 -

32. OPERATING LEASE ARRANGEMENTS

a. The Group as lessee

Operating leases relate to leases of land, offices, employee dormitories and office equipment with lease terms between 1 and 50 years. The Group does not have a bargain purchase option to acquire the leased land, offices, employee dormitories and office equipment at the expiry of the lease periods.

The future minimum lease payments for non-cancellable operating lease commitments were as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	June 30, 2015 December 31, 2014 $ 40,504 $ 62,176 131,799 119,670 206,422 217,055 $ 378,725 $ 398,901	June 30, 2014 $ 93,306 122,717 232,083 $ 448,106

The lease payments recognized as expenses were as follows:

Minimum lease payment	For the Three Months Ended June 30 2015 2014 $ 26,473 $ 28,925	For the Three Months Ended June 30 2015 2014 $ 26,473 $ 28,925		For the Six Months Ended June 30	For the Six Months Ended June 30
		2015 $ 26,473		2015 $ 53,791	2014 $ 54,279

b. The Group as lessor

Operating leases relate to the building owned by the Group with lease terms between 1 to 5 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have a bargain purchase option to acquire the property at the expiry of the lease period.

The future minimum lease revenue from non-cancellable operating leases was as follows:

Not later than 1 year Later than 1 year and not later than 5 years	June 30, 2015 December 31, 2014 $ 4,136 $ 4,433 2,662 4,509 $ 6,798 $ 8,942	June 30, 2014 $ 4,342 6,412 $ 10,754

33. CAPITAL MANAGEMENT

The Group manages its capital to ensure that the Group will be able to operate under the premises of going concern and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

The Group’s strategy for managing the capital structure is to lay out the plan of product development and expand the market share considering the growth and the magnitude of industry and further developing an integral plan founded on the required capacity, capital outlay, and magnitude of assets in long-term development. Ultimately, considering the risk factors such as the fluctuation of the industry cycle and the life cycle of products, the Group determines the optimal capital structure by estimating the profitability of

• 45 -

products, operating profit ratio, and cash flow based on the competitiveness of products. The management of the Group periodically examines the capital structure and contemplates on the potential costs and risks involved while exerting different financial tools. In general, the Group implements prudent strategy of risk management.

34. FINANCIAL INSTRUMENTS

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

The management considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

• b. Fair value of financial instruments that are measured at fair value

• 1) Fair value hierarchy

June 30, 2015 Financial assets at FVTPL Derivative financial instrument Available-for-sale financial assets - non-current Securities listed in ROC Securities listed in other countries December 31, 2014 Financial assets at FVTPL Derivative financial instrument Available-for-sale financial assets - non-current Securities listed in ROC Securities listed in other countries Financial liabilities at FVTPL Derivative financial instruments	Level 1 $ - $ 997,729 296,307 $ 1,294,036 Level 1 $ - $ 982,975 260,167 $ 1,243,142 $ -	Level 2 $ 44 $ - - $ - Level 2 $ 95 $ - - $ - $ 7,113	Level 3 $ - $ - - $ - Level 3 $ - $ - - $ - $ -	Total $ 44 $ 997,729 296,307 $ 1,294,036 Total $ 95 $ 982,975 260,167 $ 1,243,142 $ 7,113

• 46 -

June 30, 2014

Financial assets at FVTPL Derivative financial instrument Available-for-sale financial assets - non-current Securities listed in ROC Securities listed in other countries	Level 1 $ - $ 1,006,328 183,650 $ 1,189,978	Level 2 $ 913 $ - - $ -	Level 3 $ - $ - - $ -	Total $ 913 $ 1,006,328 183,650 $ 1,189,978

There were no transfers between Level 1 and Level 2 in the current and prior periods.

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

Financial Instruments Derivatives - foreign currency forward contracts	Valuation Techniques and Inputs
	Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates.

• c. Categories of financial instruments

		June 30,	December	31,	June 30,
		2015	2014		2014
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading	$	44	$	95 $	913
Loans and receivables (i)		7,435,860	11,162,496		11,316,035
Available-for-sale financial assets (ii)		1,385,865	1,356,541		1,301,450
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading		-	7,113		-
Amortized cost (iii)		17,234,149	20,568,146		20,657,596

• i) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, notes receivable and trade receivables (including receivables from related parties), other receivables, and other financial assets (including current and non-current).

• ii) The balances included the carrying amount of available-for-sale financial assets measured at cost.

• iii) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, notes payable and trade payables (including payables to related parties), other payables (in clouding other payables to related parties), payable for purchase of equipment, and long-term loans (including current portion).

• 47 -

• d. Financial risk management objectives and policies

The Group manages its exposure to risks relating to the operations through market risk, credit risk, and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by management in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Group must comply with certain treasury procedures that provide guiding principles for overall financial risk management.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below), interest rates (see (b) below), and other price risk (see (c) below).

a) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing forward foreign exchange contracts.

Sensitivity analysis

The Group was mainly exposed to the USD and JPY.

Sensitivity analysis of rate is for the transactions in currencies other than the entity’s functional currency (foreign currencies) which are recognized at the rates of exchange prevailing at the dates of the transactions.

The following table details the Group’s sensitivity to a 3% and 10% increase in New Taiwan dollars (the functional currency) against the relevant foreign currencies, respectively. The sensitivity rates used are 3% and 10% when reporting foreign currency risk internally to key management personnel.

Pre-tax loss	Currency USD Impact Six Months EndedJune 30 2015 2014 $ 32,022 $ 38,246	Currency USD Impact Six Months EndedJune 30 2015 2014 $ 32,022 $ 38,246	Currency JPY Impact	Currency JPY Impact	Currency JPY Impact
			Six Months EndedJune 30
		2015 $ 32,022		2015 $ 10,947	2014 $ 10,609

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings.

• 48 -

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

		June 30,	December 31,	December 31,	June 30,
		2015		2014	2014
Fair value interest rate risk
Financial assets	$	2,019,198	$	4,868,205 $	6,343,314
Financial liabilities		2,179,258		1,599,000	600,000
Cash flow interest rate risk
Financial assets		1,958,242		2,933,344	1,266,202
Financial liabilities		11,793,235		14,751,975	16,360,524

Sensitive analysis

Sensitivity analysis of interest is calculated based on the financial liabilities exposed to cash flow interest rate risk at the end of each reporting period.

If interest rates had been 50 basis points higher/lower, the Group’s pre-tax loss for the six months ended June 30, 2015 and 2014 would increase/decrease by $29,483 thousand and $40,901 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.

Sensitive analysis

Sensitivity analysis of equity price is calculated based on the fair values of available-for-sale investments at the end of each reporting period.

If equity prices had been 10% higher/lower, equity for the six months ended June 30, 2015 and 2014 would have increased/decreased by $129,404 thousand and $118,998 thousand, respectively, as a result of the changes in fair value of available-for-sale investments.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s exposure to credit risk mainly arises from trade receivables - operating, bank deposits, and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

Business related credit risk

In order to maintain the credit quality of trade receivables, the Group has established procedures to monitor and limit exposure to credit risk on trade receivables.

Credit evaluation is performed in the consideration of the relevant factors which may affects the customer’s paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions. The Group holds some of the credit enhancements such as prepayments and collateral to mitigate its credit risks.

• 49 -

Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of trade receivables and, where appropriate, credit guarantee insurance cover is purchased.

As of June 30, 2015, December 31, 2014 and June 30, 2014, the Group’s ten largest customers accounted for 42%, 52% and 48% of total trade receivables (including receivables from related parties), respectively. The Group believed the concentration of credit risk was relatively insignificant for the remaining trade receivables.

Financial credit risk

The Group’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Corporate Treasury function. The Group only deals with creditworthy counterparties and banks so that no significant credit risk was identified.

• 3) Liquidity risk

The objective of liquidity risk management is to ensure the Group has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

The Group relies on bank borrowings as a significant source of liquidity. As of June 30, 2015, December 31, 2014 and June 30, 2014, the Group had available unutilized overdraft and short-term bank loan facilities of approximately $1,627,587 thousand, $3,922,524 thousand and $5,090,486 thousand, respectively.

Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows.

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

To the extent that interest flows are floating rate, the undiscounted amount was derived from the expected borrowing interest rate at the end of the reporting period.

June 30, 2015

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 3,261,655 Variable interest rate liabilities 3,695,844 Fixed interest rate liabilities 2,184,392 $ 9,141,891	1-3 Years $ - 8,299,378 - $ 8,299,378	3-5 Years $ - 315,979 - $ 315,979	5+ Years $ - - - $ -	Total $ 3,261,655 12,311,201 2,184,392
				$ 17,757,248

• 50 -

December 31, 2014

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 4,217,171 Variable interest rate liabilities 12,929,684 Fixed interest rate liabilities 1,603,482 $ 18,750,337 June 30, 2014 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 3,697,072 Variable interest rate liabilities 5,641,471 Fixed interest rate liabilities 601,874 $ 9,940,417	1-3 Years $ - 1,704,910 - $ 1,704,910 1-3 Years $ - 10,493,748 - $ 10,493,748	3-5 Years $ - 443,796 - $ 443,796 3-5 Years $ - 614,628 - $ 614,628	5+ Years $ - - - $ - 5+ Years $ - - - $ -	Total $ 4,217,171 15,078,390 1,603,482
				$ 20,899,043
				Total $ 3,697,072 16,749,847 601,874
				$ 21,048,793

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

Liquidity and interest risk rate tables for derivative financial liabilities

The following table detailed the Group’s liquidity analysis for its derivative financial instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

June 30, 2015

	On Demand or	On Demand or
		Less than			3	Months to
		1 Month	1-3	Months		1 Year	1-5 Years		5+ Years
Gross settled
Foreign exchange forward contracts
Inflows	$	30,960	$	-	$	-	$	-	$	-
Outflows		30,916		-		-		-		-
December 31, 2014
	On Demand or
		Less than			3	Months to
		1 Month	1-3	Months		1 Year	1-5 Years		5+ Years
Gross settled
Foreign exchange forward contracts
Inflows	$	562,947	$	-	$	-	$	-	$	-
Outflows		569,965		-		-		-		-

• 51 -

June 30, 2014

	On Demand or	On Demand or
		Less than			3	Months to
		1 Month	1-3	Months		1 Year		1-5 Years		5+ Years
Gross settled
Foreign exchange forward contracts
Inflows	$	179,969	$	-	$	-	$		- $		-
Outflows		179,056		-		-			-		-

35. TRANSACTIONS WITH RELATED PARTIES

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

a. Operating revenues

Related Parties Listed Account Categories Sales Key management personnel Others Associates	Three Months Ended June 30 2015 2014 $ 490,037 $ 603,308 536 1,228 433 400 $ 491,006 $ 604,936	Three Months Ended June 30 2015 2014 $ 490,037 $ 603,308 536 1,228 433 400 $ 491,006 $ 604,936		Six Months Ended June 30	Six Months Ended June 30
		2015 $ 490,037 536 433 $ 491,006		2015 $ 1,057,450 1,447 1,022 $ 1,059,919	2014 $ 1,437,700 1,627 400 $ 1,439,727

Sales prices to related parties were not comparable to those with external customers as the Group was the sole provider for them. The sales terms to the related parties were between 30 to 60 days after monthly closing, similar to those with external customers.

• b. Purchases

Related Parties Categories Key management personnel	Three Months Ended June 30 2015 2014 $ 24,419 $ 3,656	Three Months Ended June 30 2015 2014 $ 24,419 $ 3,656		Six Months Ended June 30	Six Months Ended June 30
		2015 $ 24,419		2015 $ 24,419	2014 $ 3,656

Materials purchased from related parties were for manufacturing process. The payment term was 30 days after monthly closing, similar to those with external vendors.

• c. Trade receivables from related parties:

Listed Account Related Parties Categories Receivables from Key management personnel Related parties, Others net Associates	June 30, 2015 December 31, 2014 $ 252,742 $ 482,213 - 182 82 784 $ 252,824 $ 483,179	June 30, 2014 $ 312,762 165 381 $ 313,308 (Continued)

• 52 -

Listed Account Related Parties Categories Other receivables Associates The Group is its major management authority	June 30, 2015 December 31, 2014 $ 436 $ 217 19 32 $ 455 $ 249	June 30, 2014 $ 169 41 $ 210 (Concluded)

The outstanding trade receivables from related parties are unsecured. No expense was recognized for the six months ended June 30, 2015 and 2014 for allowance for impaired trade receivables with respect to the amounts owed by related parties.

d. Trade payables to related parties:

Listed Account Related Parties Categories Payables to related The Group is its major management authority parties Key management personnel Associates Other payables Others To related Associates parties	June 30, 2015 December 31, 2014 $ 63,168 $ 62,957 15 - 5 228 $ 63,188 $ 63,185 $ 4,220 $ - 434 - $ 4,654 $ -	June 30, 2014 $ 67,037 3,615 - $ 70,652 $ 3,320 8 $ 3,328

The outstanding trade payables from related parties are unsecured and will be settled in cash.

e. Other transaction

Related Parties Listed Account Categories Manufacturing expense The Group is its major management authority Operating expense Others The Group is its major management authority Key management personnel Associates	Three Months Ended June 30 2015 2014 $ 68,258 $ 69,181 $ 5,550 $ 6,000 294 33 15 - 419 - $ 6,278 $ 6,033	Three Months Ended June 30 2015 2014 $ 68,258 $ 69,181 $ 5,550 $ 6,000 294 33 15 - 419 - $ 6,278 $ 6,033		Six Months Ended June 30
		2015 $ 68,258 $ 5,550 294 15 419 $ 6,278		2015 2014 $ 120,523 $ 143,248 $ 11,100 $ 12,000 430 85 2,727 - 831 - $ 15,088 $ 12,085 (Continued)

• 53 -

Related Parties Listed Account Categories Software and pattern revenue Associates The Group is its major management authority Rental revenue Associates	Three Months Ended June 30 2015 2014 $ 451 $ 96 210 72 $ 661 $ 168 $ 1,607 $ 807	Three Months Ended June 30 2015 2014 $ 451 $ 96 210 72 $ 661 $ 168 $ 1,607 $ 807		Six Months Ended June 30
		2015 $ 451 210 $ 661 $ 1,607		2015 2014 $ 920 $ 96 215 124 $ 1,135 $ 220 $ 3,214 $ 807 (Concluded)

The subcontract processing charges and operating expense of related parties were comparable to those with other vendors. The payment term was 75 days after monthly closing.

The Group leases offices to associates (rentals are classified under other gains and losses). The amount of lease payment was based on the office space leased by each related party and was collected on a monthly basis.

Under certain contracts, the Group authorized the above related parties to use the Group’s pattern and software. The specifically negotiated terms were not comparable to those with external customers.

f. Compensation of key management personnel

The remuneration of key management personnel for the six months ended June 30, 2015 and 2014 was as follows:

as follows:
Short-term benefits Post-employment benefits Share-based payments	For the Three Months Ended June 30				For the Six Months Ended June 30
		2015 $ 36,258 3,970 10,147 $ 50,375	2014 $ 37,023 28,501 2 $ 65,526		2015 $ 63,325 7,940 15,724 $ 86,989	2014 $ 69,009 57,001 4 $ 126,014

The remuneration of key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

36. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, the tariff of imported raw materials guarantees, natural gas agreement, land lease agreement or the deposit for hiring foreign workers:

Property, plant and equipment, net Pledge deposits (classified as other financial assets - non-current)	June 30, 2015 $ 14,293,746 166,951 $ 14,460,697	December 31, 2014 $ 14,573,603 165,799 $ 14,739,402	June 30, 2014 $ 15,673,180 166,594 $ 15,839,774

• 54 -

37. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of June 30, 2015 were as follows:

• a. As of June 30, 2015, December 31, 2014 and June 30, 2014, unused letters of credit amounted to approximately $183,237 thousand, $6,647 thousand and $4,974 thousand, respectively.

• b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment	June 30, 2015 December 31, 2014 $ 626,283 $ 639,834	June 30, 2014 $ 1,363,015

• c. The Company entered into the Phase-change memory technology agreement with IBM Company in January 2010, and the term of the agreement is from January 2010 to January 2013. Under the agreement, both parties have to share in the related expenditures of the technology development, and the Company has completed the payment in January, 2013. The Company entered into another Phase-change memory technology agreement with IBM Company in January 2013. The term of the agreement is from January 2013 to January 2016. As of June 30, 2015, the Company has paid US$7,000 thousand and unrecognized commitment is US$1,400 thousand.

• d. The Company entered into the Patents Cross-License Agreement with J Company in December 2009, and the term of the agreement is from December 2009 to December 2015. Under the agreement, the Company has completed in April 2011.

38. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

June 30, 2015

Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 1,476,140 0.25 USD 82,444 30.86 Financial liabilities Monetary items JPY 1,038,274 0.25 USD 46,855 30.86	Carrying Amount $ 369,035 2,544,222 $ 2,913,257 $ 259,569 1,445,945 $ 1,705,514

• 55 -

December 31, 2014

Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 3,208,671 0.26 USD 85,878 31.65 Financial liabilities Monetary items JPY 1,894,756 0.26 USD 56,627 31.65 June 30, 2014 Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 1,680,254 0.29 USD 98,192 29.87 Financial liabilities Monetary items JPY 1,314,432 0.29 USD 49,512 29.87	Carrying Amount $ 834,254 2,718,039 $ 3,552,293 $ 492,637 1,792,245 $ 2,284,882 Carrying Amount $ 487,274 2,932,995 $ 3,420,269 $ 381,185 1,478,923 $ 1,860,108

The significant realized and unrealized foreign exchange gains (losses) were as follows:

For the Three Months Ended June 30

Foreign Currencies USD JPY Others	2015 Exchange Rate Net Foreign Exchange Gain (Loss) 30.89 $ (17,777) 0.26 (5,586) 11 $ (23,352)	2014
		Exchange Rate Net Foreign Exchange Gain (Loss) 30.18 $ (29,932) 0.30 6,211 139 $ (23,582)

• 56 -

For the Six Months Ended June 30

Foreign Currencies USD JPY Others	2015 Exchange Rate Net Foreign Exchange Gain (Loss) 31.23 $ (30,838) 0.26 644 (2,179) $ (32,373)	2014
		Exchange Rate Net Foreign Exchange Gain (Loss) 30.19 $ (4,842) 0.29 29,898 323 $ 25,379

39. SEPARATELY DISCLOSED ITEMS

Information on significant transactions and information on investees:

• a. Financing provided to others: None

• b. Endorsements/guarantees provided: None

• c. Marketable securities held (excluding investment in subsidiaries and associates): Table 1 (attached)

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

• e. Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital: None

• f. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None

• g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 2 (attached)

• h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3 (attached)

• i. Trading in derivative instruments: Please see Note 7

• j. Intercompany relationships and significant intercompany transactions: Table 5 (attached)

• k. Information on investees: Table 4 (attached)

• l. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gains or losses, carrying amount of the investment at the end of the period, repatriated investment gains or losses, and limit on the amount of investment in the mainland China area: Table 6 (attached)

• 2) Any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: None

• 57 -

40. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were as follows:

Memory products and wafer fabrication IC design

The Group’s reportable segments were separated according to the nature of its business activities. The accounting policies adopted by the reportable segments had no material difference from those disclosed in Note 4.

• a. Segment revenues and results

The following was an analysis of the Group's revenue and results from continuing operations by reportable segment.

Memory products and wafer fabrication IC design Loss from operations Other income Other gains and losses Finance costs Share of loss of associates Loss before tax (continuing operations)		Segment Net Operating Revenue	Segment Net Operating Revenue	Segment Net Operating Revenue	Segment Net Operating Revenue	ths Ended 0 2014 $ 9,730,781 31,993 $ 9,762,774		Segment Loss From Operations And Net Los	Segment Loss From Operations And Net Los	Segment Loss From Operations And Net Los	Segment Loss From Operations And Net Los	s
		For the Three M June 3	onths Ended 0 2014 $ 4,964,637 8,074 $ 4,972,711		For the Six Mon June 3			For the Three M June 3	onths Ended 0 2014 $ (1,673,595 ) (122,252) (1,795,847 ) 71,547 3,242 (70,280 ) (6,926) $ (1,798,264)		For the Six Mon June 3	ths Ended 0
		2015 $ 4,969,794 5,435 $ 4,975,229			2015 $ 9,667,388 14,115 $ 9,681,503			2015 $ (1,072,978 ) (98,374) (1,171,352 ) 49,947 (15,591 ) (73,312 ) (6,958) $ (1,217,266)			2015 $ (2,229,958 ) (188,839) (2,418,797 ) 1,024,961 (25,631 ) (138,374 ) (13,121) $ (1,570,962)	2014 $ (2,806,342 ) (258,693) (3,065,035 ) 93,701 37,902 (140,330 ) (6,926) $ (3,080,688)

b. Segment total assets and liabilities

Segment assets Memory products and wafer fabrication IC design Consolidated total assets Segment liabilities Memory products and wafer fabrication IC design Consolidated total liabilities	June 30, 2015 $ 39,325,430 645,832 $ 39,971,262 $ 18,735,899 46,800 $ 18,782,699	December 31, 2014 $ 44,087,905 754,670 $ 44,842,575 $ 22,176,137 60,908 $ 22,237,045	June 30, 2014 $ 46,908,262 1,003,547 $ 47,911,809 $ 22,078,385 62,899 $ 22,141,284

• 58 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

MARKETABLE SECURITIES HELD JUNE 30, 2015

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		June 30, 2015	June 30, 2015		Note
				Shares/Units (In Thousands)	Carrying Amount	Percentage of Ownership	Fair Value (Note 3)
The Company Macronix (BVI) Co., Ltd. Hui Ying Investment, Ltd.	Stock Ardentec Corporation United Industrial Gases Co., Ltd. Aetas Technology Inc. Zowie Technology Co., Ltd. Honbond Venture Capital Co., Ltd. Stock Chipbond Technology Corporation Key ASIC Bhd Tower Semiconductor Ltd. Global Strategic Investment Fund(Cayman) Global Strategic Investment Fund(Samoa) Stock Macronix International Co., Ltd. Raio Technology Co., Ltd.	The Company serves as member of its board of directors None None None The Company serves as member of its board of directors None None None None None The Company None	Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current	35,243,366 6,671,877 145,850 20,426 1,803,526 1,088,319 26,924,500 584,893 490,000 1,739,783 3,899,382 876,968	$ 925,138 58,500 - - - 72,591 17,618 278,689 - 33,329 23,279 -	7.40 3.06 0.29 0.18 15.00 0.17 3.34 0.76 2.52 4.90 0.11 10.57	$ 925,138 132,290 - 56 981 72,591 17,618 278,689 14,662 50,565 23,279 21,663	Note 1 Note 2 - Note 2 Note 2 Note 1 Note 1 Note 1 Note 2 Note 2 Note 1 Note 2

Note 1: The market value was based on the closing price as of June 30, 2015.

Note 2: The calculation is based upon the most recent financial statements available to the Company.

Note 3: Active market is market value; and no market is net value, which calculated by closing rate.

• 59 -

TABLE 2

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2015

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Term	Ending Balance	% to Total
The Company Macronix (Hong Kong) Co., Ltd. Macronix America Inc.	MegaChips Corporation Macronix (Hong Kong) Co., Ltd. Macronix America Inc. The Company The Company	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary Indirect subsidiary Subsidiary	Sales Sales Sales Purchase Purchase	$ 1,057,450 1,501,991 303,869 US$ 48,248 US$ 9,735	11 16 3 100 100	30 days after monthly closing 45 days after monthly closing Net 60 days 45 days after monthly closing Net 60 days	Note 35 Note 35 Note 35 No material difference No material difference	Note 35 Note 35 Note 35 No material difference No material difference	$ 252,742 334,812 75,111 US$ 10,851 US$ 2,427	8 10 2 100 100	- - - - -

• 60 -

TABLE 3

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 2015

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Action Taken **
The Company	MegaChips Corporation Macronix (Hong Kong) Co., Ltd.	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary	$ 252,742 334,812	5.76 times 8.71 times	$ - -	- -	JPY 616,361 thousand US$ 4,780 thousand	$ - -

• 61 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTEES FOR THE SIX MONTHS ENDED JUNE 30, 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as ofJune 30, 2015	Balance as ofJune 30, 2015	Balance as ofJune 30, 2015	Net Income (Loss) of the Investee (Note 3)	Share of Profit (Loss)	Note
				June 30, 2015 (Note 1)	December 31, 2014 (Note 1)	Shares	Percentage of Ownership	Carrying Amount (Note 2)
The Company Macronix (BVI) Co., Ltd. Run Hong Investment, Ltd. Hui Ying Investment, Ltd. Infomax Communication Co., Ltd. Infomax Holding Co., Ltd. Mxtran Inc. Mxtran Holding (Samoa) Co., Ltd.	Macronix America Inc. Macronix (BVI) Co., Ltd. Hui Ying Investment, Ltd. Run Hong Investment, Ltd. Infomax Communication Co., Ltd. Mxtran Inc. MoDioTek Co., Ltd. New Trend Technology Inc. Macronix Europe NV. Macronix Pte Ltd. Macronix (Hong Kong) Co., Ltd. Macronix (Asia) Limited Infomax Communication Co., Ltd. Mxtran Inc. MoDioTek Co., Ltd. MoDioTek Co., Ltd. Infomax Holding Co., Ltd. Infomax Holding Company Limited Mxtran Holding (Samoa) Co., Ltd. Mxtran (H.K.) Holding Co., Limited.	San Jose, California, U.S.A. Tortola, British Virgin Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan San Jose, California, U.S.A. Belgium Singapore Hong Kong Cayman Island Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Samoa Hong Kong Samoa Hong Kong	Sales and marketing Investment holding company Investment Investment Baseband chip, analog baseband chip, and power management chip Combi-SIM IC and the related service Wi-Fi video transmission IC and security systems IC design After-sales service After-sales service Sales and marketing Investment holding company Baseband chip, analog baseband chip, and power management chip Combi-SIM IC and the related service Wi-Fi video transmission IC and security systems Wi-Fi video transmission IC and security systems Investment holding company Investment holding company Investment holding company Investment holding company	$ 2,640 7,348,057 500,000 984,432 1,502,711 697,374 59,944 853,767 2,106 3,291 378,427 26,325 27,423 34,271 4,241 4,241 273,869 97,521 27,809 23,880	$ 2,640 7,348,057 500,000 984,432 1,502,711 607,379 59,944 850,637 2,106 3,291 378,427 26,325 27,423 34,271 4,241 4,241 264,448 97,521 27,809 23,880	100,000 223,300,000 - - 150,271,240 69,627,323 5,994,371 25,950,000 999 174,000 89,700,000 800,000 2,742,506 3,393,200 403,245 403,245 8,870,000 23,352,500 920,000 6,152,000	100.00 100.00 100.00 100.00 97.25 90.43 20.61 100.00 100.00 100.00 100.00 100.00 1.77 4.41 1.39 1.39 100.00 100.00 100.00 100.00	$ 179,070 1,582,435 23,546 27,575 488,756 83,297 22,381 297,964 88,647 16,605 486,483 49,848 8,896 4,066 1,512 1,512 6,318 2,418 (2,148 ) (2,453 )	$ (35,449 ) 605 (689 ) (5,260 ) (144,315 ) (40,010 ) (56,097 ) (3,798 ) 3,498 426 (5,937 ) 1,672 (144,315 ) (40,010 ) (56,097 ) (56,097 ) (15,654 ) (5,138 ) (3,354 ) (3,354 )	$ (35,449 ) 605 (689 ) (5,260 ) (140,346 ) (35,849 ) (11,562 ) Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Note 1: The foreign currency amount was converted into New Taiwan dollars at the historical exchange rate.

Note 2: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2015

Note 3: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the average exchange rate for the six months ended June 30, 2015.

Note 4: Under relevant regulations, no disclosure of investment gain (loss) is needed.

• 62 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Counterparty	Relationship (Note 1)			Transaction Summary
			Account	Amount	Payment Terms (Note 4)	% to Total Revenues or Assets
MXIC	MXHK	2	Sales	$1,501,991	Note 2	16
			Notes receivable and trade receivables	334,812		1
	MXE	2	Operatingexpenses	54,413		1
			Otherpayables	18,517		-
	MXA	1	Sales	303,869	Note 2	3
			Operatingexpenses	64,676		1
			Notes receivable and trade receivables	75,111		-
			Otherpayables	41,590		-
	Mxtran	1	Rental revenue	2,054	Note3	-
	MX Asia	2	Operatingexpenses	45,650		-
			Otherpayables	16,471		-
	INFOMAX	1	Rental revenue	3,771	Note3	-

• Note 1: 1. Transaction was between the parent company and subsidiaries.

• Transaction was between the parent company and indirect subsidiaries.

Note 2: The sale price referred to the product price to end customer.

Note 3: The Company leased office to related parties and collected rental revenue according to the floor space per month.

Note 4: The transaction terms with related parties were 30 to 60 days after monthly closing and were similar to those with third parties.

• 63 -

TABLE 6

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (Note 3)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2015 (Note 3)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2015 (Note 3)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of June 30, 2015 (Note 3)	Net Income (Loss) of the Investee	% Ownership for Direct or Indirect Investment (Note 4)	Investment Gain (Loss) (Notes 5)	Carrying Amount as of June 30, 2015 (Note 6)	Accumulated Inward Remittance of Investment Income as of June 30, 2015
							Outward	Inward
Macronix Microelectronics (Suzhou) Co., Ltd. Infomax Communication (Suzhou) Co., Ltd. Maxtran Technology Co., Ltd.	Development of integrated circuit system and software Software, rendering and technical service Technical support of Combi-SIM IC		$ 296,160 82,415 23,435	(Note 1) (Note 2) (Note 2)		$ 296,160 82,415 23,435	$ - - -	$ - - -	$ 296,160 82,415 23,435	$ 3,273 (4,772 ) (3,353 )	100.00 99.02 94.84	$ 3,273 (4,725 ) (3,180 )	$ 349,358 1,258 (2,754 )	$ - - -
Accumulated Investment in Mainland China as of June 30, 2015		Investment Amount Authorized by the Investment Commission, MOEA				Upper Limit on Investment
$ 402,010 (Note 3)		$ 402,010 (Note 3)				$ 12,704,776

Note 1: The Company invested in a company located in Mainland China indirectly through the existing company in the third country.

Note 2: The Company invested in a company located in Mainland China indirectly through the investing company in the third country.

Note 3: The foreign currency amount was converted into New Taiwan dollars at the historical exchange rate.

Note 4: The percentage of ownership is based on the total holding percentage owned by the Company and its subsidiaries.

Note 5: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the average exchange rate for the six months ended June 30, 2015.

Note 6: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2015.

• 64 -