TTET — Interim / Quarterly Report 2016

Nov 23, 2016

TTET UNION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

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MARCH 31, 2016 AND 2015

$\sim$

For the convenience of readers and for information purpose only, the auditors' report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors' report and financial statements shall prevail.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of TTET Union Corporation

We have reviewed the accompanying consolidated balance sheets of TTET Union Corporation and its subsidiary as of March 31, 2016 and 2015, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-month periods then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Except as discussed in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36, "Review of Financial Statements" in the Republic of China. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As described in Note 4(3), the financial statements of the Company's subsidiary were consolidated based on its unreviewed financial statements as of and for the three-month periods ended March 31, 2016 and 2015. Total assets of this subsidiary amounted to \$649,791 thousand and \$564,417 thousand, representing 13% and 12% of the related consolidated totals, and total liabilities amounted to \$392,171 thousand and \$330,443 thousand, representing 38% and 33% of the related consolidated totals, as of March 31, 2016 and 2015, respectively. Total comprehensive income of this subsidiary amounted to \$13,081 thousand and \$9,548 thousand, constituting 7% and 4% of the related consolidated totals for the three-month periods ended March 31, 2016 and 2015, respectively.

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of the subsidiary and investee company accounted for under the equity method been reviewed by independent accountants as described in the preceding paragraph, 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 Statements by Securities Issuers" and International Accounting Standard 34, "Interim Financial Reporting" as endorsed by the Financial Supervisory Commission of the Republic of China.

James Liu

Independent Accountants

Lewis Lee

PricewaterhouseCoopers, Taiwan Republic of China April 29, 2016

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

			March 31, 2016		December 31, 2015			March 31, 2015
	Assets	Notes	AMOUNT	℅	AMOUNT	℅		AMOUNT	%
	Current assets
1100	Cash and cash equivalents	6(1)	\$ 1,452,900	30	\$ 1,232,661	25	\$	1,006,790	21
1110	Financial assets at fair value	6(2)
	through profit or loss - current				3,401
1150	Notes receivable, net		184,912	4	183,452	4		133,771	3
1170	Accounts receivable, net	6(3)	612,397	12	612,157	13		690,990	14
1180	Accounts receivable - related	7
	parties		77,359	$\boldsymbol{2}$	90,161	$\overline{2}$		77,844	$\overline{2}$
1200	Other receivables		9,522		18,966			10,643
130X	Inventory	$5(2)$ and
		6(4)	1,756,905	36	1,895,218	39		2,120,874	44
1410	Prepayments		209,613	$\overline{\mathbf{4}}$	200,024	4		190,180	4
1476	Other financial assets - current	8	1,950		1,950			1,950
11XX	Total current assets		4,305,558	88	4,237,990	87		4,233,042	88
	Non-current assets
1523	Available-for-sale financial assets - $6(5)$
	non-current		1,275		1,275			1,275
1600	Property, plant and equipment	$6(6)$ and $8$	565,062	11	575,275	12		540,742	11
1780	Intangible assets	6(7)	1,955		1,626			1,271
1840	Deferred income tax assets	6(21)	28,457	1	24,092	1		28,939	1
1920	Guarantee deposits paid		9,033		16,326			18,294
1990	Other non-current assets		90		94
15XX	Total non-current assets		605,872	12	618,688	13		590,521	12
1XXX	Total assets		\$ 4,911,430	100	\$ 4,856,678	100	\$.	4,823,563	100
			(Continued)

TTET UNION CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of New Taiwan dollars)
(The consolidated balance sheets as of March 31, 2016 and 2015 are reviewed, not audited)

	Liabilities and Equity	Notes	March 31, 2016 AMOUNT	%		December 31, 2015 AMOUNT			March 31, 2015 AMOUNT
	Current liabilities						℅			$\%$
2100	Short-term borrowings	6(8)	\$ 91,689	$\overline{2}$	- \$	127,675	3	- \$	79,820	2
2110	Short-term notes and bills payable	6(9)	34,993	1					19,997
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current		28,023						2,403
2170	Accounts payable		335,047	7		393,274	8		288,038	6
2180	Accounts payable - related parties	- 7	38,588	$\mathbf{1}$		35,453	1		90,849	$\overline{c}$
2200	Other payables		205,912	4		317,962	6		203,404	4
2230	Current income tax liabilities	6(21)	134,882	3		93,847	2		192,372	4
2310	Advance receipts		91,324	2		113,404	2		27,471	1
21XX	Total current liabilities		960,458	20		1,081,615	22		904,354	19
	Non-current liabilities
2570	Deferred income tax liabilities	6(21)	9,530			10,000	1		6,776
2640	Net defined benefit liabilities - non 5(2) and
	current	6(10)	57,872	1		58,085	1		90,452	$\overline{c}$
2645	Guarantee deposits received		790			940			970	$\overline{\phantom{a}}$
25XX	Total non-current liabilities		68,192	1		69,025	$\boldsymbol{2}$		98,198	$\overline{a}$
2XXX	Total liabilities		1,028,650	21		1,150,640	24		1,002,552	21
	Equity attributable to owners of
	parent
	Share capital
3110	Share capital - common stock	6(11)	1,599,749	33		1,599,749	33		1,599,749	33
3200	Capital surplus	6(12)	23,784	$\blacksquare$		23,784			23,784	$\mathbf{1}$
	Retained earnings	6(13)(21)
3310	Legal reserve		876,624	18		876,624	18		777,880	16
3320	Special reserve		222			222			5,146
3350	Unappropriated retained earnings		1,337,422	27		1,163,475	24		1,373,147	28
31XX	Equity attributable to owners
	of the parent		3,837,801	78		3,663,854	75		3,779,706	78
36XX	Non-controlling interest		44,979	-1		42,184	$\mathbf{1}$		41,305	$\mathbf{1}$
3XXX	Total equity		3,882,780	79		3,706,038	76		3,821,011	79
	Contingent liabilities and	$6(23)$ and 9
	commitments
3X2X	Total liabilities and equity		\$ 4,911,430	$100 \t S$		4,856,678			100 \$ 4,823,563	100

TTET UNION CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of New Taiwan dollars)
(The consolidated balance sheets as of March 31, 2016 and 2015 are reviewed, not audited)

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated April 29, 2016.

TTET UNION CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)
(UNAUDITED)

				Three months ended March 31
			$\overline{2016}$			2015
	Items	Notes	AMOUNT	$\%$		AMOUNT	%
4000	Operating revenue	$6(15)$ and 7	\$ 3,927,503	100	\$	4,750,989	100
5000	Operating costs	$6(4)(19)(20)$ and 7	3,542,734) (	90)		4,306,393)	91)
5900	Net operating margin		384,769	10		444,596	9
	Operating expenses	6(7)(19)(20)(23) and 7
6100 6200	Selling expenses General and administrative		$104,495$ ) (	$3)$ (		$102, 143$ ) (	2)
	expenses		46,773)(	$1)$ (		48,601) (	1)
6300	Research and development expenses		1,145)			903)
6000	Total operating expenses		152,413	4)		$\overline{151,647}$	$\overline{3}$
6900	Operating profit		232,356	6		292,949	6
	Non-operating income and expenses
7010	Other income	6(16)	4,784			8,760
7020	Other gains and losses	$6(2)(5)(14)(17)$ and
		12	23,269)			7,324)
7050	Finance costs	6(18)	929)			641)
7000	Total non-operating income
	and expenses		19,414)			795
7900	Profit before income tax		212,942	6		293,744	6
7950	Income tax expense	6(21)	$36,200)$ (	$\overline{1}$		49,784)	1)
8200	Profit for the period		\$ 176,742	5	\$	243,960	5
	Other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss
8362	Unrealized gain on valuation of $6(5)(14)(17)$ available-for-sale financial assets		\$			222
8300	Total other comprehensive
	income for the period		\$			222
8500	Total comprehensive income for the period		\$ 176,742	5	$\frac{3}{2}$	244,182	5
	Profit, attributable to:
8610 8620	Owners of the parent Non-controlling interest		\$ 173,947 2,795	5	\$	241,953 2,007	5
			\$ 176,742	$\overline{5}$	\$	243,960	$\overline{5}$
	Comprehensive income attributable to:
8710	Owners of the parent		\$ 173,947
8720	Non-controlling interest		2,795	5	\$	242,175 2,007	5
			\$ 176,742	5	\$	244,182	5
	Basic earnings per share (in dollars)
9750	Net income Diluted earnings per share (in	6(22)	\$	1.09	\$		1.51
9850	dollars) Net income	6(22)		1.09	\$		1.51

The accompanying notes are an integral part of these consolidated financial statements.
See review report of independent accountants dated April 29, 2016.

			CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY TTET UNION CORPORATION AND SUBSIDIARY	(Expressed in thousands of New Taiwan dollars) (UNAUDITED)
						Equity attributable to owners of the parent
					Retained Earnings		Other Equity
		Share capital					available-for- gain or loss Unrealized $\mathbf s$
	Notes	$-$ common stock	surplus Capital	reserve Legal	reserve Special	retained earnings Unappropriated	sale financial assets	Total		Non-controlling interest	Total equity
For the three-month periods ended March 31, 2015
Balance at January 1, 2015		\$1,599,749	23,784 ↮	\$777,880	5,146 Ψģ	1,131,194 ↮	222) ₩	\$3,537,531	وى	39,298	\$3,576,829
Net income for the three-month period ended March 31, 2015						241,953		241,953		2,007	243,960
Other comprehensive income for the three-month period ended March 31, 2015						ı	222	222			222
Balance at March 31, 2015		\$1,599,749	23,784 ⊶	\$777.880	5,146 ↮	1.373.147 ÷,	ا وس	\$3,779,706	↮	$\frac{305}{2}$	\$3,821,011
For the three-month periods ended March 31, 2016
Balance at January 1, 2016		\$1,599,749	23,784 ↔	\$876,624	222 ⊷	1,163,475 €Ģ	چی	\$3,663,854	69	42, 184	\$ 3,706,038
Net income for the three-month period ended March 31, 2016						173.947		173,947		2.795	176,742
Balance at March 31, 2016		\$1.599.749	$\frac{23.784}{23}$ ا⊶	\$876.624	222 ⊷	1,337,422 s,	÷9	\$3,837,801	₩,	44,979	\$3,882,780

The accompanying notes are an integral part of these consolidated financial statements.
See review report of independent accountants dated April 29, 2016.

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TTET UNION CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of New Taiwan dollars)
(UNAUDITED) $\mathbf{r}$

(UNAUDITED)			For the three-month periods ended	March 31,
	Notes		2016		2015
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		\$	212,942	\$	293,744
Adjustments
Income and expenses having no effect on cash flows
Loss on financial assets at fair value through profit or
loss			31,424		26,527
Provision for doubtful accounts	6(3)		279		63
Gain on reversal of decline in market price	6(4)	€	1,292)	-6	13,012)
Gain on disposal of available-for-sale financial assets	6(5)(14)(17)				897)
Property, plant and equipment recognised as expense	6(6)		1,215		1,177
Depreciation	6(6)(19)		23,437		23,764
Loss (gain) on disposal of property, plant and equipment 6(17)			453	(	$355$ )
Amortisation	6(7)(19)		278		282
Interest income	6(16)	€	$1,274$ ) (		$1,139$ )
Finance costs	6(18)		929		641
Changes in assets/liabilities relating to operating activities
Changes in operating assets
Notes receivable		(	1,460)		54,654
Accounts receivable		(	$519$ ) (		30,615)
Accounts receivable - related parties			12,802		84,015
Other receivables			9,444		5,204
Inventories			139,605		43,477)
Prepayments		(	$9,589$ ) (		16,671)
Net changes in liabilities relating to operating activities
Accounts payable		€	$58,227$ ) (		$20,005$ )
Accounts payable - related parties			3,135		50,260
Other payables			$112,063$ ) (		124,849)
Advance receipts			$22,080$ )		$13, 115$ )
Net defined benefit liabilities - non-current			213)		2,697)
Cash inflow generated from operations Interest received			229,226		273,499
			1,274		1,139
Interest paid			923)		$669$ )
Net cash flows from operating activities			229,577		273,969

(Continued)

TTET UNION CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of New Taiwan dollars)
(UNAUDITED)

			For the three-month periods ended	March 31
	Notes		2016		$\overline{2015}$
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets		\$			18,228
Cash paid for acquisition of property, plant and equipment	6(6)		14,892)		10,654)
Proceeds from disposal of property, plant and equipment					373
Increase in intangible assets	6(7)		$607$ ) (		276)
Decrease in guarantee deposits paid			7,293		1,252
Decrease in other non-current assets			4
Net cash flows (used in) from investing activities			8,202)		8,923
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings		(	35,986) (		266,086)
Increase in short-term notes and bills payable			35,000		9,000
Decrease in guarantee deposit received			$150$ )		180)
Net cash flows used in financing activities			$1,136$ )		257,266)
Net increase in cash and cash equivalents			220,239		25,626
Cash and cash equivalents at beginning of period	6(1)		1,232,661		981,164
Cash and cash equivalents at end of period	6(1)	\$	1,452,900	\$	1,006,790

The accompanying notes are an integral part of these consolidated financial statements.
See review report of independent accountants dated April 29, 2016.

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TTET UNION CORPORATION AND SUBSIDIARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2016 AND 2015

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

1. HISTORY AND ORGANIZATION

• (1) TTET Union Corporation (the "Company") was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on May 24, 1982. The Company and its subsidiary (the "Group") are primarily engaged in the manufacture, sales, processing, import and export of a variety of vegetable oils and fat, and engaged in cogeneration plant business, wholesale and retailing of oils, etc.
• (2) The common shares of the Company have been listed on the Taiwan Stock Exchange since February 1996.
• 1. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were reported to the Board of Directors on April 29, 2016.

• 1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC") None.
• (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company
  • None.
• (3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

	Effective Date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Recoverable amount disclosures for non-financial assets (amendments to IAS 36)	January 1, 2014
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39)	January 1, 2014
IFRIC 21, 'Levies'	January 1, 2014
Defined benefit plans: employee contributions (amendments to IAS 19R)	July 1, 2014

	Effective Date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Improvements to IFRSs 2010-2012	July 1, 2014
Improvements to IFRSs 2011-2013	July 1, 2014
Investment entities: applying the consolidated exception (amendments to IFRS 10, IFRS 12 and IAS 28)	January 1, 2016
Accounting for acquisition of interests in joint operations (amendments to IFRS 11)	January 1, 2016
IFRS 14, 'Regulatory deferral accounts'	January 1, 2016
Disclosure initiative (amendments to IAS 1)	January 1, 2016
Clarification of acceptable methods of depreciation and amortisation (amendments to IAS 16 and IAS 38)	January 1, 2016
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)	January 1, 2016
Equity method in separate financial statements (amendments to IAS 27)	January 1, 2016
Improvements to IFRSs 2012-2014	January 1, 2016
Disclosure initiative (amendments to IAS 7)	January 1, 2017
Recognition of deferred tax assets for unrealised losses (amendments to IAS 12)	January 1, 2017
IFRS 9, 'Financial instruments'	January 1, 2018
IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
Clarifications to IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
(amendments to IFRS 15)
IFRS 16, 'Leases'	January 1, 2019
Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)	To be determined by International Accounting Standards Board

The Group is assessing the potential impact of the new standards, interpretations and amendments above. The impact will be disclosed when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and IAS 34,

'Interim Financial Reporting' as endorsed by the FSC.

(2) Basis of preparation

• A. Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
• (b) Available-for-sale financial assets measured at fair value.
• (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the "IFRSs") requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:
• (a) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of the subsidiary begins from the date the Group obtains control of the subsidiary and ceases when the Group loses control of the subsidiary.
• (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
• (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
• (d) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
• (e) When the Group loses control of a subsidiary, the Group measures any investment retained in

the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss, on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

• Name of Business Ownership (%) Name of investor subsidiary activities March 31, 2016 December 31, 2015 Note TTET Union Wholesale Master 80.27 80.27 (Note) of food Corporation Channels Corporation Name of Business Ownership (%) Name of investor subsidiary activities March 31, 2015 Note TTET Union Master Wholesale 80.27 (Note) Corporation Channels of food Corporation
• B. Subsidiary included in the consolidated financial statements:

Note: The financial statements of the entity as of and for the three-month periods ended March 31, 2016 and 2015 were not reviewed by independent auditors as the entity did not meet

the definition of significant subsidiary.

The financial statements of the Company's subsidiary were consolidated based on its unreviewed financial statements as of and for the three-month periods ended March 31, 2016 and 2015. Total assets of this subsidiary amounted to \$649,791 and \$564,417, representing 13% and 12% of the related consolidated totals, and total liabilities amounted to \$392,171 and \$330,443, representing 38% and 33% of the related consolidated totals, as of March 31, 2016 and 2015, respectively. Total comprehensive income of this subsidiary amounted to \$13,081 and \$9,548, constituting 7% and 4% of the related consolidated totals for the three-month periods ended March 31, 2016 and 2015, respectively.

• C. Subsidiaries not included in the consolidated financial statements: None.
• D. Adjustments for subsidiaries with different balance sheet dates: None.
• E. Significant restrictions: None.
• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

Items included in the consolidated financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company's functional and presentation currency.

• A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
• B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
• C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
• D. All foreign exchange gains and losses are presented in the statement of comprehensive income, within "Other gains and losses".
• (5) Classification of current and non-current items
• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
  • (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
  • (b) Assets held mainly for trading purposes;
  • (c) Assets that are expected to be realized within twelve months from the balance sheet date;
  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
  • (a) Liabilities that are expected to be paid off within the normal operating cycle;
  • (b) Liabilities arising mainly from trading activities;
  • (c) Liabilities that are to be paid off within twelve months from the balance sheet date:

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

• A. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
• B. Commercial paper that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
• (7) Financial assets at fair value through profit or loss
• A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
  • (a) Hybrid (combined) contracts; or
  • (b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
  • (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using settlement date accounting.
• C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
• (8) Available-for-sale financial assets
• A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
• B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using settlement date accounting.
• C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.
• (9) Receivables

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business.

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(10) Inventories

Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. Inventories are stated at the lower of cost and net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(11) Impairment of financial assets

• A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
• B. The criteria that the Group uses to determine whether there is objective evidence of impairment loss is as follows:

(a) Significant financial difficulty of the issuer or debtor;

• (b)The disappearance of an active market for that financial asset because of financial difficulties;
• (c)Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
• (d)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
• (e)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
• C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
• (a) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset's acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from 'other comprehensive income' to 'profit or loss'. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Financial assets measured at amortised cost

The amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(12) Derecognition of financial assets

The Group derecognizes a financial asset when one of the following conditions is met:

• A. The contractual rights to receive cash flows from the financial asset expire.
• B. The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
• C. The contractual rights to receive cash flows from the financial asset have been transferred; and, the Group has not retained control of the financial asset.

(13) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
• B. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
• C. Property, plant and equipment apply the cost model. Except for land, other property, plant and

equipment are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately.

D. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors', from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Asset	Useful lives
Buildings	$4{\sim}40$ years
Machinery	$3{\sim}15$ years
Transportation equipment	$1 \sim 12$ years
Leasehold improvements	$3 - 10$ years
Other equipment	$3{\sim}19$ years

(14) Operating leases (lessee)

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

(15) Intangible assets

Computer software and trademarks are stated at cost and amortized on a straight-line basis over their estimated useful life of $1 \sim 4$ years.

(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

• $(17)$ Borrowings
• A. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.
• B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan

to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

• (18) Financial liabilities at fair value through profit or loss
• A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

(a)Hybrid (combined) contracts; or

• (b)They eliminate or significantly reduce a measurement or recognition inconsistency; or
• (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
• B. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
• (19) Accounts payable

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. However, short-term accounts payable without bearing interest subsequently are measured at initial invoice amount as the effect of discounting is immaterial.

(20) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(21) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realized the asset and settle the liability simultaneously.

• (22) Employee benefits
• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits

expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

• B. Pensions
• (a) Defined contribution plan

For the defined contribution plan, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plan
• I. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).
• II. Remeasurement arising on defined benefit plan is recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
• III. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. The related information is disclosed accordingly.
• (c) Employees', directors' and supervisors' remuneration
• Employees', directors' and supervisors' remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employees' compensation is distributed by shares, the Group calculated the number of shares based on the closing market price at the previous day of the board meeting resolution.

$(23)$ Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
• B. The current income tax expense is calculated on the basis of the tax laws enacted or

substantively enacted at the balance sheet date in the country where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiary, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
• D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
• F. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

(24) Dividends

Dividends are recorded in the Company's financial statements in the period in which they are approved by the Company's shareholders. Cash dividends are recorded as liabilities.

(25) Revenue recognition

A. Sales of goods

Revenue is measured at the fair value of the consideration received or receivable taking into account the value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group's activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. Sales of services

The Group provides processing services. Revenue from processing services is recognized under the percentage-of-completion method when the outcome of services provided can be estimated reliably.

(26) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group's accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, and the related information is addressed below:

(1) Critical judgments in applying the Group's accounting policies

Financial assets - impairment of equity investments

The Group follows the guidance of IAS 39 to determine whether a financial asset - equity investment is impaired. This determination requires significant judgment. In making this judgment, the Company evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

(2) Critical accounting estimates and assumptions

A. Evaluation of inventories

(a) As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgments and

estimates. The Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on the balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

• (b) As of March 31, 2016, the carrying amount of inventories was \$1,756,905.
• B. Calculation of net defined benefit liabilities non-current
• (a) When calculating the present value of defined benefit obligations, the Group must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined benefit obligations.
• (b) As of March 31, 2016, the carrying amount of net defined benefit liabilities non-current was \$57,872.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	March 31, 2016	December 31, 2015	March 31, 2015
Cash:
Cash on hand	\$ 2,030	\$ 1,366	\$ 1,238
Checking and demand deposits	392,030	333, 132	302, 142
	394,060	334, 498	303, 380
Cash equivalents:
Commercial paper	1, 058, 840	898, 163	703, 410
	1, 452, 900	\$ 232, 661	1,006,790

A. The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

B. The Group has no cash and cash equivalents pledged to others as of March 31, 2016, December 31, 2015 and March 31, 2015.

(2) Financial assets and liabilities at fair value through profit or loss

	March 31, 2016	December 31, 2015	March 31, 2015
Financial assets held for trading
Non-hedging derivative		3, 401
	March 31, 2016	December 31, 2015	March 31, 2015
Financial liabilities held for trading
Non-hedging derivative	28,023		2, 403

A. The Group recognized net gain on financial assets and liabilities held for trading amounting to \$33,367 and \$7,914 for the three-month periods ended March 31, 2016 and 2015, respectively ("shown as other gains and losses").

B.The non-hedging derivative instruments transaction and contract information are as follows (Units in thousands of currencies indicated):

	March 31, 2016		December 31, 2015
	Contract	Contract	Contract	Contract
Derivative instruments	Amount	Period	Amount	Period
Current item:
Foreign exchange futures	USD 52,943	2016.2.15 $\sim$ 2016.6.21	USD 23,974	2015.10.23 $\sim$ 2016.3.1
	March 31, 2015
	Contract	Contract
Derivative instruments	Amount	Period
Current item:
Foreign exchange futures	USD 19,174	2015.2.24 $\sim$ 2015.5.29

The Group entered into the forward foreign exchange contracts to manage exposures due to fluctuations of foreign exchange rates. However, the Group did not apply hedge accounting treatment for the forward foreign exchange contracts.

• C. The Group has no financial assets at fair value through profit or loss pledged to others as of March 31, 2016, December 31, 2015 and March 31, 2015.
• (3) Accounts receivable, net

	March 31, 2016	December 31, 2015	March 31, 2015
Accounts receivable Less: Alloowance for doubtful	613, 316	612, 797	691, 435
accounts	919)	640)	445)
	612,397	612,157	690,990

A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

	March 31, 2016	December 31, 2015		March 31, 2015
Less 30 days	\$ 2,904	2,437	\$	2,640
$31\sim60$ days	121	277		86
$61 \sim 90$ days	21	1,767
$91 \sim 120$ days	1,718	$\overline{\phantom{a}}$		64
	\$ 764	4,481	S	2,790

The above ageing analysis was based on past due date.

B. Movements of the Group's provision for impairment of accounts receivable are as follows:

		For the three-month periods ended March 31,
	2016	2015
	Individual provision	Individual provision
At January 1	\$ 640	\$ 382
Provision for impairment	279	63
At March 31	919	445

C. The Group's accounts receivable that were neither past due nor impaired were from the customers who have good credit quality.

D. The Group holds certificates of deposit and land collateral as security for accounts receivable as of March 31, 2016, December 31, 2015 and March 31, 2015.

(4) Inventories

				March 31, 2016
				Allowance for
		Cost		market price decline		Book value
Merchandise	\$	165, 750	$($ \$	1,169)	$\mathbf{\hat{z}}$	164, 581
Merchandise in transit		2,131				2, 131
Raw materials		409,089				409,089
Raw materials in transit		641, 986				641, 986
Supplies		17,364	€	661)		16,703
Work in process		152, 366				152, 366
Finished goods		365, 715		281)		365, 434
Finished goods in transit		4,615				4,615
	\$	1,759,016	(\$	2, 111)	\$	1,756,905
				December 31, 2015
				Allowance for
		Cost		market price decline		Book value
Merchandise	$\boldsymbol{\hat{\mathbf{s}}}$	164, 264	$($ \$	1,183)	$\mathcal{S}$	163,081
Raw materials		513, 238				513, 238
Raw materials in transit		826, 461				826, 461
Supplies		19,483	(	1,058)		18, 425
Work in process		120, 295				120, 295
Finished goods		254, 880		1,162)		253, 718
	\$	1,898,621	(3)	3,403)	\$	1,895,218

				March 31, 2015
				Allowance for
		Cost		market price decline	Book value
Merchandise	\$	134, 415	$\left( \text{\$} \right)$	1,025)	\$ 133, 390
Raw materials		613, 687		3,609)	610,078
Raw materials in transit		884, 950		5, 205)	879, 745
Supplies		31, 128		924)	30, 204
Work in process		78,837			78,837
Work in process in transit		52,536			52, 536
Finished goods		336, 510		426)	336, 084
	Ф	2, 132, 063	S	11, 189)	\$ 2, 120, 874

Expenses and losses of inventories recognized:

	For the three-month periods ended March 31,
	2016		2015
Cost of goods sold	\$ 3, 481, 852	S	4, 248, 252
Loss on physical inventory
Gain on reversal of decline in market price (Note)	1, 292)		13,012)
Total	3,480,560		4, 235, 248

(Note) The Group recognized gain from price recovery as the increase in the international prices of raw materials led to a recovery in inventory net realizable value.

(5) Available-for-sale financial assets - non current

	March 31, 2016	December 31, 2015		March 31, 2015
Unlisted stocks	8.275	8, 275	-8	8.275
Accumulated impairment	7,000	7,000)		7,000)
	0.275	1, 275

• A. The Group recognized \$- and \$1,119 in other comprehensive income for fair value change and reclassified $\text{\$--}$ and \$897 from equity to profit or loss (shown as "other gains and losses") for the three-months periods ended March 31, 2016 and 2015, respectively.
• B. The Group has no available-for-sale financial assets pledged to others as of March 31, 2016, December 31, 2015 and March 31, 2015.

								Transportation		Leasehold		Other		Construction
		Land		Buildings		Machinery		equipment		improovements		equipment		in progress		Total
January 1, 2016
Cost	↔	44, 244	↔	950 879.	⊷	3,025,106	↔	16, 170	ക	9,636	⊷	83,022	↔	39, 123	ĠĄ,	4, 097, 251
Accumulated depreciation				974 612.		2, 841, 653)		12, 447)		3,012)		51,890				3,521,976
	↔	44, 244		$\frac{976}{2}$ 266,	⇔∥	183, 453	اچھ	$\frac{723}{2}$ က်	കി	6,624	e٥,	31, 132	↔	39, 123	↔	575, 275
For the three-month
periods ended March 31
At January	↔	44, 244	↔	976 266,	↔	183, 453	↔	3,723	⊷	6,624	⊷	31, 132	မေ	39, 123	↔	575, 275
Additions				662		8,074				825		343		4,988		14,892
Reclassifications						32, 951		t		ı				32, 951)
Expensed								I		I				1,215		1, 215
Depreciation				016		14, 101)		278)		257)		1,785)		Ţ		23, 437)
Disposals-Cost				304)		51, 759)		$\mathbf{1}$		1,825		$\widehat{5}$				54, 979)
depreciation $-A$ ccumulated				267		51, 343				1,825		ವ				54,526
At March 31	ఈ∥	44.244		585 260,	⇔∥	209, 961	⊷∥	445 က်	ee	7,192	↔	29,690	લ્ભ∣	9,945	⊷	565,062
March 31, 2016
Cost	↔	44, 244	↔	308 $8 - 9,$		3,014,372		16,170		8,636	⊷	83, 274	↔	9,945	⇔	4,055,949
Accumulated depreciation				123 $\frac{8}{5}$		2,804,411		(2, 725)		1,444)		53, 584)				3,490,887
		44, 244	⊷	$\frac{55}{55}$ 의	⇔∥	$\frac{209}{201}$	⇔∣	3, 445	⇔∣	$\frac{7}{1}$ , 192	⇔∣	29,690	GG.	9,945	¢۵	565,062

(6) Property, plant and equipment

$-26-$

$\frac{1}{2}$

								Transportation		Leaschold		Other		Construction
		Land		Buildings		Machinery		equipment		improvements		equipment		in progress		Total
January 1, 2015
Cost	↔	44, 244	↔	874,900	⊷	2, 953, 727	မာ	17,507	↮	5,803	⊷	72,098	↔	20, 495	↔	3,988,774
Accumulated depreciation				584, 624)		2, 785, 841)		13,590)		2,404)		47,268)				3, 433, 727
	⇔l	44, 244	⇔∥	290, 276	⇔∥	167,886	⇔	917 က်	ക	399 က်	e⊖¦	24,830	⇔∥	20,495	⇔∥	555, 047
For the three-month
periods ended March 31, 2015
At January 1	ఈ	44, 244	⇔	290, 276	⇔	167,886	↔	3,917	⇔	3,399	↔	24,830	↔	20,495	↔	555, 047
Additions		$\mathbf{I}$		827		6,863				$^{12}$		989		1,963		10,654
Reclassifications		Ī		2,318		2,037		ı		103		1,567		6,025)		I
Expensed		1				J		ı		J		I		1,177		1,177
Depreciation		$\mathbf{I}$		7,249)		14,716)		298)		(35)		1,366)				23, 764)
Disposals-Cost								220)		I		635)				855)
depreciation $-A$ ccumulated		1		1				202		J		635				837
At March 31	⇔∣	44, 244	۱⊕←	$\overline{12}$ 286,	⇔∥	162,070	↔ા	601 က်	⇔∥	379 က်	↔	26,020	↔	256 ட்	اجہ	540,742
March 31, 2015
Cost	↔	44, 244	ക	878,045	⊷	2,962,627	∽	17,287	⇔	5,918	↔	74,019	ക	15,256	∽	3,997,396
Accumulated depreciation				591, 873)		2,800,557		13,686)		2,539)		47,999		L		3, 456, 654
	↔	44, 244	eel	286, 172	⇔∥	$162,\,070$	⇔∥	3,601	⊖∋l	3, 379	↔	26,020	ക	$rac{6}{250}$ ເລ່	⇔∥	540, 742

A. The Group has not capitalized any interest for the three-month periods ended March 31, 2016 and 2015.

B. For more information regarding the Group's property, plant and equipment pledged to others as at March 31, 2016, December 31, 2015 and March 31, 2015, please refer to Note 8, "Pledged assets".

$\sim$ 27 $\sim$

$(7)$ Intangible assets

		Computer software		Trademark		Total
At January 1, 2016
Cost	\$	5,060	\$	133	\$	5, 193
Accumulated amortisation		3,449)		118 )		3, 567 )
	\$	1,611	\$	15	$\frac{3}{2}$	1,626
For the three-month periods
ended March 31, 2016
At January 1	\$	1,611	\$	15	\$	1,626
Additions		607				607
Amortisation		277)		1)		278)
At March 31	\$	1,941	\$	14	\$	1,955
At March 31, 2016
Cost	\$	5,667	\$	133	\$	5,800
Accumulated amortisation		3,726)		119)		3,845)
	\$	1,941	\$	14	\$	1,955
		Computer software		Trademark		Total
At January 1, 2015
Cost	\$	3,651	\$	133	\$	3,784
Accumulated amortisation		2, 395)		112)		2,507 )
	\$	1,256	\$	21	\$	1, 277
For the three-month periods ended March 31, 2015
At January 1	\$	1,256	\$	21	\$	1,277
Additions		276				276
Amortisation		281)		1)		282)
At March 31	ሐ ⊉	1, 251	ሖ ⊉	$\overline{20}$	\$	1, 271
At March 31, 2015
Cost	\$	3,927	\$	133	\$	4,060
Accumulated amortisation		2,676)		113)		2,789 )
	\$	1,251	\$	20	\$	1,271

Details of amortization on intangible assets are as follows:

			For the three-month periods ended March 31,
		2016	2015
Selling expenses	\$	\$ 24	63
Administrative expenses		254	219
	\$	278	\$ 282
(8) Short-term borrowings
	March 31, 2016	Interest rate range	Collateral
Bank unsecured borrowings	\$ 91,689	$1.07\% \sim 1.47\%$	None
	December 31, 2015	Interest rate range	Collateral
Bank unsecured borrowings	\$ 127, 675	$1.07\% \sim 1.46\%$	None
	March 31, 2015	Interest rate range	Collateral
Bank unsecured borrowings	\$ 79,820	$1.13\% \sim 1.68\%$	None
(9) Short-term notes and bills payable
	March 31, 2016	Interest rate	Collateral
Commercial paper payable	\$ 35,000	0.86%	None
Less: Unamortised discount
	\$ 34, 993
	March 31, 2015	Interest rate	Collateral
Commercial paper payable	\$ 20,000	1.20%	None
Less: Unamortised discount	3)
	\$ 19,997

There are no short-term notes and bills payable as of December 31, 2015.

The above commercial papers were issued and secured by Mega Bills Finance Co., Ltd. for short-term financing.

$(10)$ Pensions

A.The Group has defined benefit pension plans in accordance with the Labor Standards Law, covering all regular employees' service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to $6\%$ (prior to February 2014 - 5%) of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, and the subsidiary, Master Channels Corp., contributes monthly an amount equal to 4% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Group would assess the balance in the aforementioned labor pension reserve account by March 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Group will make contribution for the deficit by next March. The information on the Group's defined benefit pension plan is as follows:

• (a) The pension cost under the aforementioned defined benefit pension plans of the Group for the three-month periods ended March 31, 2016 and 2015 were \$1,393 and \$1,455, respectively.
• (b) The Group's expected contributions under the defined benefit pension plans for the year ending December 31, 2016 amount to \$6,420.
• B. Effective July 1, 2005, the Group has established a defined contribution pension plan (the "New Plan") under the Labor Pension Act, covering all regular employees with R.O.C. nationality. Under the New Plan, the Group contributes monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plan of the Group for the three-month periods ended March 31, 2016 and 2015 were \$2,580 and \$2,317, respectively.
• $(11)$ Share capital
• A. Movements in the number of the Company's ordinary shares outstanding are as follows (in thousands of shares):

		For the three-month periods ended March 31,
	2016	2015
Beginning and ending balance	159, 975	159, 975

B. As of March 31, 2016, the Company's authorized capital was \$1,778,000 and the paid-in capital was \$1,599,749, consisting of 159,975 thousand shares of ordinary stock, with a par value of \$10 (in dollars) per share. All proceeds from shares issued have been collected.

$(12)$ Capital surplus

Pursuant to the Company Law, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserves should not be used to cover accumulated deficit unless the legal reserve is insufficient. Movements of the Company's capital reserves for the three-month periods ended March 31, 2016 and 2015 are as follows:

		For the three-month period ended March 31, 2016
	Share premium	Treasury share transactions	Total
Beginning and ending balance	154	23,630	S 23, 784
		For the three-month period ended March 31, 2015
		Treasury share
	Share premium	transactions	Total
Beginning and ending balance	Я 154	23,630	S 23,784

(13) Retained earnings

• A. Pursuant to the Company Act, the current year's after-tax earnings should set aside 10% of the remaining earnings as legal reserve until the balance of legal reserve is equal to that of paid-in capital. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company's paid-in capital.
• B. According to the Company's Articles of Incorporation, 10% of the annual net income, after offsetting any loss of prior years and paying all taxes and dues, shall be set aside as legal reserve, and set aside or reverse special reserve. The remaining net income and the unappropriated retained earnings from prior years can be distributed in accordance with a resolution passed during a meeting of the Board of Directors and approved at the stockholders' meeting. Of the amount to be distributed by the Company, stockholders' bonuses shall comprise 50% to 100% of the unappropriated retained earnings. Since the Company is in a changeable industry environment and the life cycle of the Company is in a stable growth, the appropriation of earnings should consider fund requirements and capital budgets to decide how much earnings will be kept or distributed and how much cash dividends will be distributed. The percentage of stock dividends shall not be more than 50% of dividends distributed.
• C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
• D. For the year ended December 31, 2015, the Company recognized dividends distributed to owners amounting to \$799,875 (\$5 (in dollars) per share as cash dividend). On March 22, 2016, the Board of Directors during its meeting proposed total dividends for the distribution of earnings for 2015 amounting to \$799,875 (\$5 (in dollars) per share) as cash dividend. The financial statements do not reflect this dividend payable.

(14) Other equity items—Unrealized gain or loss on available-for-sale financial assets
		For the three-month periods ended March 31,
		2016		2015
At January 1	\$		(	222)
Revaluation				1,119
Revaluation transfer				897)
At March 31	\$		\$
(15) Operating revenue
		For the three-month periods ended March 31,
		2016		2015
Sales revenue	\$	3, 845, 968	\$	4, 655, 275
Processing revenue		81, 535		95, 714
	\$	3, 927, 503	\$	4,750,989
(16) Other income
		For the three-month periods ended March 31,
		2016		2015
Interest income:
Interest income from bank deposits	\$	6	\$
Other interest income		1,268		1,132
Other income		3,510		7,621
	\$	4,784	\$	8,760
(17) Other gains and losses
		For the three-month periods ended March 31,
		2016		2015
Net currency exchange gain (loss)	\$	10,551	$$^{(3)}$$	662)
Gain on disposal of available-for-sale
financial assets Net loss on financial assets and liabilites				897
at fair value through profit or loss	(	$33, 367$ ) (		7,914)
(Loss) gain on disposal of property,
plant and equipment and equipment	$\overline{\mathcal{S}}$	453) 23, 269)	$($ \$	355
				7, 324)
(18) Finance costs
		For the three-month periods ended March 31, 2016
Interest expense:				2015
Bank borrowings
Other interest expense	\$	891 38	\$	616
	\$			25
		929	$\mathcal{S}$	641

$(14)$ $\Omega_{11}$ $\cdot$ $\cdot$ $\overline{11}$ $\mathbf{r}$ $\mathbf{L}$ $\omega$ sta financial casato $\ddotsc$ $\mathbf{r}$ $\ddot{\phantom{a}}$

$\sim 32$ $\sim$

$\hat{\mathcal{A}}$

(19) Expenses by nature

For the three-month period ended March 31, 2016 Operating cost Operating expense Total Employee benefit expenses \$ \$ 21,032 \$ 82, 831 103,863 Depreciation \$ $\frac{1}{2}$ 20,836 2,601 \$ 23, 437 Amortization \$ \$ \$ 278 278 For the three-month period ended March 31, 2015 Operating cost Operating expense Total Employee benefit expenses $\frac{3}{2}$ 21, 223 $\$$ \$ 79,930 101, 153 Depreciation \$ 21,621 \$ \$ 2,143 23,764 Amortization \$ \$ \$ 282 282 (20) Employee benefit expense For the three-month period ended March 31, 2016 Operating cost Total Operating expense Wages and salaries $\boldsymbol{\hat{\mathbf{x}}}$ 18,644 $\mathbf{\hat{S}}$ $\mathbf{\$}$ 69,905 88, 549 Labor and health insurance expenses 1.215 6,272 7,487 Pension costs 925 3,048 3,973 Other personnel expenses 248 3,606 3,854 \$ 21,032 \$ 82,831 \$ 103,863

		For the three-month period ended March 31, 2015
	Operating cost	Operating expense	Total
Wages and salaries	\$ 18,845	\$ 66, 972	\$ 85, 817
Labor and health insurance
expenses	1,235	6, 253	7,488
Pension costs	894	2,878	3,772
Other personnel expenses	249	3,827	4,076
	21, 223	\$ 79,930	\$ 101, 153

A. According to the Articles of Incorporation of the Company, when distributing earnings, the remuneration to the directors and supervisors equal 2% of the distributable net profit of current period and the remuneration to employees shall not be less than 0.2% of the distributable net profit of current period. However, in accordance with the Company Act amended on May 20, 2015, a company shall distribute employee remuneration, based on the profit of the current year distributable, in a fixed amount or a proportion of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. A company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation distributed in the form of

shares or in cash; and in addition thereto a report of such distribution shall be submitted to the shareholders during their meeting. Qualification requirements of employees, including the employees of subsidiary of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. The board of directors of the Company has approved the amended Articles of Incorporation of the Company on December 17, 2015. According to the amended articles, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees' compensation and directors' and supervisors' remuneration. The ratio shall not be lower than 2% for employees' compensation and shall not be higher than 2% for directors' and supervisors' remuneration. The amended articles will be resolved in the shareholders' meeting in 2016.

B. For the three-month periods ended March 31, 2016 and 2015, employees' compensation and directors' and supervisors' remuneration were accrued at \$7,930 and \$11,040, respectively. The aforementioned amounts were recognized in salary expenses and estimated and accrued based on the distributable net profit for 2015 calculated by the percentage prescribed under the Articles of Incorporation of the Company. The actual amount approved at the shareholders' meeting for employees' compensation and directors' and supervisors' remuneration for 2015 was \$40,002, which is different from the estimated amount recognized in the 2015 financial statements of \$40,100, by \$98. Such difference will be recognized in profit and loss for the year ending December 31, 2016.

Information about employees' compensation and directors' and supervisors' remuneration of the Company as proposed by the board of directors and approved by stockholders will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

$(21)$ Income tax

A. Income tax expense

Components of income tax expense:

		For the three-month periods ended March 31,
	2016	2015
Current tax:
Current tax on profits for the year	41,035	\$ 51,881
Deferred tax:
Origination and reversal of temporary
differences	4,835)	2,097)
Income tax expense	36, 200	\$ 49, 784

B. As of April 29, 2016, the Company's income tax returns through 2014 have been assessed by the Tax Authority, and there were no disputes existing between the Company and the Tax Authority.

C. Unappropriated retained earnings:

	March 31, 2016	December 31, 2015	March 31, 2015
Earnings generated in and
after 1998	1, 337, 422	1, 163, 475	1, 373, 147

• D. As of March 31, 2016, December 31, 2015, and March 31, 2015, the balance of the imputation tax credit account was \$149,324, \$149,324 and \$95,437, respectively. As dividends were approved at the stockholders' meeting on June 29, 2015 and with the dividend distribution date set on July 21, 2015 by the Board of Directors, the creditable tax rate for the unappropriated retained earnings of 2014 is 20.98% and the creditable tax ratio for 2015 is expected to be 20.39%. The Company's imputation tax credit distributed to the stockholders shall be calculated on the basis of the balance of each stockholder on the date of dividend distribution. As a result, the applicable creditable tax rate for the dividend distributed for 2015 shall be adjusted which accounts for the imputation tax credits under the Tax Law before the day of dividend distribution.
• $(22)$ Earnings per share

		For the three-month periods ended March 31, 2016
		Weighted average
		number of ordinary
		shares outstanding	Earnings per
		Amount after tax (shares in thousands) share (in dollars)
Basic earnings per share
Profit attributable to the
ordinary shareholders	\$ 173, 947	159, 975	\$	1.09
Diluted earnings per share
Profit attributable to ordinary
shareholders	\$ 173, 947	159, 975
Assumed conversion of all dilutive
potential ordinary shares
Employees' bonus		320
Profit attributable to ordinary
shareholders plus assumed
conversion of all dilutive
potential ordinary shares	\$ 173, 947	160, 295	S	1.09

		For the three-month periods ended March 31, 2015
		Weighted average
		number of ordinary
		shares outstanding Amount after tax (shares in thousands) share (in dollars)	Earnings per
Basic earnings per share
Profit attributable to the
ordinary shareholders	\$ 241, 953	159, 975	1.51
Diluted earnings per share
Profit attributable to ordinary
shareholders	\$ 241, 953	159, 975
Assumed conversion of all dilutive potential ordinary shares
Employees' bonus		74
Profit attributable to ordinary
shareholders plus assumed
conversion of all dilutive potential ordinary shares	241, 953	160,049	1.51

(23) Operating leases

The Group leases buildings under non-cancellable operating lease agreements. The lease terms are between 1 and 19 years, and all these lease agreements are renewable at the end of the lease period. The Group recognized rental expenses of \$5,531 and \$5,175 for these leases in profit or loss (shown as "operating expenses") for the three-month periods ended March 31, 2016 and 2015, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	March 31, 2016	December 31, 2015	March 31, 2015
Not later than one year Later than one year but	\$ 23,071	\$ 27, 739	\$ 22, 920
not later than five years	82,048	102, 384	87,776
Later than five years	94, 928	120,896	112, 175
	200, 047	251,019	222, 871

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties

A. Sales:

	For the three-month periods ended March 31,
		2016	2015
Sales of product:
$-$ An entity controlled by key management
individuals	\$	115,667	\$	163, 693
$-$ Key management individuals		111, 645		69, 369
		227, 312		233,062
Processing revenue:
- An entity controlled by key management
individuals		63, 340		73, 757
$-$ Key management individuals		18, 195		21,957
		81,535		95, 714
		308, 847	\$	328, 776

The collection period for related parties was 7~45 days after sales of goods, 10~45 days for sales to companies of traditional channel. Except for the collection periods, other terms of sales were the same for related and third parties. The terms of providing processing services to related parties were the same with regular customers. The above related parties close their accounts at the end of each month and made payment within 15 days after it. The pricing depends on the contract and management methods.

B. Purchases

		For the three-month periods ended March 31,
		2016	2015
An entity controlled by key management
individuals	S	82, 229		84, 527
Key management individuals		24,040		159,631
		106, 269		244, 158

The terms of purchases and payments $(7-30)$ days after receipt ) to related parties were the same with third party suppliers, except for an entity controlled by key management individuals, where in payments are made in 15~30 days after receipt.

C.Accounts receivable

	March 31, 2016		December 31, 2014	March 31, 2015
An entity controlled by key
management individuals	61, 715	-8	67.706	60,762
Key management individuals	15, 644		22, 455	17,082
	77, 359		90, 161	77.844

D. Accounts payable

	March 31, 2016		December 31, 2015	March 31, 2015
An entity controlled by key
management individuals	34, 438	-\$	34, 843	\$	32, 617
Key management individuals	4, 150		610		58, 232
	38,588	\$	35, 453		90, 849

(2) Key management compensation

	For the three-month periods ended March 31,
	2016	2015
Salaries and other short-term employee benefits	33,664	32, 935

8. PLEDGED ASSETS

The Group's assets pledged as collateral were as follows:

		Book Value
Assets pledged	March 31, 2016	December 31, 2015	March 31, 2015	Purpose of collateral
Time deposits (Note 1)	1,950	1,950	\$ 1,950	Performance guarantees
Land (Note 2)	44.244	44.244	44, 244	(Note 3)
Buildings, net (Note 2)	142, 173	144, 365	150, 870	n
	188, 367	190, 559	197, 064

(Note 1) Recognized as "Other current financial assets".

(Note 2) Recognized as "Property, plant, and equipment".

(Note 3) Uncanceled secured loan on Property, plant and equipment.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

• (1) As of March 31, 2016, December 31, 2015, and March 31, 2015, the unused letters of credit amounted to \$1,784,901, \$785,270 and \$587,288, respectively.
• (2) Capital expenditures contracted for but not yet incurred

			March 31, 2016 December 31, 2015 March 31, 2015
Property, plant and equipment \$	$47,352$ \$	$36, 108$ \$		59, 433

(3) For more information about operating leases, please refer to Note 6(23), 'Operating leases.'

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

$(1)$ Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders, and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new

shares or sell assets to reduce debt.

• (2) Financial instruments
• A. Fair value information of financial instruments

The financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable (including related parties), other receivables, other financial assets – current, guarantee deposit paid, short-term borrowings, short-term notes and bills payable, accounts payable (including related parties), other payables and guarantee deposits received) are based on their book value as book value approximates to fair value. The fair value information of financial instruments measured at fair value is provided in Note 12 (3), "Fair value in formation".

• B. Financial risk management policies
• (a) The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial position and financial performance.
• (b) Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Company's and the subsidiary' operating units.
• C. Significant financial risks and degrees of financial risks
• (a) Market risk
  • (i) Foreign exchange risk
  • i. Some purchases and sales are valued in US dollars, therefore the fair value changes with market exchange rate.
  • ii. To manage the foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, the Group is required to hedge the foreign exchange risk exposure using forward foreign exchange contracts. However, hedge accounting is not applied as transactions did not meet all criteria of hedge accounting.

		March 31, 2016
	Foreign currency
	amount (in thousands)	Exchange rate	Book value
(foreign currency: functional
currency)
Financial assets
Monetary items
USD: NTD	\$ 6	32.24	\$ 182
Financial liabilities
Monetary items
USD: NTD	1,604	32.24	51,689

	December 31, 2015
	Foreign currency
	amount (in thousands)	Exchange rate	Book value
(foreign currency: functional
currency)
Financial assets
Monetary items
USD : NTD	\$ 3	32.88	\$	104
Financial liabilities
Monetary items
USD: NTD	3, 275	32.88		107,675
		March 31, 2015
	Foreign currency
	amount (in thousands)	Exchange rate		Book value
(foreign currency: functional
currency)
Financial assets
Monetary items
USD: NTD	\$ 11	31.35	\$	355
Financial liabilities
Monetary items
USD: NTD	1,430	31.35		44,820

• iii. As of March 31, 2016 and 2015, if the NTD:USD exchange rate appreciates/ depreciates by 1% with all other factors remaining constant, the after-tax profit for the three-month periods ended March 31, 2016 and 2015 would increase/decrease by \$515 and \$444, respectively.
• iv. The unrealized exchange gain (loss) arising from significant foreign exchange variation on monetary items held by the Group for the three-month periods ended March 31, 2016 and 2015 amounted \$700 and (\$29), respectively.
• (ii) Price risk

The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as available-for-sale. To manage its price risk arising from investments in equity securities, the Group has set various stop loss points to ensure that the Group is not exposed to significant market risks.

The Group's investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 2% with all other variables held constant, other components of

$-40-$

equity would have increased/decreased by $$26$ and $$$ – for the three-month periods ended March 31, 2016 and 2015, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

(iii) Interest rate risk

If interest rates on borrowings had been 1% higher/lower with all other variables held constant, there is no significant effect on after-tax profit for the three-month periods ended March 31, 2016 and 2015.

• (b) Credit risk
• (i) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group's credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and outstanding receivables.
• (ii) No credit limits were exceeded during the three-month periods ended March 31, 2016 and 2015, and management does not expect any significant losses from non-performance by these counterparties.
• (iii) For the credit quality information of the Group's financial assets which are not past due and impaired, please refer to Note 6, "Financial assets".
• (iv) For aging analysis information of the Group's financial assets which are past due but not impaired, please refer to Note 6, "Financial assets".
• (v) For individual analysis of the Group's financial assets which are impaired, please refer to Note 6, "Financial assets".
• (c) Liquidity risk
• (i)Cash flow forecasting is performed in Finance Division of the Group. Finance division monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
• (ii)Forward exchange agreement which the Company is engaged in will be the item of cash outflow, amounting to US\$52,943 thousand dollars. There is no significant risk because the rate of forward exchange agreement had already been confirmed.
• (iii)The table below analyses the Group's non-derivative financial liabilities and gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities.

March 31, 2016	Less than 1 year	2 years	Between 1 and Between 2 and 5 years	More than 5 years
Non-derivative financial
liabilities
Short-term borrowings	\$ 91,770	\$	\$	\$
Short-term notes and
bills payable	35,000
Accounts payable
(including related
parties)	373, 635
Other payables	205, 912
Guarantee deposits
received		790
Derivative financial
liabilities
Forward exchange
contracts	28,023
	Less than		Between 1 and Between 2 and		More than
December 31, 2015	1 year	2 years	5 years		5 years
Non-derivative financial
liabilities
Short-term borrowings	\$ 127,706	\$	\$	\$
Accounts payable
(including related
parties)	428, 727
Other payables	317, 962
Guarantee deposits
received		940

The amounts disclosed in the table are the contractual undiscounted cash flows.

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March 31, 2015	1 year	2 years	5 years	5 years
Non-derivative financial
liabilities
Short-term borrowings	\$ 79,890	\$	\$	\$
Short-term notes and
bills payable	20,000
Accounts payable
(including related
parties)	378,887
Other payables	203, 404
Guarantee deposits
received		970
Derivative financial
liabilities
Forward exchange
contracts	2,403

The Group has no derivative financial liabilities as of December 31, 2015.

(3) Fair value information

• A. Details of the fair value of the Group's financial assets and financial liabilities not measured at fair value are provided in Note 12(2), "Financial instruments".
• B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group's investment in listed stocks is included in Level 1.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group's investment in forward foreign exchange contracts is included in Level 2.
• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group's investment in equity investment without active market is included in Level 3.
• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at March 31, 2016, December 31, 2015, and March 31, 2015 is as follows:

March 31, 2016	Level 1	Level 2	Level 3	Total
Assets:
Recurring fair value measurements
Available-for-sale financial assets
Equity securities - non-current	\$	\$	\$ 1,275	\$ 1, 275
Liabilities:
Recurring fair value measurements
Financial liabilites at fair value
through profit or loss
Forward exchange contract	\$	28,023	\$	28,023 \$
December 31, 2015	Level 1	Level 2	Level 3	Total
Assets:
Recurring fair value measurements
Financial assets at fair value through
profit or loss
Forward exchange contract	\$	3,401 \$	\$	\$ 3,401
Available-for-sale financial assets
Equity securities - non-current			1,275	1,275
	\$	\$ 3,401	\$ 1,275	\$ 4,676
March 31, 2015	Level 1	Level 2	Level 3	Total
Assets:
Recurring fair value measurements
Available-for-sale financial assets
Equity securities - non-current	\$	\$	1, 275 \$	\$ 1,275
Liabilities:
Recurring fair value measurements
Financial liabilites at fair value
through profit or loss
Forward exchange contract	\$	2,403	\$	2,403

D. The methods and assumptions the Group used to measure fair value are as follows:

Market quoted price

(a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Closing price

• (b) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.
• E. For the three-month periods ended March 31, 2016 and 2015, there was no transfer between Level 1 and Level 2.
• F. The following is the movement of level 3 for the three-month periods ended March 31, 2016 and 2015:

	2016	2015
	Equity Securities	Equity Securities
Beginning and ending balance

• G. For the three-month periods ended March 31, 2016 and 2015, there was no transfer into or out from Level 3.
• H. Financial segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

(According to the current regulatory requirements, the Group is only required to disclose the information for the three-month periods ended March 31, 2016. The financial information of investees was prepared based on unreviewed financial statements and disclosed individually. Elimination and adjustment for consolidation were not considered.)

• A. Loans to others: None.
• B. Provision of endorsements and guarantees to others: None.
• C. Holding of marketable securities at the end of the period (not including subsidiary, associates and joint ventures): Please refer to table 1.
• D. Acquisition or sale of the same security with the accumulated cost exceeding \$300 million or 20% of the Company's paid-in capital: Please refer to table 2.
• E. Acquisition of real estate reaching \$300 million or 20% of paid-in capital or more: None.
• F. Disposal of real estate reaching \$300 million or 20% of paid-in capital or more: None.
• G. Purchases or sales of goods from or to related parties reaching \$100 million or 20% of paid-in capital or more: None.
• H. Receivables from related parties reaching \$100 million or 20% of paid-in capital or more: None.
• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2), "Financial assets and liabilities at fair value through profit or loss".
• J. Significant inter-company transactions during the reporting periods: Please refer to table 3.
• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

$-45-$

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 5.

B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

(1) General information

The management of the Group has identified the operating segments based on information provided to the Group's chief operating decision maker in order to make strategic decisions. The components of the Group and the basis for identification and measurement of segment information had no significant changes in this period.

(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

For the three-month period ended	TTET Union		Master Channels
March 31, 2016	Corporation		Corporation	Total
Segment revenue	\$ 3, 346, 019	\$	660,580	\$ 4,006,599
Revenue from internal customers	79,096			79,096
Revenue from external
customers	3, 266, 923		660,580	3, 927, 503
Segment income	197, 182		15,760	212, 942
Segment assets	4, 261, 639		649,791	4, 911, 430
For the three-month period ended	TTET Union		Master Channels
March 31, 2015	Corporation		Corporation	Total
Segment revenue	\$ 4, 256, 127	\$	576,026	\$ 4, 832, 153
Revenue from internal customers	81, 164			81, 164
Revenue from external
customers	4, 174, 963		576,026	4,750,989
Segment income	282, 241		11,503	293, 744
Segment assets	4, 259, 146		564, 417	4, 823, 563

(3) Reconciliation for segment income and segment assets

The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income. The amounts provided to the chief operating decision-maker with respect to segment income and segment assets are measured consistent with that of the financial statements.

TTET Union Corporation and Subsidiary

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures).

March 31, 2016

Expressed in thousands of NTD

Ownership 1.08% ţ I 1 1,275 Number of shares Book value 489,457 329,866 239,517 400,000 Available-for-sale financial ledger account Cash equivalents Cash equivalents Cash equivalents securities issuer I I ļ International Bills Finance Corp. Marketable securities Mega Bills Finance Co., Ltd. China Bills Finance Corp. Commercial paper: FOOD CHINA INC. Stocks: Securities held by TET Union Corporation		Relationship with the	General	As of March 31, 2016
					Fair value		Footnote
						489,457	I
						329,866 239,517	I
							I
						275	l
			assets - non-current

Table 1

				Amount			329,866	489,457		239,517
Expressed in thousands of NTD	Balance as at	March 31, 2016		shares
			Gain (loss) on Number of	disposal			373	555		360
							2,348,584) \$	1,907,971)		1,087,437)
		Disposal		Selling price Book value			2,348,957 (\$	1,908,506 (		1,087,797 (
			Number of	shares			မ ,
				Amount			2,538,501	1,967,867		998,301
		Addition	Number of	shares
				Amount			139,949	429,561		328,653
	Balance as at	January 1, 2016	Number of
		Relationship -	with	account Counterparty the investor shares			I	$\begin{array}{c} \end{array}$		I
							$\begin{array}{c} \end{array}$	I		I
		General	ledger
			Marketable	securities	Commercial					paper: China Billis Cash Firance Corp. equivalents International Cash Billis equivalents Finance Corp. Mega Billis Cash Finance Co., equivalents	Ltd.
Table 2				Investor	TET Union	Corporation

TTET Union Corporation and Subsidiary

Acquisition or sale of the same security with the accumulated cost exceeding \$300 million or 20% of the Company's paid-in capital

For the three-month period ended March 31, 2016

Table 2, Page 1

֚֚֡֓֓֡֬֓֓֬֓֓֬֓֓֬֓֓֬֓֓֬֓֬֓֬֓֬֓֬֓֬֓֓֬֓֬֓֓
ì
j j í

Significant inter-company transactions during the reporting periods

For the three-month period ended March 31, 2016

Table 3

Expressed in thousands of NTD

Percentage of total consolidated revenues or total assets (Note 3) Transaction terms Transaction terms Amount	(2%) half month, notes due in 79,096) Closes its accounts each 20 days	$\frac{8}{3}$ I 30,767
General ledger account Relationship (Note 2)	Sales	Accounts receivable
Counterparty Company name (Note 1) Number	Food Master Channels Corp. TTET Union Corporation		Note 2: Relationship between transaction company and counterparty is olassified into the following three categories: Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (2) The subsidiaries are numbered in order starting from '1'. (1)Parent company to subsidiary. (1)Parent company is '0'.

(2)Subsidiary to parent company.
(3)Subsidiary to subsidiary.
Note 3: Regarding percentage of transection amount to consolidated revenues or total based on period-end balance of transaction to consolidated assets for balan

TTET Union Corporation and Subsidiary

$\ddot{\phantom{a}}$

For the three-month period ended March 31, 2016 Information on investees

Expressed in thousands of NTD

Investment income (loss) Net profit (loss) Shares held as at March 31, 2016 amount Initial investment	recognised by the Company f the investee for	the three-month period for the three-month period Balance as at Balance as at	Footnote ended March 31, 2016 ended March 31, 2016 December 31, 2015 Number of shares Ownership Book value March 31, 2016	Subsidiary 0,286 13,081 181,873 80.27 2,039,999 138,385 138,585
		Main business	$\frac{\text{acivities}}{\text{}}$ _	Wholesale food S
			Location	Taiwan
			Investee	Food Master	Channels	Corp.
			Investor	TET Union	orporation

$\ddot{\phantom{0}}$

Table 4

TTET Union Corporation and Subsidiary

For the three-month period ended March 31, 2016 Information on investments in Mainland China

Table 5

Expressed in thousands of NTD

					Accumulated Amount remitted from Taiwan to		Accumulated				Accumulated
				amount of	Mainland China/		amount		Net income of Ownership Investment income		amount
				emittance from		Amount remitted back			of remittance investee for the held by (loss) recognised		of investment
				Taiwan to		to Taiwan for the three-month		from Taiwan to three-month the	by the Company	Book value of	income
			Investment	Mainland China					period ended March 31, 2016 Mainland China period ended Company for the three-	investments as remitted back to
Investee in	Main business	Paid-in	method						as of January 1, Remitted to Remitted back as of March 31, March 31, (direct or month period ended of March 31, Taiwan as of
Mainland China	activities	capital	(Mote)	2016		Mainland China to Taiwan	2016	2016	indirect) March 31, 2016		2016 March 31, 2016 Footnote
information and Technology Ltd. FoodChina Online Heijing	Program planning, \$ 45,066 System design, g.			7,726			$7,726$ (\$4,652) $1.08$ \$			1,275	$\overline{\phantom{a}}$

Note : Investment methods are classified into the following three categories:
(1)Directly invest in a company in Mainland China.
(2)Indirect investment in PRC through the existing company (FOOD CHINA INC.) located in the t

	Accumulated		Ceiling amount of
	investment		investments in
	balance from	Amount	Mainland China
	Taiwan to	approved by	imposed by
Company name	Mainland China	MOEA	MOEA (Notel)
TTET Union	7,726 \$	7,726 \$	2,329,668
Corporation

Note 1: The celing amount is 60% of consolidated net worth.
Note 2:Foreign currencies were translated into New Taiwan Dollars using the exchange rate as of report date as follows: USD:NTD 1:32.19.