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YP Annual Report 2016

Jun 29, 2017

51950_rns_2017-06-29_8bc189c4-36bd-40c0-8013-7e704ff7e8c3.pdf

Annual Report

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Stock Code: 2023

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Annual Report 2016

(Translation)

Information uploaded to: http://sii.twse.com.tw Open information website: http://mops.twse.com.tw Related Information: Same as above.

Published date: May 15, 2017

I. Names, titles and contact info of the Company's spokesperson and deputy spokesperson Spokesperson: Lin-Maw Wu Title: President Tel: (07) 611-7181 Email: [email protected]

Deputy spokesman: Yung-Hsien Chen

Title: Vice President - Finance Tel: (07) 611-7181 Email: [email protected]

II. Address and Contact of Head Office and Plant:

Head Office: No.369, Yuliao Rd., Qiaotou Dist., Kaohsiung City 825, Taiwan (R.O.C.) Tel: (07) 611-7181 Factory: No.369, Yuliao Rd., Qiaotou Dist., Kaohsiung City 825, Taiwan (R.O.C.) (Kaohsiung Plant) Tel: (07) 611-7181 Factory: No.369, Yuliao Rd., Qiaotou Dist., Kaohsiung City 825, Taiwan (R.O.C.) (Kaohsiung Plant) Tel: (07) 611-7181 Factory: No.6, Gongye 6th Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.) (Pingtung Plant) Tel: (08) 755-0979 Factory: No.909, Fuxing Rd., Luzhu Dist., Kaohsiung City 821, Taiwan (R.O.C.) (Luzhu Plant) Phone: (07) 697-4428 Factory: No.600, Zhong’an Rd., Yanchao Dist., Kaohsiung City 824, Taiwan (R.O.C.) (Yancao Plant) Phone: (07) 616-3001

III. Name, address, website, and telephone of stock transfer agency:

Name: Shareholder Service Dept., Taipei Office, Yieh Phui Enterprise Co.,Ltd Address: 15F., No.30, Beiping E. Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.) Company website: www.yiehphui.com.tw Tel: (02) 2395-6780

IV. Contact Information of the Certified Public Accountants for the Latest Financial Report

Names of CPAs: Ling-Wen Huang, Jen-Yao Hsieh Name of Accounting Firm: Crowe Horwath (TW) CPAs Address: 27F., No.6, Siwei 3rd Rd., Lingya Dist., Kaohsiung City 802, Taiwan Website: www.crowehorwath.net/tw Tel: (07) 331-2133

V. Overseas Trade Places for Listed Negotiable Securities:

Listing location: none Ways for query: none

VI. Company website: www.yiehphui.com.tw

Table of Contents

Table of Contents
I. Letter to Shareholders…………………………………………………………………… 1
II. Company Profile ………………………………………………………………………... 10
1. Date of Establishment………………………………….…………………………..……. 10
2. Corporate History……….……………………………………………………………….. 10
III. Corporate Governance Report…………………………………………………………. 15
1. Organization……………………………………………………………………………… 15
2. Information on the Directors, President, Vice Presidents, Associate Managers, and
Supervisors of Departments and Branch Offices………………………………………… 18
3. Compensation of Directors, Supervisors, President and Vice Presidents………..………. 37
4. Implementation of Corporate Governance………………………………………..……… 51
5. Information on CPA professional fees……………………………………………………. 116
6. Information on Replacement of Certified Public Accountants……………………… 118
7. The Company's Chairman, President, or Managers of Finance or Accounting Who
Have Worked in the Firm of the CPA(s) or Its Affiliates………………………………… 120
8. Transfer or Pledge of Shares by the Company's Directors, Executive Officers and
Stockholders with More Than 10% of the Company's Shares ……………...................... 120
9. Information on the Top 10 Holders of the Company's Shares Who Are Identified as
Related Parties, Spouse or Relative within Second-Degree of Kinship ……………………
122
10. Information on the Number of Shares of the Company Invested by the Company, any
of the Company’s Directors and Supervisors and Executive Officers or a Company
Directly or Indirectly Controlled by the Company and Consolidated Percentage of
Shareholding……………………………………………………………………………… 130
IV. Funding Status …………………………………………………………………………. 132
1. Capital and Shares ……………………………………………………………………….. 132
(1) Source of Share Capital ……………………………………………………………..…132
(2) Structure of Shareholders …………………………………………………………..… 134
(3) Conditions of Share Distribution ..…………………………………………………… 135
(4) List of Major Shareholders …………………………………………………………… 135
(5) Fair market value, net worth, profit, dividend per share and other relevant
information for the most recent two years ………………………………………………
136
(6) Company dividend policy and implementation status ………………….………….... 137
(7) Effect upon business performance and earnings per share of any stock dividend 139
distribution proposed or adopted at the most recent shareholders' meeting …………..
(8) Employee Bonuses and Compensation for Directors ……………………..…….....… 139
(9) Repurchases of Shares by the Company..…………………………………………...... 141
2. Issuance of Corporate Bonds …………………………………………………………….. 141
3. Issuance of Preferred Shares …………………………………………………………….. 141
4. Issuance of Overseas Depository Receipts …………………………………………..…... 141
5. Issuance of Employee Stock Options ……………………………………………………. 141
6. Issuance of New Shares in Connection with Mergers or Acquisitions………………….…141
7. Implementation of the Capital Utilization Plan ……..………………………………...…. 141
**V. Operational Highlights …………………………………………………………………… ** 142
1. Business Content……………………………………………………………………………142
(1) Scope oBusiness ……………………………………………………………………… 142
(2) Industry Overview …………………………………………………………….……… 146
(3) Overview of Technology and R&D……..…………………………………….……… 147
(4) Short- and Long-Term Business Development Plans ………………………………… 149
2. Overview of Market, Production and Sales……..…………………………………………150
(1) Market Analysis ………….………………………………………….……………….. 150
(2) Major Application and Manufacturing Processes of the Company's Main Products .. 151
(3) Supply Status of Primary Raw Materials …………..………………………………… 154
(4) Information on the Customers that Contribute to More Than 10% of Total
Purchases and Sales in the Last Two Years………………………………………………
155
(5) Production Volume and Value of the Last TwoYears ……….…………………………157
(6) Sales Volume and Value of the Last Two Years ……………………………………… 157
3. Employee Information………………………………………………………………….… 158
4. Environmental Expenditures …………………………………….………………….….… 158
5. Labor Relations ……………………………………………………………………….……160
6. Important Contracts ……………………………………………………………………… 162
VI. Financial Conditions ………………………………………………………………………164
1. Condensed Balance Sheet and Consolidated Income Statement for the Last Five Years .. 164
2. Financial Analysis of the Last Five Years …………………………………………….…. 168
3. The Audit Committee’s Audit Report on the Most Recent Fiscal Year ………………….. 173
4. Last Fiscal Year's Consolidated Financial Statements of the Parent Company and
Subsidiaries Audited and Attested by the CPA …………………………………………… 174
5. Individual Financial Reportsfor the Last Fiscal Year………………………..………….… 174
6. Impact on the Company's Financial Status due to Financial Difficulties Experienced by
the Company and Its Related Companies during the Last Fiscal Year up to the
Publication Date of This Report ……………………………………………………………
174
VII. Review, Analysis, and Risks of Financial Status and Performance…………...……… 175
1. Financial Status ……………………………………………………………………………175
2. Financial Performance ………………………………………………………………….…176
3. Cash Flow …………………………………………………………………………………182
4. Major Capital Expenditures in the Last Fiscal Year and Their Impact on the Company's
Financial Affairs……………………………………………………………………………
183
5. Investment Policies for the Last Fiscal Year, the Main Reasons for the Profits or Losses
Generated thereby, Improvement Plans, and Investment Plans for the Coming Year………
183
6. Risk Analysis and Evaluation ……………………………………………………………. 184
7. Other Important Matters …………………………………………………………………, 187
VIII. Special Items …………………………………….………………………………………188
1. Affiliation Information …………….……………………………………………….……. 188
2. Private Placement of Securities ……………………………………………………………210
3. Holding or Disposal of the Company's Shares by Subsidiaries ……………...………….. 210
4. Other Required Disclosures …………………………………...…………………………. 210
IX. Any Event which has a Material Impact on Shareholders' Rights and Interests or 210
the Company’s Securities as Prescribed in Article 36, Paragraph 3, Subparagraph 2
of the Securities and Exchange Act that have Occurred from Last Year to the
Printing Date of This Report………………………………………………………………
Appendix I: Last Fiscal Year's Consolidated Financial Statements of the Parent Company 211
and Subsidiaries Audited and Attested by the CPA ……………………………………………
Appendix II: Individual Financial Reportsfor the Last Fiscal Year………………………..……344

I. Letter to Shareholders

Dear Shareholders,

The supply side in China went into an aggressive reform in 2016. De-capacity in the steel industry is expected to continue into 2017. Yieh Phui is optimistic about the future, but will stay cautious of the market development.

The January 2017 issue of the World Bank's World Economic Situation and Prospects Report revealed that the global economic growth rate is expected to expand by 0.4% to 2.7% in 2017, compared with 2016. In addition, the World Steel Association (WSA) predicted that global demand for steel is expected to increase by 0.5% to 1.51 billion tons in 2017.

In recent years, the international community has taken actions to block the export of cheap steel products from China. Protectionism in steel trading is growing, which prompted the Chinese authorities to the launch the slogan of ―supply-side reform‖ at end of 2015, expanding de-capacity actions to steel, coal, cement, glass, and aluminium. According to the Thirteenth Five-Year Plan, the steel industry will reduce the production capacity of crude steel by 100 million to 150 million tons by 2020. With the prices of coal and steel rising from the bottom, driving the international steel prices to stability and in turn raising consumer confidence, a streak of opportunities for overturning the trend emerged in the global steel market in 2016.

In China, production of crude steel totaled 808 million tons, a slight growth of 0.5%, compared with that in 2015. Export volume came to 108 million tons, a slight decrease of 3.6%, compared with the 112 million tons in 2015. The statistics show that the market has reached its peak for both crude steel production and steel exports. With expanded infrastructure development and the supply-side reform policy for steel production in 2017, the threat of steel exports from China to the global market is expected to decrease over time.

The US Federal Reserve announced an upward adjustment of the interest rate on December 14, 2016, and hinted that such adjustment may occur three times in 2017. Subsequently, the first interest rate adjustment of 0.25% was implemented on March 15, 2017. This shows that economic growth in the US began to recover and is moving upward steadily. The report of the European Steel Association (EUROFER) released in early February 2017 indicated that apparent consumption of steel in the EU is expected to grow 3% in the first half of 2017 compared with the same period last year, and stay at a stable level in the second half. The report also projected that consumption of steel will continue to rise and therefore the demand for steel will continue to grow at a moderate speed in 2017 and 2018. This shows that the EU economy is also recovering.

Looking into 2017, the global economy will continue to recover and the overall steel

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market is expected to continue trending upward. Although the market is still full of uncertainties, Yieh Phui is fully prepared to charge forward in the ever-changing global steel market.

I. Overview of Business in 2016:

In 2016, Yieh Phui Enterprises Co., Ltd. achieved a growth of 11.93% in sales, which brought an increase of NT$1.644 billion to overall revenue compared with 2015. Yieh Phui (China) brought an increase of 9.04% in sales, which contributes to an increase of NT$964 million in revenue compared with 2015. Yieh Hsing, on the other hand, experienced a sharp drop in sales, resulting in a decrease of NT$232 million in revenue. Overall, the Company's consolidated revenue came to NT$52,847,410 thousand , an increase of 6.15% over the previous year (NT$49,784,834 thousand). The consolidated net income after tax (NIAT) is NT$2,378,545 thousand, an increase of 247.29% over the previous year of (NT$1,614,837 thousand). In the total of the NIAT, NT$2,502,005 thousand is attributed to the income of the parent company, an increase of 362.32% from (NT$953,786 thousand) of the previous year.

1. Business plan implementation results:

Consolidated Financial Statement

Year
Item		 2016 2015 Difference in
amounts		 changes %
OperatingRevenue 52,847,410 49,784,834 3,062,576
6.15
OperatingCost 45,641,051 46,080,342 -439,291
-0.95
Grossprofit(loss) 7,206,359 3,704,492 3,501,867
94.53
OperatingExpenses 3,362,322 2,842,815 519,507
18.27
Net income(loss) 3,844,037 861,677 2,982,360
346.11
Non-operatingrevenues and expenses -471,965 -2,458,392 1,986,427
80.80
Net income(loss)before tax 3,372,072 -1,596,715 4,968,787
311.19
Income tax expense 993,527 18,122 975,405 5,382.44
Net income(loss)after tax 2,378,545 -1,614,837 3,993,382
247.29
Other comprehensive income(net) -904,716 190,111 -1,094,827
-575.89
Total comprehensive income 1,473,829 -1,424,726 2,898,555
203.45
Net income attributable to owners of parent
company		 2,502,005
-953,786		 3,455,791
362.32
Net income attributable to non-controlling
interests		 -123,460 -661,051 537,591
81.32
Comprehensive income (loss) attributable
toparent company		 1,612,620 -761,465 2,374,085
311.78
Comprehensive income (loss) attributable -138,791 -663,261 524,470
79.07

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to non-controlling interests

Individual Financial Statement

Year
Item		 2016 2015 Difference in
amounts		 changes %
OperatingRevenue 23,867,665 22,223,598 1,644,067
7.40
OperatingCost 20,009,747 20,354,559 -344,812
-1.69
Grossprofit(loss) 3,857,918 1,869,039 1,988,879
106.41
OperatingExpenses 1,793,191 1,310,381 482,810
36.85
Net income(loss) 2,064,727 558,658 1,506,069
269.59
Non-operating revenues and
expenses		 948,024 -1,623,316 2,571,340
158.40
Net income(loss)before tax 3,012,751 -1,064,658 4,077,409
382.98
Income tax expense 510,746 -110,872 621,618
560.66
Net income (loss) after tax 2,502,005 -953,786 3,455,791
362.32

  1. The Company did not publish financial projections in 2016; therefore, disclosure of budget implementation results is not applicable.

  2. 3 Financial balance and profitability analysis:

Consolidated Financial Statement

Item 2016 2015
Net cash inflow from operating activities
(NT$thousand)		 3,375,039 3,547,840
Equity/Assets(%) 36.87 37.98
Liabilities/Assets(%) 63.13 62.02
Long-term asset to real estate, plant and
equipment ratio(%)		 153.50 162.75
Current ratio(%) 102.10 120.89
Quick ratio(%) 58.52 77.76
Return on assets(%) 3.83 -1.23
Return on shareholders’ equity (%) 8.03 -5.54
Net income ratio(%) 4.50 -3.24
Earningsper share(NT$) 1.46 -0.56
Number of shares at end ofyear 1,718,090,576 1,718,090,576

Individual Financial Statement

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Item 2016 2015
Net cash inflow from operating activities
(NT$thousand)		 2,003,887 2,677,000
Equity/Assets(%) 57.09 57.11
Liabilities/Assets(%) 42.91 42.89
Long-term asset to real estate, plant and
equipment ratio(%)		 434.09 387.63
Current ratio(%) 74.03 58.92
Quick ratio(%) 38.51 36.44
Return on assets(%) 5.98 -1.49
Return on shareholders’ equity (%) 9.37 -3.61
Net income ratio(%) 10.48 -4.29
Earningsper share(NT$) 1.46 -0.56
Number of shares at end ofyear 1,718,090,576 1,718,090,576
  1. Research and Development:

Starting from 2007, Yieh Phui has developed the market for coated steel to be used for household appliances and has been recognized by famous appliance producers such as Whirlpool, Fisher & Paykel, SHARP, and Panasonic.

Confronting with fierce market competition, Yieh Phui has been vigorously developing high end quality products for high end market and cooperating with Japanese steel firms to expand in the overseas market. We have seen good results from this collaboration since December 2013 with the volume increasing each month every year, contributing to our earnings and expecting the cumulative total sales to reach 100,000 tons landmark in the second quarter of 2017.

On product differentiation, Yieh Phui has successfully developed anti-microbial metallic coated steel sheets – regular spangle, used for the pipes for air-conditioning, and gained recognition by the public construction projects of Hong Kong, such as MRT and hospitals, and those of Macao. Yieh Phui continues to develop other high end prepainted steel sheets and Al-Zn coated steel sheets for inner panels of ovens. The sales have steadily increased in 2016 and expected to expand in the projects of other appliances. In addition, Yieh Phui has finalized the production of Printed Prepainted Steel Sheets (wood & hairline patterns) for special applications in the industry and will deliver those products in 2017, enhancing the market prospect and the diversity of our offers.

The trend of globalization has triggered the EU to issue the regulation of RoHS and WEEE, which focus on the recycling of electronic appliances, environment friendly production and their re-use. This policy has won the recognition of the whole world

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and Yieh Phui has developed products compliant with those regulations and earned big and long-term orders of major appliance producers. Later on in 2007 the EU issued REACH, controlling 16 ingredients in the materials, mixtures and products exporting to EU that may cause cancers, deformation and toxicity to human reproductive system. Up to the end of 2016, there have been 173 such items and they have been put into Yieh Phui’s quality control and auditing system to protect the environment and the health of consumers. Later this year EU may have some new instructions on construction materials like metallic and color coated steel sheets in 2017 and 2018. The company will do whatever it can aggressively and speedily develop multi-combination and multi-purpose products with suppliers of surface treatment and paints. Also, Yieh Phui will cooperate with the sales channels of the supply chain of dealers and roll formers, making sure that our products will reach the world market seamlessly and in a timely fashion to score another great performance in expansion and sales.

II. Overview of 2016 business plan:

1. Business Strategy

Yieh Phui has been developing the global market for many years and achieved a system of order transfer that makes us far more flexible than domestic competitors. With a well-developed distribution system, we will continue to secure the established distribution channels and existing customers and expand into the niche markets through a series of sales strategies, including developing niche products, actively seeking strategic alliances and expanding market shares, aiming to reach multiple targets in deeper and broader scope.

Cheap steel imports have brought certain impacts to the domestic market in recent years. CNS certification for galvanized and pre-painted steel products is currently suspended in Taiwan, and therefore early-stage screening of poor quality hot-dip galvanized/pre-painted steel products in effort to mitigate the impact on the domestic market is not yet achieved. Nonetheless, Yieh Phui took the initiative to provide CNS-standard galvanized and pre-painted steel products to our customers in the domestic market. We use high quality products to counter inferior imports and take an active approach to secure the quality of overall supply of steel products in the domestic market. Although, under the global marketing strategy, the Company sets its goal for domestic sales at 35%, we have never neglected the development of the domestic market. As always, we actively provide assistance to our downstream processing service providers to minimize the risks of unstable quality, poor capital flow, delayed shipment and exchange rate fluctuation. Our active approach directly enhanced our market competitiveness. In the future the company will continue to develop the domestic market with our advantages in

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quality and services and create a win-win business environment for both the company and our customers.

At the current stage, over 65% of the Company's total sales come from exports. Therefore, the movement of the global market drives the Company's performance. Taiwan has been marginalized in the AFTA (ASEAN Free Trade Area) as China signs FTAs with Japan and South Korea. In addition, anti-dumping and safeguard actions taken by Australia, Thailand, Indonesia, and the US announced the rising of protectionism. These events highlighted the disadvantageous position of Taiwan in the chain of global trade. Therefore, in addition to urging the government to sign FTA with our trade partners, we will continue to consolidate the resources in the steel industry and seek ways to lower the cost of sales to help our customers and our Company maximize market competitiveness in the global steel industry.

2. Expected sales and marketing strategies:

The Company’s projected sales for 2017 include galvanized steel sheets at 719,455 tons, pre-painted steel sheets at 291,656 tons, steel structure engineering at 30,000 tons, crane equipment 48 units and others (sale and purchase, OEM and scraps) at 153,746 tons. The total comes to 1,194,857 tons and 48 units of cranes. The Company’s (consolidated) projected sales for the major products in 2017 include: galvanized steel sheets at 1,183,855 tons, pre-painted steel sheets at 550,845 tons, cold-rolled steel sheets at 682,080 tons, steel structure engineering at 30,000 tons, crane equipment 48 units, wires at 281,700 tons, stainless steel at 82,500 tons, steel pipes at 132,130 tons and other products at 166,107 tons. With our advantages in quality, secured distribution channels, highly flexible distribution and comprehensive services, the Company strives to achieve the goals set for 2017.

III. Future company development strategy

The vision of Yieh Phui is to become the best steel maker and service provider in the world. To achieve this goal and with the TPM Campaign reaching the fifth stage, Yieh Phui Production & Service System (YPS) will move forward from the fourth stage of ―YPS=TPM+MOT‖ to the fifth ―YPS is excellent, TPM is perfect and MOT is outstanding‖. Since 2013, Yieh Phui has started a series of changes to deal with the volatility of the steel market. Thus, 2013 is the very first year of Yieh Phui to start the ―campaign for changes‖. The slogan for the year is ―adapting to the trend of steel market, changing the attitude and eager to change‖. The slogan for the second year, 2014, is ―change and more changes, better than better.‖ As the campaign reaches the third year, the slogan becomes there is ―Just as water retains no constant shape, so in warfare there are no constant conditions. Change with constantly changing conditions. Changes are normality.‖ We must endeavor to make

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all necessary adjustments. For the efforts of the past three years, the corporate culture of Yieh Phui has evolved and reached a landmark of being awarded the ―Advanced Special Award for TPM Achievement‖. The YPS campaign has evolved from ―touching service‖ to ―supreme service‖. Thus, the campaign for changes has now been turned to innovation and 2016 is the first year of innovation with the slogan ―catalyzing creativity through learning and modeling--changing and improving,‖ short for utilization, learning from others, collaboration and innovation. 2017 is the second year of innovation and the slogan is ―keep innovating and expanding product and service differentiation, creating greatest value for customers and Yieh Phui‖. With excellence in production and outstanding services to promote sales and explore potential markets, the company will continue to innovate to offer more differentiation in products, services and marketing, creating the best value for customers and Yieh Phui coupled with enhancing the satisfaction for services and targeting the sales level of individual positions. In addition to satisfying the demand of customers and outstanding services, the company will make every effort to reduce the cost of sales and increase profitability.

In addition to Yieh Phui’s steady growth in Taiwan, Yieh Phui (China) has expanded its operation in Changshu Economic Development Zone, Jiangsu, China, producing 1.2 million tons of cold-rolled steel sheets for automobiles and 400,000 tons of hot-dip Zn-Fe coated steel sheets for automobiles, advancing its technology in the market of steel sheets for automobiles. The first stage of this expansion of pickling and tandem cold mill (PLTCM) had been finished and started production on February 15, 2015, while the production of continuous annealing line (CAL) was done on August 15, 2015, No. 3 continuous coil coating line on February 21, 2017, and No. 4 continuous hot-dip galvanizing line will be available in the third quarter of 2017. Besides aiming for the 700,000 car market in Riverside Industrial Park, Changshu, Yieh Phui (China) also focuses on the market of cars and car parts around the world. China is a member of ASEAN and its steel enjoys preferential tariff treatment. As a result, the steel products in China are more competitive than those produced in Taiwan for the sale in ASEAN. Then, the production of coated steel sheets will reach 1.5 million tons, higher than Yieh Phui’s 1.3 million tons in Taiwan. For the combined eight production lines of hot-dip galvanizing lines in Taiwan and China, the capacity will reach 2.8 million tons.

IV. Impact from competition, legal environment, and overall economy

In recent years, rapid expansion of production capacity in China caused oversupply in the steel market; as a consequence, price competition was on the rise. To counter the situation, several countries enforced trade protection measures.

Finally, China launched the coal and steel industry supply-side reform in 2016, forcefully pushing forward the steel de-capacity policy. This policy prompted coal

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prices to rise sharply in the second half of 2016, driving iron ore prices to rise slowly throughout the year, and the steel market also reversed from the bottom. In Taiwan's domestic market, cheap imports of steel products poured into Taiwan, filling the market with low-price, low-quality materials that pose potential risks to people’s lives and the quality of public infrastructure. As a countermeasure, the government joined the domestic manufacturers of galvanized steel productions to put forward anti-dumping complaints against China and South Korea. Actions were taken to prevent inferior imports from damaging the domestic steel market. Nonetheless, exporters of low-price steel products are still attempting to the enter the Taiwan market.

In the international market, several countries pushed forward anti-dumping or import defense measures to counter mass steel exports from China. Taiwan did not escape the sanctions. In particular, the double actions (countervailing and anti-dumping) against anti-corrosion sheet steel launched by the United States in early June 2016 had a serious impact on Taiwan, although the final penalty on Taiwan was much lighter than on other countries. China’s thirteenth Five-Year Plan, in particular, the supply-side reform, creates favorable conditions for the steel market and, despite the major global events like Britain's exit from EU and Italy’s constitutional referendum, the US Federal Reserve still announced a rate hike of 0.25% on March 16, 2017. All signs seem to indicate recovery of the global economy. However, global trade protectionism began to rise along with the inauguration of Donald Trump, the new president of the United States. New US policies are likely to redirect regional trade consolidation led by the United States from multilateral trade to bilateral trade talks. The steel market is still full of uncertainties and therefore we should stay cautious since the impact on the global economy is still yet to emerge. In addition, Taiwan has long been marginalized in trade relations with Southeast Asian countries. As more and more countries began to impose counter-dumping remedy measures on China, China began to export in massive volume to Southeast Asian markets. China's new direction has seriously weakened Taiwan's competitiveness in terms of exports to Southeast Asia. Plus, South Korea began active development of the world's major and emerging markets through signing of FTAs. Under overwhelming competition, Taiwan's steel industry has been at a disadvantageous position. It is now time for the government of Taiwan to think about how to break the FTA barriers in the conflict of trade globalization and anti-globalization.

In recent years, under the dual-production base model formed by Yieh Phui and Yieh Phui (China), the Company has begun to reinforce dual-axis operations through developing export markets outside of China and the niche markets. In response to the environmental trends, we have also been actively developing green steel products, aiming to exceed the competitors in the industry through the blue ocean

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strategy. In addition to securing the China market, Yieh Phui (China) has also been given the mission to mitigate the impact brought by the 10+3 agreement of ASEAN. We pay close attention to the differences in the tariffs between Taiwan and China for exports to ASEAN countries and make timely adjustments to the productions of these two manufacturing bases. They complement each other and the overall synergy not only helps the Company to improve market share and competitiveness advantage in the ASEAN and other regional markets, but also enable Yieh Phui to develop into an international steel enterprise.

Chairman: I. S. Lin

President: Lin-Maw Wu Accounting Supervisor: Lin Chien-Hung

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II. Company Profile

1. Date of Establishment:

Date of establishment: April 14, 1978

License number: business registration number 75947936

2. Corporate History:

  1. Mergers and Acquisitions in the most recent year up to the date of publication of this annual report: None.

  2. Invested companies: please see details on page 188.

  3. Company restructuring: none

  4. Massive transfer or exchange of the Company's shares by directors, supervisors or persons holding more than 10% of the Company's shares: none

  5. Major changes in ownership and its impact on the Company: none.

  6. Major changes in management or business: none

  7. Other important matters that may affect shareholders' interests and its impact on the Company:

  8. 1998.05 Official signing of the contract for the fourth continuous galvanizing line for an annual output of 250 thousand tons. Environmental protection specialist won awards and commended by the President.

  9. 1998.09 Painted sheet steel and PVC coated sheet steel certified for CNS6532 class 2 fire-resistant material for building and interiors. Autonomous management (pickling unit) won the silver medal of the Taiwan Continuous Improvement Award for Business Collaboration.

  10. 1998.11 The QA Department Metallurgy Laboratory was certified for CNLA standards.

  11. 1998.12 Certified for BS8800 (OHSMS) Occupational Health and Safety Management System.

  12. 1999.03 Signed a contract with Sonoda Japan for the second finishing line.

  13. 1999.05 Signed a contract with KHI Japan for the third rolling line.

  14. 1999.08 Signed a contract with Waldrich Siegen Germany for the third rolling mill.

  15. 1999.11 Certified for ISO9002 DNN standards (quality system).

  16. 1999.11 Restructured the second production line and success successfully tested the slitter line.

  17. 1999.12 The fourth continuous galvanizing line (Pingtung) launched a cold test.

  18. 2000.02 The fourth continuous galvanizing line (Pingtung) launched a hot test.

  19. 2000.05 The third continuous paint line launched a hot test.

  20. 2000.05 The board of directors approved the investment for ICT and optoelectronic products.

  21. 2000.08 The third pull-in rolling machine launched a hot test and production.

10

Ye Hui's 100% investment in Singapore-based Intercontinental Steel

(ICS) was awarded the Approved International Trader (AIT) by the Ministry of Trade, Singapore.

  • 2001.03 Won the Voluntary Industrial Safety and Health Management Program two-year certification mark from the Council of Labor Affairs.

  • 2001.11 Won the JIPM TPM Award.

  • 2002.04 Grand opening of the Changshu Qiyang Building Materials Co., Ltd. in China.

  • 2002.05 Won the Water Saving Merit Award from the Ministry of Economic Affairs.

  • 2002.10 The board of directors made a resolution to appoint the current President, Wang Cheng-Chieh, as a Senior Consultant (for implementation of the long-term business development plan) and Vice President - Technology, Lin-Maw Wu, as the President.

  • 2002.11 Official ground-breaking ceremony for the Changshu Technomaterial Co., Ltd. (total investment of US$ 231 million with a capital of US$ 79 million).

  • 2003.01 The board of directors approved purchase of the assets of Yieh Hsing steel pipe factory I, steel pipe factory II, galvanizing factory, cold rolling mill machinery division and administration building and investment in Lien kang Heavy Industrial Co., Ltd (approved by the board of directors).

  • 2003.03 Official acquisition of partial assets of Yieh Hsing Co., Ltd. and continued the operations.

  • 2003.03 The Group was officially renamed the "E United Group".

  • 2003.09 Issued the first domestic convertible bonds at NT$3 billion.

  • 2003.09 Official beam installation ceremony for the plant of Changshu Xinrui Technological Material Co., Ltd. (China)

  • 2004.03 Issued second overseas convertible bonds at US$100 million.

  • 2004.07 Official opening of the E United Group Head Office.

  • 2004.08 The board of directors approved the President of Yieh Phui, Lin-Maw Wu to act concurrently as the Chairman of Xinrui.

  • 2004.12 The first pickling and cold rolling lines of Xinrui Technomaterial Co., Ltd. were officially launched into operation and manufactured the first roll of sheet steel.

  • 2004.12 Won the JIPM-TPM award for continuous pursuit of excellence.

  • 2005.03 The first painting line of Xinrui Technomaterial Co., Ltd. was officially launched into production and manufactured the first roll of sheet steel.

  • 2005.03 The first galvanizing line of Xinrui Technomaterial Co., Ltd. was officially launched into production and manufactured the first roll of

11

sheet steel; Stage 1 plant construction was completed.

  • 2005.03 Received the 9th "Outstanding Business Leader Golden Peak Award‖ (OEMA)" for Outstanding Business, Outstanding Leader and Outstanding Product.

  • 2005.08 Merged Lien Kang Heavy Industrial Co., Ltd. and set up the Engineering Business Division.

  • 2005.10 The second cold rolling line of Xinrui Technomaterial Co., Ltd. was officially launched into production and manufactured the first roll of sheet steel.

  • 2005.11 The first galvanizing line of Xinrui Technomaterial Co., Ltd. was launched into trial production for manufacturing of aluminium and zinc products.

  • 2005.12 The second galvanizing and second painting line of Xinrui Technomaterial Co., Ltd. was officially launched into production and manufactured the first roll of sheet steel.

2006.08 Yieh Phui Enterprise Co., Ltd. took over EMMT Systems Corp.

  • 2006.09 EMMT Systems Corp. founded a subsidiary - Groupco Technology Inc. Chairman, Mr. Lin-Maw Wu and President, Mr. Chen Ko-Chin.

  • 2006.10 Jiangsu Provincial People's Government approved reorganization of Changshu Xinrui Technology Materials Co., Ltd. into Yieh Phui (China) Technomaterial Co., Ltd.

  • 2007.06 Certified for QC 080000 IECQ HSPM (Hazardous Substances Process Management System).

  • 2007.10 Ground-breaking ceremony for Guang Lian Steel (Vietnam) Co., Ltd.

  • 2008.03 Yieh Phui was selected the Best Potential Business in the Common Health Magazine LOHAS Business Campaign.

  • 2008.03 EMMT System Corp. continue to invest in AWID, won three seats

  • in the board of directors and acquired over 50% of the company's shares.

  • 2008.11 Invested in Yieh Hsing's private placement for new shares; Yieh Hsing became a subsidiary ofYieh Phui.

  • 2009.02 Passed the Singapore BC1:2008 FPC (Factory Production Control) certification.

2009.02 Passed the ISO/IEC 17025:2005 testing laboratory certification.

2009.04 The third continuous hot-dip galvanizing line of Yieh Hui (China) was launched into production and manufactured the first roll of sheet steel. Stage 3 construction for plant expansion was completed.

2009.04 Certified for the Indonesian National Standard SNI for Plated

12

Products.

2009.08 Obtained the DNV 2005 Greenhouse Gas Inventory Verification Statement.

2009.08 Galvanized and painted products certified for the JIS Mark.

2009.11 Won the Voluntary Greenhouse Gas Reduction Merit Award by Industrial Development Bureau, Ministry of Economic Affairs.

2010.03 Won the JIOM-TPM Special Award.

2010.05 Yieh Phui (China) received the Indonesia SNI Certification.

2010.06 Yieh Phui (China) increased the total of investment from US$321.3 million to $351.3 million and the registered capital from US$130 million to $140 million.

  • 2010.09 Yieh Phui led the world's steel industry to propose the first hot-dip galvanized sheet steel product category rules (PCR), which are registered in the "Third Category Global Environmental Declarations Network (GEDnet)".

  • 2010.10 Received Malaysia MS certification for galvanized and painted steel products.

  • 2010.10 Selected an "Industrial Safety and Health Model" by the Industrial Development Bureau of the Ministry of Economic Affairs.

  • 2010.11 Received Indonesia National Standard SNI-Surabaya Plated Steel (GL & GI) certification.

  • 2010.12 Steel Pipe Business Division received 2005 GHG inventory Verification Statement.

  • 2010.12 Obtained the first Product Carbon Footprint (CFP) and Category 3 Environmental Product Declaration (EPD) Verification Statement in the domestic galvanized and painted sheet steel indsutry.

  • 2011.03 Yieh Phui's original steel pipe business division separated into Shin Yang Steel Co., Ltd., a 100% subsidiary of Yieh Phui.

  • 2011.03 Awid China Co., Ltd. (Changshu), a subsidiary of EMMT Shanghai was founded.

  • 2011.06 Certified by the Ministry of Economic Affairs for the CNS 12681/ISO 9001:2008 standards.

  • 2010.07 The brand "Yieh Phui" named one of Taiwan's Top Brands in the Centennial Celebration Campaign of the Ministry of Economic Affairs.

  • 2010.08 Won the Premier's Award in the 2010 Awards for International Trade hosted by the Ministry of Economic Affairs.

13

2011.09 EMMT Systems Corp. passed the DNV TAF testing laboratory accreditation.

  • 2011.11 Certified for the OHSAS 18001 and TOSHMS Occupational Health and Safety Management System by the Bureau of Standards, Meteorology and Inspection, Ministry of Economic Affairs.

  • 2012.01 EMMT Systems Corp. passed the IECEX explosion-proof system certification.

  • 2012.03 Certified for CNS 12681/ISO 9001:2008 standards (hot-dip galvanized 55% aluminum-zinc alloy sheet steel and rolls, painted hot-dip galvanized sheet steel and rolls) by the Bureau of Standards, Meteorology and Inspection, Ministry of Economic Affairs.

  • 2012.12 Passed the AEO safety certification verification and received the "Safety Verified Enterprise" certificate from the Customs Administration, Ministry of Finance.

  • 2013.09 The Bureau of Standards, Meteorology and Inspection, Ministry of Economic Affairs authorized the Company to use the "MIT Smile Mark" for the CNS certified hot-dip galvanized and painted sheet steel products and rolls.

  • 2014.12 Kaohsiung Plant I passed Energy Management System ISO 50001:2011 verification and received the certificate.

  • 2014.12 Yieh Phui antibacterial plated steel passed the Industrial Bureau (MOEA) "Nano Mark" product verification and received the certificate.

  • 2015.06 Selected an Outstanding Enterprise in the "12th National Brand Yushan Award."

  • 2015.06 Yieh Phui was selected as one of the constituents of TWSE CG 100 Index.

  • 2015.07 The Bureau of Energy, Ministry of Economic Affairs awarded the "Outstanding Performance" medal.

  • 2015.12 Certified by the Kaohsiung City Environmental Protection Bureau for "2015 Kaohsiung City Pollution Reduction Excellence."

  • 2016.03 Won the JIPM TPM Special Award 2015.

  • 2016.11 Certified by the Industrial Development Bureau, Ministry of Economy Affairs for 2016 Industry Voluntary Greenhouse Gas Reduction Excellence".

14

III. Corporate Governance Report

1. Organization:

1. Structure of Organization December 31, 2016

Organization of Yieh Phui Enterprise Co., Ltd.

==> picture [780 x 374] intentionally omitted <==

----- Start of picture text -----

Board of Audit Committee
Compensation
Directors
The Auditor's
Office
Chairman
Expansion Chairman's
Planning Office
Vice Chairman
Committee Office
President Technology Planning Office
China Business Division
Steel Pipe Technology Office
Overseas Technology Office
Trade Safeguards and
Investigation Office
Managing
Vice President President's Dept. of Administration and Analytics
Staff Office
Dept. of Business Planning
Vice President - Global Marketing & Sales Vice President Vice President - Vice President - Vice President Vice President - Production
- Finance Technology Planning - Engineering
Assistant VP - Global Marketing & Sales Assistant VP - Production
Vice
Assistant VP - Technology Assistant VP - Planning Vice President's
Vice President's Vice President's Vice President's President's Office Technology DevelopmentOffice
Office Office Office Office
T M P St e e T
Office
Sales Division Domestic Marketing & Sales Division Global Marketing & Development Division Marketing Research Office Import and Market Finance Division Investing Division echnology Division Division Technical Service Division Information System Division Production Planning Sales anagement Division Office Engineering Design Office Public Relations Office TPM Development Industrial Safety & Health urchasing Division Mechanical & Construction el Structure Sales Production Division Steel Structure chnology Division Steel Structure Production Division Pickling and Rolling Production Division Galvanizing Steel Production Division Pre-Painting Steel Division Pingtung Production Utilities Division Maintenance Divisio n Mechanical e Maintenanc Electrical
----- End of picture text -----

15

2. Roles and Responsibilities

bilities
Department Responsibilities
The Auditor's Office Implements the audit system and provides advises for improvement to
the management.
Expansion Planning Committee Sets equipment standards and specifications, plans and analyzes
overall expansion,and manages coordination and installationprogress.
Trade Safeguards and Investigation
Management Office		 Handles domestic and international anti-dumping and trade remedy
actions.
President's Staff Office Carries out organizational planning and coordination, implements and
manages the internal control system and standardization, corporate
goals, performance trackingand analysis.
Domestic and Global Marketing &
Sales Divisions		 Processes requests for import and export price quotes and orders,
manages contacts for shipment and executes sales campaigns.
Marketing Development Division Manages development of the domestic and international markets.
Import and Market Research Office Carries out survey and analysis on the domestic and foreign markets
and manages raw materialsprocurement.
Finance Division Carries out accounting, tax filing, costing, budgeting and variance
analysis, financial management, asset management and shareholder
services.
Investing Division Carries out studies on foreign investments and analysis on the
effectiveness.
Technology Division Manages production technology development, quality control and
product specifications.
Technical Service Division Manages after-sale services and technical improvement.
Information System Division Manages development of the Company's computerized management
system,installation and maintenance of hardware equipment.
Production Planning Division Manages production schedules based on the orders and production
plan, order delivery and shipment and tracking and raw material
storage and management.
Sales Management Division Manages shipping of customer orders, vehicle dispatch and shipment
verification.
Management Division Manages personnel, general affairs and documents and other relevant
matters.

16

Public Relations Office Handles public relations affairs.
Industrial Safety & Health Office Manages and implements the Company's workplace and labor safety
and health related matters.
TPM Development Office Implements TPM Management activities, including individual
improvement, self-maintenance, planned maintenance, education and
training, health and safety, quality management, initial flow
management, planning and monitoring the efficiency of indirect
departments.
Purchasing Division Manages procurement and related matters.
Steel Structure Sales &
Construction Division		 Manages marketing, contracting, budgeting, cost control and work
progress for engineering projects, acting to control and coordinated
cross-departmental works.
Steel Structure Production Division Manages manufacturing, installation and contractors for steel
structures and coordinates related works.
Steel Structure Technology
Division		 Manages technology planning, project quality control and construction
drawings for steel structures.
Mechanical Production Division Manages sales, production planning, design, manufacturing and
installation related matters for lifting equipment and other engineering
projects.
Technology Development Office Manages improvement of production equipment and processes.
Production Divisions Manages production line operations, production efficiency and quality
improvement.
Utilities Division Manages operations and maintenance of public and wastewater
treatment facilities.
Mechanical Maintenance Division Manages service and maintenance of on-site mechanical equipment
and facilities.
Electrical Maintenance Division Manages service and maintenance of on-site electrical facilities.
Engineering Design Office Carries out improvement of production line equipment, design of
expansionprojects and review of design drawings.

17

2. Information on the Directors, President, Vice Presidents, Associate Managers and Supervisors of Departments and Branch Offices:

(I) Information on the Chairman

April 30,2017 April 30,2017 April 30,2017 April 30,2017
Title Nationality or
Place of
Registration		 Name Gender Date Elected
(Resumed)
Date
Term		 First-time
Elected
Date		 Shares held
when elected		 Shares
Number of Shares Held		 Shares held by
spouse and
underage children		 Shares held in
names of other
persons		 Summary of
Experiences and
Education
 Current Position
in the Company
and/or Other
Company
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Number of
Shares		 Percentage
of Shares		 Number of
Shares		 Percenta
ge of
Shares		 Number of
Shares		 Percen
tage of
Shares		 Number
of Shares
Percen
tage of
Shares		 Titl
e		 Na
me		 Rel
atio
nshi
p
Chairman Taiwan, R.O.C. Kuo Chiao Investment
& Development Co.
Ltd.
Representative: I. S.
Lin
Male		 06/22/2016 3 years 06/20/2004 55,557,334
136,959		 3.23 55,557,334
143,888		 3.23 47,117 0 0 0 Yieh United -
Chairman of the
Board
Yieh Hsing - Director		 Yieh Phui -
Chairman of the
Board
Able Win
International
Investment Limited -
chairman of the
board
Wei Hung
Investment Co., Ltd.
- Chairman of the
Board		 None None None
Taiwan, R.O.C. Kuo Chiao Investment
& Development Co.
Ltd.
Representative:
Lin-Maw Wu
Male		 06/22/2016 3 years 09/28/2005 55,557,334
118,788		 3.23 55,557,334
124,797		 3.23 0 0 0 0 EMBA, National Sun
Yat-Sen University
Yieh Phui, VP Global
Marketing and Sales		 Yieh Phui - President
Yieh Phui (China) -
Chairman of the
Board
EMMT Systems
Corp. - Chairman of
the Board
Shin Yang Steel Co.,
Ltd. - Chairman of
the Board		 None None None

18

Title Nationality or
Place of
Registration		 Name Gender Date Elected
(Resumed)
Date
Term		 First-time
Elected
Date		 Shares held
when elected		 Shares held
when elected		 Shares
Number of Shares Held		 Shares
Number of Shares Held		 Shares held by
spouse and
underage children		 Shares held by
spouse and
underage children		 Shares held in
names of other
persons		 Shares held in
names of other
persons		 Summary of
Experiences and
Education
 Current Position
in the Company
and/or Other
Company
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Number of
Shares		 Percentage
of Shares		 Number of
Shares		 Percenta
ge of
Shares		 Number of
Shares		 Percen
tage of
Shares		 Number
of Shares
Percen
tage of
Shares		 Titl
e		 Na
me		 Rel
atio
nshi
p
Director Taiwan, R.O.C. Kuo Chiao Investment
& Development Co.
Ltd.
Representative:
Ping-Yung Liang
Male		 06/22/2016 3 years 10/15/2015 55,557,334
41,397		 3.23 55,557,334
41,397		 3.23 122,977 0 0 0 Department of
Industrial and
Information
Management,
National Cheng Kung
University
Deputy CEO of Yieh
Lian Group Head
Office, President of
Yieh United Steel
Corp., Senior
Consultant and Special
Assistant to the
Chairman - Yieh
United Steel Corp.
Chairman of the
Group
Purchasing
Management
Committee and
Special
Assistant to the
Chairman,
Union Group		 None None None

19

Title Nationality or
Place of
Registration		 Name Gender Date Elected
(Resumed)
Date
Term		 First-time
Elected
Date		 Shares held
when elected		 Shares held
when elected		 Shares
Number of Shares Held		 Shares
Number of Shares Held		 Shares held by
spouse and
underage children		 Shares held by
spouse and
underage children		 Shares held in
names of other
persons		 Shares held in
names of other
persons		 Summary of
Experiences and
Education		 Current Position
in the Company
and/or Other
Company
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Number of
Shares		 Percentage
of Shares		 Number of
Shares		 Percenta
ge of
Shares		 Number of
Shares		 Percen
tage of
Shares		 Number
of Shares
Percen
tage of
Shares		 Titl
e		 Na
me		 Rel
atio
nshi
p
Taiwan, R.O.C. Yaohui Investment
Co., Ltd.
Representative:
Ching-Tsung Huang		 Male 06/22/2016 3 years 09/28/2005 55,557,334
0		 3.23 55,557,334
0		 3.23 10,793 0 0 0 Department of
Accounting, Feng
Chia University
Special Assistant, Eliter
International Corp.
Chia Yuan
Investment &
Development Co.,
Ltd - Chairman of
the Board
Hsing Long
Investment &
Development Co.,
Ltd. - Director
Lien Shua Investment
Development Co.,
Ltd. - Director
None		 None None
Independent
Director		 Taiwan, R.O.C. Chin-Shu Sun Male 06/22/2016 3 years 06/20/2013 0 0.00 0 0.00 0 0 0 0 Department of
Accountancy,
National Cheng Kung
University
CPA, Republic
of China in
practice for over
40 years
Chairman of the
Kaohsiung City
Institute of
Certified Public
Accountants
Member of the
National
Federation of
CPA
Associations of
R.O.C.		 Compensation
Committee, Yieh
Phui Enterprise Co.,
Ltd.
Compensation
Committee, Yieh
Hsing Co., Ltd.
Li Hsin
Management
Consultant - Director
Co-Tech
Development
Corporation -
Independent Director
Chi Chiang
Enterprise Co., Ltd. -
Director
Yieh Hsing
Enterprise Co.,Ltd.-		 None None None

20

Title Nationality or
Place of
Registration		 Name Gender Date Elected
(Resumed)
Date		 Term First-time
Elected
Date		 Shares held
when elected		 Shares held
when elected		 Shares
Number of Shares Held		 Shares
Number of Shares Held		 Shares held by
spouse and
underage children		 Shares held by
spouse and
underage children		 Shares held in
names of other
persons		 Shares held in
names of other
persons		 Summary of
Experiences and
Education		 Current Position
in the Company
and/or Other
Company
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Number of
Shares		 Percentage
of Shares		 Number of
Shares		 Percenta
ge of
Shares		 Number of
Shares		 Percen
tage of
Shares		 Number
of Shares		 Percen
tage of
Shares		 Titl
e		 Na
me		 Rel
atio
nshi
p
Taiwan, R.O.C. Ching-Hui Hsieh Male 06/22/2016 3 years 06/20/2013 0 0.00 0 0.00 0 0 0 0 Master of Law,
National Chung Hsing
University
Prosecutor, Taiwan
Hsinchu District Court
Judge, Taiwan
Kaohsiung District
Court
Chairman, Kaohsiung
Bar Association
Member of the 3rd
Council of Control
Yuan
President,
Kaohsiung and
Penghu Chapter,
Legal Aid
Foundation		 Compensation
Committee, Yieh
Phui Enterprise Co.,
Ltd.
Compensation
Committee, Yieh
Hsing Co., Ltd.
Representative,
Legal Trust Law
Firm
Compensation
Committee, Yieh
Hsing Co., Ltd.		 None None None

21

Title Nationality or
Place of
Registration		 Name Gender Date Elected
(Resumed)
Date		 Term First-time
Elected
Date		 Shares held
when elected		 Shares held
when elected		 Shares
Number of Shares Held		 Shares
Number of Shares Held		 Shares held by
spouse and
underage children		 Shares held by
spouse and
underage children		 Shares held in
names of other
persons		 Shares held in
names of other
persons		 Summary of
Experiences and
Education		 Current Position
in the Company
and/or Other
Company
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Any Executive
Officer,
Director or
Supervisor
Who is a
Spouse or
Relative within
the Second
Degree of
Kinship
Number of
Shares		 Percentage
of Shares		 Number of
Shares		 Percenta
ge of
Shares		 Number of
Shares		 Percen
tage of
Shares		 Number
of Shares		 Percen
tage of
Shares		 Titl
e		 Na
me		 Rel
atio
nshi
p
Independent
Director		 Taiwan, R.O.C. Te-Yuan Yang Male 06/22/2016 3 years 06/22/2016 0 0.00 0 0.00 0 0 0 0 PhD Economics,
University of
California, Santa
Barbara
Assistant Lecturer,
Department of
Economics,
University of
California, Santa
Barbara
Deputy director of the
Department of
Finance, National
Kaohsiung First
University of Science
and Technology,
Director, Department
of Finance, National
Kaohsiung First
University of Science
and Technology
Director, Department
of Money and
Banking, National
Kaohsiung First
University of Science
and Technology
Professor, Department
of Money and
Banking, National
Kaohsiung First
University of Science
and Technology		 None None None None

Note: The names of institutional directors and their representatives listed below are arranged in two adjacent upper-lower cells. Note: The Company's directors of the board were elected on June 22, 2016

Note: Independent Director, Ching-Hui Hsieh, resigned on March 13, 2017

22

Table 1: Major Shareholders of Institutional Shareholders

March 31,2017 March 31,2017
Name of institutional
shareholders(Note 1)		 Major shareholders of institutional shareholders
(Note 2)		 Shareholding
percentage
Chia Yuan Investment and
Development Co., Ltd		 Shin Yang Investment and Development Co., Ltd. 13.98%
Hsing Lung Investment & Development Co., Ltd 11.29%
Wei Hong Investment and Development Co., Ltd. 15.90%
Lian Shuo Investment Development Co., Ltd 18.29%
Yaohui Investment Co., Ltd. 16.01%
Yieh Hung Enterprise Co., Ltd. 15.47%
Kuo Chiao Investment &
Development Co.,Ltd.		 Yu Hong industrial Co., Ltd 98.80%
Yaohui Investment Co., Ltd. Wei Hong Investment and Development Co., Ltd. 11.57%
Lian Shuo Investment Development Co., Ltd 19.29%
Hsing Lung Investment & Development Co., Ltd 19.99%
Yu ShengInvestment and Development Co.,Ltd 19.80%
Wei Chiao Investment & Development 19.80%
Shin Yang Investment and
Development Co., Ltd.		 Lin Chung-Hsian 14.46%
Hsing Lung Investment & Development Co., Ltd 31.33%
Lian Shuo Investment Development Co., Ltd 22.93%
Yieh Hung Enterprise Co., Ltd. 25.74%

Note 1: For legal person directors and supervisors, the names of the institutional shareholders shall be disclosed.

Note: please declare names of the primary shareholders (top 10 shareholders) and their shareholding of the corporate shareholders. If the major shareholders are institutional shareholders, please fill out Table 2 below.

23

Table 2: Major shareholders of the major institutional shareholders

March 31,2017 March 31,2017
Name of Institutional Shareholder
(Note 1)
Major Shareholders of Institutional
Shareholders(Note 2)		 Shareholding
percentage
Hsing Lung Investment &
Development Co., Ltd		 I. S. Lin 31.50%
Yue-E Lin Tsai 18.52%
Wei Chiao Investment Development Co., Ltd 19.90%
E-Da Hospital 10.57%
Wei Hong Investment and Development Co.,
Ltd.		 11.38%
Lian Shuo Investment
Development Co., Ltd		 I. S. Lin 12.49%
Wei Hong Investment and Development Co.,
Ltd.		 19.99%
Tsung-ChengLin 10.58%
Hsing Lung Investment & Development Co.,
Ltd		 19.93%
Wei Chiao Investment Development Co., Ltd 19.84%
Wei Hong Investment and
Development Co., Ltd.		 Yieh Hung Enterprise Co., Ltd. 25.41%
I. S. Lin 18.21%
Hsing Lung Investment & Development Co.,
Ltd		 20.19%
Wei Chiao Investment Development Co., Ltd 13.40%
Chia Yuan Investment and Development Co.,
Ltd		 11.39%
Yu Sheng Investment and
Development Co., Ltd		 Lian Shuo Investment Development Co., Ltd 49.24%
Hsing Lung Investment & Development Co.,
Ltd		 24.75%
Wei Chiao Investment Development Co., Ltd 11.16%
Wei Hong Investment and Development Co.,
Ltd.		 12.46%
Wei Chiao Investment
Development Co., Ltd		 Hsing Lung Investment & Development Co.,
Ltd		 13.01%
Yu Sheng Investment and Development Co.,
Ltd		 13.03%
Lian Shuo Investment Development Co., Ltd 10.21%
Wei Hong Investment and Development Co.,
Ltd.		 15.89%
E-Da Hospital 7.6%
Yu Hong Industrial Co., Ltd. Li-Chuan Lin 10.00%
Tsung-Ching Lin 18.00%
Tsung-Cheng Lin 26.00%
Tsung-Hsian Lin 18.00%

24

Name of Institutional Shareholder
(Note 1)
Major Shareholders of Institutional
Shareholders(Note 2)		 Shareholding
percentage
Chih-Long Lin 18.00%
Yieh Hung Enterprise Co., Ltd. Tsung-Cheng Lin 10.75%
Chih-Long Lin 12.85%
Hsing Lung Investment & Development Co.,
Ltd		 19.34%
Wei Hong Investment and Development Co.,
Ltd.		 18.26%
Wei Chiao Investment Development Co., Ltd. 11.01%

Note 1: As shown in Table 1 above, when a major shareholder is an institutional shareholder, disclose the name of the institution.

Note 2: Names of substantial shareholders (ranked top 10 in terms of shareholding) in the corporate shareholders and their shareholding ratio shall be filled in this section.

25

Table 3: Directors

March 31, 2017

Requirement
Name
(Note 1)		 Do the Directors have five or m
of work experience
and the following professional
qualifications?		 Do the Directors have five or m
of work experience
and the following professional
qualifications?		 ore years Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Independence
(Note 2)		 Currently
serving
as
the
independent
director
of
other
public
companies
Serve in
lecturer
roles or
above in
public or
private
college
institutions
in one of the
following
departments
: business
administrati
on, law,
finance,
accounting,
or another
discipline
relevant to
the
company's
operations
Currently
serving as
ajudge,
prosecutor,
lawyer,
accountant, or
other
professional
practice or
technician that
must undergo
national
examinations
and specialized
license.		 Work
experienc
e
necessary
for
Business
administr
ation,
legal
affairs,
finance,
accountin
g, or
business
sector of
the
Company		 1 2 3 4 5 6 7 8 9 10
Director: I. S. Lin v - - v v v v v v No
Director:
Ping-YungLiang		 v - - v v v v v v No
Director: Lin-Maw
Wu		 v - - v v v v v v No
Director:
Ching-Tsung
Huang		 v - - v v v v v v No
Independent
Director: Chin-Shu
Sun		 v v v v v v v v v v v 3
Independent
Director: Te-Yuan
Yang		 v v v v v v v v v v v No

Note 1: Please add more rows to accommodate additional entries.

  • Note 2: Please "check" the box under each criteria number if the director or supervisor meets the criteria two years prior to resuming the position or during the term of service.

  • （ 1 ） Not employed by the Company or its affiliated companies.

  • （ 2 ） Not a director or supervisor of the Company of any of its affiliates (excluding independent directors set up by the Company, its parent company or subsidiaries in compliance of the local regulations).

  • （ 3 ） Not a shareholder that hold more than 1% of the Company’s total shares or rank among top-ten shareholders, this applies for the Director himself/herself, spouse, minor children, or shares held under others’ names.

  • （ 4 ） Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any of the persons in the preceding three subparagraphs.

  • （ 5 ） Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in

26

holdings.

  • （ 6 ） Not a director, supervisor, manager, or a shareholder that holds more than 5% of shares at a company or institution that has financial or business exchanges with the Company.

  • （ 7 ） Not a professional individual or owner, partner, director (member of the governing board), supervisor (member of the supervising board), or managerial officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting, or consultation services to the company or to any affiliated business, or spouse thereof. However, members of Remuneration Committee who executes their responsibility according to Article 7 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter are not bound by this limitation.

  • （ 8 ） Not the spouse or being a relative within the second degree of kinship to any other director of the Company.

  • （ 9 ） Not under of any conditions defined in Article 30 of the Company Act.

  • （ 10 ） Not elected as a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

27

(II) General Manager, Deputy General Manager, Assistant Manager, and Managerial Officer of Various Departments or

Branches

March 31, 2017

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
President Taiwan,
R.O.C.		 Lin-Maw Wu Male 10/22/2002 124,797
0
0
0
0
0
Master, National Sun
Yat-Sen University
Yieh Phui, VP Global
Marketing and Sales
Yieh Phui
(China) -
Chairman of
the Board
Supervisor -
Yieh United
Chairman -
Yieh Hsing
EMMT
Systems Corp.
- Chairman of
the Board
None		 None None
Senior
Consultant		 Taiwan,
R.O.C.		 Tien-Chi
Chang		 Male 08/01/2005 145,446
0
0
0
0
0
National Chengchi
University
Finance Manager,
Yieh Phui		 Supervisor -
Kuo Chiao
Supervisor -
Chien Huan		 None None None
Senior
Consultant		 Taiwan,
R.O.C.		 Hsien-Tung
Liu		 Male 09/08/2006 306,515
0
0
0
0
0
MBA, Regis
University, Colorado,
USA
Chairman - TangEng
Chairman -
Yeo Yih Steel		 None None None
Senior
Consultant		 Taiwan,
R.O.C.		 Ching-Tsung
Huang		 Male 05/16/2014 0
0
10,793
0
0
0
Feng Chia University
Special Assistant,
Eliter International
Corp.		 Chia Yuan
Investment &
Development
Co., Ltd -
Chairman of
the Board
Hsing Long
Investment &
Development
Co., Ltd. -
Director
Lien Shua
Investment		 None None None

28

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Development
Co., Ltd. -
Director
Senior
Consultant		 Taiwan,
R.O.C.		 Cheng-Chang
Wu		 Male 10/21/2014 0
0
0
0
0
0
I-Shou University
Kaohsiung County
Councilor		 E-United
Group -
Chairman		 None None None
Special
Assistant		 Taiwan,
R.O.C.		 Chia-Cheng
Lin		 Male 08/01/2012 0
0
0
0
0
0
The Taipei College of
Science and
Technology
VP - Planning, Yieh
Phui
Executive
Vice-Chairman
- E-United
Group
Chairman -
Cheng Hsin
Security
None		 None None
Special
Assistant		 Taiwan,
R.O.C.		 Min-Hsun
Chen		 Female 09/01/2013 0
0
0
0
0
0
MBA, Peter F.
Drucker and
Masatoshi Ito
Graduate School of
Management
Director - China
Development
Industrial Bank
Chairman - Taipei
Financial Center Co.,
Ltd.		 E-United
Group - Taipei
Management
Center		 None None None
Special
Assistant		 Taiwan,
R.O.C.		 Chen-Wu
Chang		 Male 08/01/2005 58
0
0
0
0
0
National Cheng
Kung University
Associate Manager,
Information System
Division,Yieh Phui		 E-United
Group - Vice
Chairman		 None None None
Planning
Vice
President		 Taiwan,
R.O.C.		 Wei-Cheng
Chen		 Male 03/14/2006 307
0
0
0
0
0
University of
Oklahoma
Associate Manager
of Production
Planning- Yieh Phui		 VP Planning -
Yieh Phui
(China)		 None None None
Production
Vice
President		 Taiwan,
R.O.C.		 Yang-Cheng
Lan		 Male 10/01/2003 0
0
0
0
0
0
National Cheng
Kung University
Plant Manager -
Pre-painting Steel		 None None None None

29

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Production Division
Finance
Vice
President		 Taiwan,
R.O.C.		 Yung-Hsien
Chen		 Male 04/01/2003 75,159
0
5
0
0
0
Tamkang University
Associate Manager,
Finance Division,
Yieh Phui		 VP Finance -
Yieh Phui
(China)
VP Finance -
Yieh Hsing
Supervisor -
YiehUnited		 None None None
Project
Vice
President		 Taiwan,
R.O.C.		 Yao-Hsing
Chien		 Male 09/01/2006 1,404
0
0
0
0
0
Chung Yuan
Christian University
Acting Associate
Manager, Technology
Division,USEC
None		 None None None
Global
Marketing &
Sales
Vice
President
Taiwan,
R.O.C.		 Shih-Chi
Yang		 Male 12/01/2006 0
0
0
0
0
0
National Chengchi
University
Manager, Global
Marketing & Sales,
Yieh Phui		 VP - Yieh Phui
(China)
None		 None None
Production
Assistant
Vice
President		 Taiwan,
R.O.C.		 Te-Jen Huang
Male		 03/01/2006 0
0
0
0
0
0
National Cheng
Kung University
Manager, Technology
Division - Yieh Phui
None		 None None None
Technology
Vice
President		 Taiwan,
R.O.C.		 Ting-Kuo
Shih		 Male 06/01/2004 0
0
0
0
0
0
National Cheng
Kung University
Manager, Technology
Division - Yieh Phui
None		 None None None
Steel Pipe
Technology
Office
Vice
President		 Taiwan,
R.O.C.		 Chang-Hsin
Ming		 Male 10/01/2009 4,512
0
0
0
0
0
National Tsing Hua
University
Plant Manager,
Pickling and Rolling
Production Division,
Yieh Phui		 None None None None
Production
Assistant
Vice
President		 Taiwan,
R.O.C.		 Cheng-Feng
Wu		 Male 12/01/2005 869
0
468
0
0
0
National Chiao Tung
University
Manager, Electrical
Maintenance
Division,Yieh Phui		 None None None None

30

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Assistant VP
- Planning
Taiwan,
R.O.C.		 Wen-Pin Lin Male 05/16/2008 99
0
273
0
0
0
Feng Chia University
Manager,
Management
Division		 None None None None
Sales
Assistant
Vice
President		 Taiwan,
R.O.C.		 I-Feng Yang Male 11/05/2007 0
0
0
0
0
0
Dayeh University
Associate Manager,
Marketing & Sales		 Associate
Manager -
Yieh Phui
(China)		 None None None
Technology
Planning
Office
Vice
President		 Taiwan,
R.O.C.		 Sen-Lung
Chen		 Male 08/16/2003 19,150
0
1,487
0
0
0
National Cheng
Kung University
Manager, Technical
Service Division,
Phieh Phui		 Director - Yieh
Phui (China)
None		 None None
Senior
Manager		 Taiwan,
R.O.C.		 Kuo-Lin Yang Male 06/01/2004 1,531
0
0
0
0
0
National Kaohsiung
University of Applied
Sciences
Plant Manager,
Galvanizing Steel
Production Division
VP
Technology -
Yieh Phui
(China)		 None None None
Senior
Manager		 Taiwan,
R.O.C.		 Chin-Yuan
Cheng		 Male 05/27/2003 7,396
0
7,388
0
0
0
Tamkang University
VP Engineering -
USEC		 None None None None
Senior
Professional
Engineer		 Taiwan,
R.O.C.		 Yung-Hua Lin Male 08/16/2006 0
0
0
0
0
0
National Chiao Tung
University
Plant Manager, Hot
Rolling Plant, Chun
HungSteel		 Assistant VP -
Paralink
Networks, Inc.
None		 None None
Professional
Adviser		 Taiwan,
R.O.C.		 Chiu-Tai Ma Male 01/01/2003 115,214
0
0
0
0
0		 Soochow University
President - Yieh Mau		 Special
Assistant -
Yieh Phui
(China)		 None None None
Professional
Adviser		 Taiwan,
R.O.C.		 Yung-Fang
Chang		 Male 05/01/1997 160,773
0
1,359
0
0
0
National Taiwan
Ocean University
Associate Manager,
Plating Plant, Yieh
Phui		 Vice Chairman
and President -
Yieh Phui
(China)

None		 None None

31

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Senior
Professional
Manager		 Taiwan,
R.O.C.		 Shao-Po Tung Male 08/15/2005 0
0
0
0
0
0		 National Defense
University		 VP - Yieh Phui
(China)
None		 None None
Senior
Professional
Manager		 Taiwan,
R.O.C.		 Wen-Chih Liu Male 12/01/2014 0
0
0
0
0
0
Master Degree,
National Taiwan
University
Manager, US Kraft
Heinz Company
Taiwan
Manager, British
Unilever Taiwan		 None None None None
Senior
Manager		 Taiwan,
R.O.C.		 Chuan-Hsiang
Huang
Male		 04/01/2015 0
0
0
0
0
0		 National Chung
Hsing University		 Assistant Vice
Chairman -
E-United
Group		 None None None
Senior
Engineer		 Taiwan,
R.O.C.		 Tai-An Kung Male 03/01/2016 0
0
0
0
0
0		 Cultural University VP - Yieh Phui
(China)
None		 None None
Professional
Manager		 Taiwan,
R.O.C.		 Jung-Chin
Chuang		 Male 08/01/2005 39,425
0
5,582
0
0
0
Tatung University
Manager of foreign
company		 None None None None
Professional
Engineer,
Office of VP
Technology
Professional
Engineer		 Taiwan,
R.O.C.		 Ming-Chih
Tsai		 Male 06/01/2004 45
0
0
0
0
0
National Taiwan
University of Science
and Technology
Associate Manager,
Production Division,
Yieh Lung
None		 None None None
Professional
Engineer		 Taiwan,
R.O.C.		 Wen-Chao
Huang		 Male 03/01/2008 0
0
0
0
0
0
Institute of
Metallurgical
Materials, Illinois
Institute of
Technology
Manager, Technical
Management Office		 VP - Yieh Phui
(China)
None		 None None

32

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Galvanizing
Steel
Production
Division
Associate
Manager		 Taiwan,
R.O.C.		 Shun-Chin Tsao Male 10/01/2009 0
0
18
thousand

0
0
0
National Taiwan
Ocean University
Plant Manager, Yieh
Phui Pingtung Plant		 None None None None
Professional
Manager		 Taiwan,
R.O.C.		 Jung-Chang
Liao		 Male 11/01/2009 0
0
12,775
0
0
0
National Chiao Tung
University
Manager, Production
Planning Division,
Yieh Phui		 None None None None
Mechanical
Production
Division
Associate
Manager		 Taiwan,
R.O.C.		 Chiu-Lin Pan Male 03/01/2010 39,361
0
0
0
0
0
National Chiayi
Institute of
Agricultural
Plant Manager,
Mechanical
Production Division,
Yieh Phui		 None None None None
Pre-Painting
Steel
Production
Division
Associate
Manager		 Taiwan,
R.O.C.		 Hung-Hai
Shih		 Male 09/01/2010 85,523
0
0
0
0
0
National Taiwan
Ocean University
Plant Manager,
Pre-painting Steel
Production Division
Manager, Technical
ServiceDivision		 None None None None
Utilities
Division
Associate
Manager		 Taiwan,
R.O.C.		 Chung-Hsin
Wu		 Male 09/01/2010 4,895
0
721
0
0
0
National Chiayi
University
Manager, Mechanical
Maintenance
Division
None		 None None None
Senior
Manager		 Taiwan,
R.O.C.		 Chi-Chen Li Male 10/01/2010 743
0
0
0
0
0
National Sun Yat-Sen
University
Manager, President
Staff's Office
None		 None None None
Mechanical
Maintenance
Division
Associate
Manager		 Taiwan,
R.O.C.		 Sheng-Wei
Sung		 Male 09/01/2010 0
0
0
0
0
0
Chin-Yi Institute of
Technology
Chung Hung		 None None None None

33

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Finance
Division
Associate
Manager		 Taiwan,
R.O.C.		 Chien-Hung
Lin		 Male 03/05/2012 0
0
0
0
0
0
National Chengchi
University
Manager, Chinfon
Commercial Bank
Co., Ltd.
Manager, Far Eastern
International Bank		 None None None None
Associate
Manager,
Division		 Taiwan,
R.O.C.		 Wei-Cheng
Chen		 Male 11/08/2012 30,481
0
0
0
0
0
Provincial Pingtung
Institute of
Agriculture
RESA Engineering
Corp.
Ting Ku Construction
Co.,Ltd.
None		 None None None
Associate
Manager,
Domestic
Marketing &
Sales
Division		 Taiwan,
R.O.C.		 Ming-Chi
Tien		 Male 09/01/2014 66,398
0
45,566
0
0
0
Chung Yuan
Christian University
Manager, Domestic
Marketing & Sales
Division		 None None None None
Professional
Manager		 Taiwan,
R.O.C.		 Hui-Sung
Chiang		 Female 01/05/2015 0
0
0
0
0
0
Master of Public
Relations, Stirling
University, UK
Associate Manager,
Public Affairs
Division, E-United
Group
Spokesperson,
Kaohsiung E-Da
ThemePark		 Associate
Manager,
E-United
Group		 None None None
Associate
Manager,
Steel
Structural
Sales &
Construction
Division		 Taiwan,
R.O.C.		 Wei-Kung
Chang		 Male 04/01/2015 0
0
0
0
0
0
Cultural University
Associate Manager,
Steel Tube Division,
Hsin Yang		 None None None None

34

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Senior
Associate
Manager,
Information
System
Division		 Taiwan,
R.O.C.		 Chun-Kai
Huang		 Male 05/01/2015 0
0
0
0
0
0
National Kaohsiung
Institute of
Technology
Manager,
Information System
Division		 None None None None
Associate
Manager,
Sales
Management
Division
Taiwan,
R.O.C.		 Yuan-Hsing
Kuo		 Male 06/01/2015 0
0
0
0
0
0
Feng Chia University
Senior Manager,
Sales Management
Division		 None None None None
President's
Staff Office
Associate
Manager		 Taiwan,
R.O.C.		 Wen-Cheng
Pan		 Male 09/01/2015 0
0
0
0
0
0
Chung Yuan
Christian University
Senior Manager,
President Staff's
Office		 None None None None
Associate
Manager,
TPM
Development
Office
Taiwan,
R.O.C.		 Wen-I Weng Male 01/06/2016 0
0
0
0
0
0
The Taipei College of
Science and
Technology
Manager,
E-United
Group		 None None None
Associate
Manager,
Technology
Division		 Taiwan,
R.O.C.		 Ping-Lin
Yang		 Male 03/01/2016 0
0
0
0
0
0
I-Shou University
Senior Manager,
Technology Division		 None None None None
Technology
Development
Office
Associate
Manager
Taiwan,
R.O.C.		 Chung-Chan
Chiang		 Male 03/01/2016 118
0
0
0
0
0
Feng Chia University
Senior Manager,
Technology
Development Office		 None None None None
Trade
Management
Office
Associate
Manager
Taiwan,
R.O.C.		 Wen-Chung
Tian		 Male 02/01/2017 82,559
0
0
0
0
0		 Feng Chia University
Finance Manager		 None None None None
Associate
Manager,
Import and
Market
Survey		 Taiwan,
R.O.C.		 Chia-En Kuo Male 02/01/2017 0
0
0
0
0
0
Chung Yuan
Christian University
Manager, Import and
Market Survey
Office		 None None None None

35

Title Nationality
Name		 Gender Date of
Electing
(Appointment)
when elected
when elected		 Shares held under
spouse or minor
children’s names		 Shares held under
spouse or minor
children’s names		 Shares held in names
of other persons		 Shares held in names
of other persons
Education and Work
Experiences
 Positions
Currently Held
in Other
Companies
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company
Managers who have spousal or
second-degree family
relationships within the
Company

Number
of
Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares
Number
of Shares
Percentage
of Shares		 Title Name Relationship
Office
Domestic
Marketing &
Sales
Division I
Associate
Manager
Taiwan,
R.O.C.		 Wei-Pin Kan Male 03/01/2017 0
0
0
0
0
0
Yung Ta Institute of
Technology &
Commerce
Manager, Domestic
Marketing & Sales
Division I		 None None None None

36

3. Compensation of Directors, Supervisors, President and Vice Presidents

1.Compensation paid to Directors (including independent directors, with the aggregate method and with disclosure of individual names and their corresponding compensation range) Unit: in NT$thousands

Title Nam
e		 Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Sum of items A,
B, C and D to
NIAT Ratio
(Note 10)		 Sum of items A,
B, C and D to
NIAT Ratio
(Note 10)		 Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Sum of items A, B,
C, D, E, F and G to
NIAT Ratio (Note
10)		 Sum of items A, B,
C, D, E, F and G to
NIAT Ratio (Note
10)		 Compensation from
other
non-subsidiary
companies invested
by the Company
(Note 11)
Base
Compensatio
n (A)
(Note 2)		 Retirement
Pension (B)		 Directors'
Compensation
(C) (Note 3)		 Expenses from
Professional
Practice (D)
(Note 4)		 Salaries, bonuses,
and special
expenses (E)
(Note 5)		 Retirement
pension (F)		 Employee Compensation (G)
(Note 6)
All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)		 All companies Compa
nies in
the
consoli
dated
financi
al
stateme
nts		 All companies All
companies
listed in this
financial
report (Note
7)
(Note 7)		 All companies All
companies
listed in this
financial
report (Note
7)
Cash Stock Cash Stock
Chairman Kuo
Chiao
Investm
ent &
Develo
pment
Co. Ltd
Represe
ntative:
I. S. Lin
(Chair
man)		 0 432 0 0 1,511 1,511 1,851 2,783 0.13 0.19 16,249 22,076 108 108 117 0 117 0 0.79 1.08 12,702
Chairman Kuo
Chiao
Investm
ent &
Develo
pment
Co. Ltd.
Represe
ntative:
Lin-Ma
w Wu

37

Chairman Kuo
Chiao
Investm
ent &
Develo
pment
Co. Ltd.
Represe
ntative:
Pi-Hsi
an Li
Chairman Kuo
Chiao
Investm
ent &
Develo
pment
Co. Ltd.
Repres
entativ
e:
Ping-Y
ung
Liang
Chairman Kuo
Chiao
Investm
ent &
Develo
pment
Co. Ltd.
Repres
entativ
e:
Ching-
Tsung
Huang
Independen
t Director		 Chin-S
hu Sun

38

Title Name Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Compensation of Directors Sum of items A,
B, C and D to
NIAT Ratio
(Note 10)		 Sum of items A,
B, C and D to
NIAT Ratio
(Note 10)		 Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Compensation Paid to Concurrent Employees Sum of items A,
B, C, D, E, F and
G to NIAT Ratio
(Note 10)		 Sum of items A,
B, C, D, E, F and
G to NIAT Ratio
(Note 10)		 Compens
ation
from
other
non-subsi
diary
companie
s
invested
by the
Company
(Note 11)
Base
Compensation
(A)
(Note 2)		 Retirement
Pension (B)		 Directors'
Compensation
(C) (Note 3)		 Expenses from
Professional
Practice (D)
(Note 4)		 Salaries, bonuses,
and special
expenses (E) (註
5)		 Retirement
pension (F)		 Employee Compensation (G)
(註6)
All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All
co
mp
ani
es		 All
companie
s listed in
this
financial
report
(Note 7)
(Note 7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All companies All
compa
nies
listed
in this
financi
al
report
(Note
7)
(Note
7)		 All
companies		 All
companies
listed in this
financial
report (Note
7)
(Note 7)		 All companies All
companie
s listed in
this
financial
report
(Note 7)
(Note 7)
Cash Stoc
k		 Cash Stoc
k
Inde
pend
ent
Dire
ctor		 Ching-Hu
i Hsieh
Inde
pend
ent
Dire
ctor		 Te-Yuan
Yang
*In addition to the information disclosed above, has any of the Company’s directors received compensation for providing services (e.g. serving as a non-employee consultant ) to any of the companies listed in this financial report
in the most recent year:

Note: Data concerning Pi-Hsian Li was calculated until June 21, 2016.

39

Compensation Range

Table of Compensation Brackets for Directors Name of Director Name of Director Name of Director Name of Director
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
The company
(Note 8)		 ~~All companies~~
listed in this
financial report
(Note 9) I		 The company
(Note 8)		 All invested
companies (note
9) I
Less than NT$2,000,000 I. S. Lin, Lin-Maw
Wu, Pi-Hsian Li,
Ping-Yung Liang,
Ching-Tsung
Huang, Chin-Shu
Sun, Ching-Hui
Hsieh and Te-Yuan
Yang
I. S. Lin, Lin-Maw
Wu, Pi-Hsian Li,
Ping-Yung Liang,
Ching-Tsung
Huang, Chin-Shu
Sun, Ching-Hui
Hsieh and Te-Yuan
Yang		 Pi-Hsian Li,
Ping-Yung Liang
Chin-Shu Sun,
Ching-Hui Hsieh
Te-Yuan Yang		 Chin-Shu Sun,
Ching-Hui Hsieh
Te-Yuan Yang
From NT$2,000,000 to 4,999,999 Ching-Tsung
Huang		 Ching-Tsung
Huang, Pi-Hsian Li
From NT$5,000,000 to 9,999,999 I. S. Lin, Lin-Maw
Wu		 Ping-Yung Liang
From NT$10,000,000 to 14,999,999 I. S. Lin, Lin-Maw
Wu
From NT$15,000,000 to 29,999,999
From NT$30,000,000 to 49,999,999
From NT$50,000,000 to 99,999,999
More than NT$100,000,000
Total

  • Note 1: The name of directors shall be listed separately (for institutional shareholders, the name of institutional shareholders and representative shall be listed separately), and the payments shall be disclosed collectively. If a director also serves as a general manager or deputy general manager, he/she should fill up this form and the (3-1) or (3-2) below.

  • Note 2: Compensation of directors in 2016 (including salaries, job compensation, severance, bonuses, and performance fees). Note 3: Compensation paid to directors in 2016 upon the approval of Board of Directors.

  • Note 4: Business expenses paid out to directors in the most recent year (including transport, special expenses, various allowances, accommodation, vehicles, and provision of physical goods and services). If housing, vehicle or other means of transportation, or personal expense is provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair

40

market value, fuel, and other payments shall be disclosed. If a driver is provided, please note the compensation paid to such driver. However, such compensation shall not be included.

  • Note 5: Compensation for directors concurrently holding positions in the company (for positions that include the General Manager, Deputy General Manager, other managerial officers, or employees) shall include salaries, job compensation, severance, bonuses, performance fees, transport fees, special expenses, various subsidies, accommodation, vehicles, and provision of physical items and services. If housing, vehicle or other means of transportation, or personal expense is provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, please note the compensation paid to such driver. However, such compensation shall not be included. Any compensation listed under IFRS 2 Share-Based Payment, including issuance of employee stock options, new restricted employee shares and cash capital increase by stock subscription shall also be included.

  • Note 6: For directors concurrently holding positions in the company in 2015 (including the General Manager, Deputy Manager, other managerial officers, or employees) and receiving the compensation (including stock and cash), the employee’s compensation paid in 2015 upon the approval of the Board of Directors shall be disclosed. If such compensation cannot be estimated, the compensation to be distributed in 2015 shall be based on the proportion of the compensation distributed last year and filled in Schedule 1-3.

  • Note 7: Total compensation in various items paid out to the Company’s directors by all companies (including this Company) listed in the consolidated statement shall be disclosed.

  • Note 8: For the total compensation in various items paid out to the Company’s directors, the name of each director shall be disclosed in the corresponding range of the compensation.

  • Note 9: Total compensation in various items paid to every director of this Company by all companies (including this Company) listed in the consolidated statement shall be disclosed. The name of the director shall also be disclosed in the proper Compensation range.

  • Note 10: Net income refers to the net income in 2016; if IFRS is adopted, the net income refers to the net income in parent company only or individual financial report in 2016.

  • Note 11: a. Compensation received by the directors from other non-subsidiary companies invested by the Company shall be disclosed in this column.

  • b. If the director receives compensation from investments in other companies that are not subsidiaries of this company, the said compensation shall be included in Column J in the compensation range table. The name of the column shall also be changed to ―All investments in other companies.‖

  • c. Compensation in this case shall refer to Compensation, fees (including Compensation as a company employee, director, or

  • supervisor), business expenses, and other related payments received by the director of this Company for being a director, supervisor, or managerial officer of other non-subsidiary companies that this company has invested in.

41

＊ The content of compensation disclosed in this table is derived based on a concept different from the the concept of income stipulated in the Income Tax Act. The purpose of the table is for the disclosure of information, instead of taxation.

2.Compensation paid to Supervisors (with the aggregate method and with disclosure of individual names and their corresponding Compensation bracket)

Unit: NT$1,000

Title Name Supervisor Compensation Supervisor Compensation Supervisor Compensation Supervisor Compensation Ratio of Total
Compensation
(A+B+C) to Net
Income (%)
(Note 8)		 Ratio of Total
Compensation
(A+B+C) to Net
Income (%)
(Note 8)		 Whether the
person receives
Compensation
from other
nonsubsidiary
companies that
this company
has invested in
(Note 9)
Base Compensation (A)
(Note 2)		 Compensation (B)
(Note 3)		 Expenses from
Professional Practice
(C) (Note 4)
All
companies		 All
companies
listed in
this
financial
report
(Note 5)		 All
companies		 All
companies
listed in
this
financial
report
(Note 7)
(Note 5)		 All
companies		 All
companies
listed in
this
financial
report
(Note 7)
(Note 5)		 All
companies		 All
companies
listed in
this
financial
report
(Note 7)
(Note 5)
Supervisor Shin Yang
Investment and
Development
Co., Ltd.
Representative:
Jen-YingCheng		 0 0 0 0 137 137 0.005 0.005 1,789
Supervisor Shin Yang
Investment and
Development
Co., Ltd.
Representative:
Hung-Chih
Chang

42

Compensation Range

Compensation of Supervisors by Range Name of Supervisor Name of Supervisor
Total of (A+B+C)
Yieh Phui (Note 6) Invested Companies (Note 7) D
Less than NT$2,000,000 Jen-Ying Cheng, Hung-Chih
Chang
Jen-Ying Cheng, Hung-Chih Chang
FromNT$2,000,000to 4,999,999
From NT$5,000,000 to9,999,999
FromNT$10,000,000to 14,999,999
From NT$15,000,000 to 29,999,999
FromNT$30,000,000to 49,999,999
FromNT$50,000,000to99,999,999
More than NT$100,000,000
Total

  • Note 1: The name of directors shall be listed separately (for institutional shareholders, the name of institutional shareholders and representative shall be listed separately) and payments shall be disclosed collectively.

  • Note 2: Supervisor’s compensation in 2015 (including supervisor’s salary, job Compensation, severance, various bonuses, and performance fees).

  • Note 3: The compensation paid to supervisors in 2015 upon the approval of the Board of Directors.

  • Note 4: Business expenses paid out for supervisors in 2015 (including transport, special expenses, various allowances, accommodation, vehicles, and provision of physical goods and services). If housing, vehicle or other means of transportation, or personal expense is provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, please note the compensation paid to such driver. However, such compensation shall not be included.

  • Note 5: Total compensation in various items paid out to this Company's supervisors by all companies (including this Company) listed in the consolidated statement shall be disclosed.

  • Note 6: For the total compensation in various items paid out to the Company's supervisors, the name of each supervisor shall be disclosed in the corresponding range of the compensation.

  • Note 7: Total compensation in various items paid to every supervisor of this Company by all companies (including this Company) listed in the consolidated statement shall be disclosed. The name of the supervisor shall also be disclosed in the proper compensation range.

  • Note 8: Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the

43

IFRS principles, net profit refers to the after-tax net income in individual or consolidated financial reports for the most recent fiscal year.

  • Note 9: a.Compensation which the company's supervisors receive from other non-subsidiary invested by the Company shall be disclosed in this column.

b. If the supervisor receives compensation from investments in other companies that are not subsidiaries of this company, the said compensation shall be included in Column D in the compensation range table. The name of the column shall also be changed to ―All investments in other companies‖.

c. Compensation in this case shall refer to compensation, compensation (including compensation as a company employee, director, or supervisor), business expenses, and other related payments received by the supervisor of this Company for being a director, supervisor, or managerial officer of other non-subsidiary companies that this company has invested in.

＊ The content of compensation disclosed in this table is derived based on a concept different from the the concept of income stipulated in the Income Tax Act. The purpose of the table is for the disclosure of information, instead of taxation.

44

  1. Compensation paid to the President and Vice Presidents (with the aggregate method and with disclosure of individual names and their corresponding compensation bracket)

Unit: NT$1,000

Unit: NT$1,0
Title Name Salary (A)
(Note 2)		 Retirement
Pension (B)		 Bonuses and
special fees etc
(C )
Note 3		 Employee Compensation (D)
(Note 4)		 Sum of items A,
B, C and D to
NIAT Ratio (%)
(Note 8)		 Whether or not the
person receives
compensation from
other non-subsidiary
companies that this
company has
invested in (Note 9)
All companies All
compani
es listed
in this
financial
report
(Note 5)		 All
com
pani
es		 All
compan
ies
listed
in this
financi
al
report
(Note
5)		 All
comp
anies		 All
compan
ies
listed
in this
financi
al
report
(Note
5)		 All companies listed in this
financial
report (note
5)		 All companies listed in
this
financial
report
(note 5)
Cash
Amo
unt		 Stock
Amo
unt		 Cash
Amo
unt		 Stoc
k
Amo
unt
President Lin-Maw Wu 18,486 22,373 616 616 9,804 11,273 214 0 214 0 1.16 1.38 2,010
Global Marketing & Sales
Vice President		 Sen-Lung
Chen
Global Marketing & Sales
Vice President		 Shih-Chi
Yang
Production
Vice President		 Yang-Cheng
Lan
Planning
Vice President		 Wei-Cheng
Chen
Technology
Vice President		 Kuo-Lin
Yang
Technology
Vice President		 Ting-Kuo
Shih
Finance
Vice President		 Yung-Hsien
Chen
Vice President - Steel Pipe
Technology		 Chang-Hsin
Ming
Project
Vice President		 Yao-Hsing
Chien
  • Regardless of titles, compensation of employees with positions equivalent to general manager and deputy manager (such as president, CEO, director) shall be disclosed.

45

Compensation Range

Compensation Range
Compensation of Presidents and Vice Presidents by
Range		 Names
Yieh Phui(Note 6) Invested Companies(Note 7)E
Less than NT$2,000,000 Shih-Chi Yang
From NT$2,000,000 to 4,999,99 Sen-Lung Chen, Yung-Hsien Chen,
Chang-Hsin Ming, Kuo-Lin Yang,
Yang-Cheng Lan, Wei-Cheng Chen,
Yao-HsingChien,Ting-Kuo Shih
Sen-Lung Chen, Chang-Hsin Ming, Kuo-Lin
Yang, Yang-Cheng Lan, Wei-Cheng Chen,
Yao-Hsing Chien, Ting-Kuo Shih, Shih-Chi
Yang
From NT$5,000,000 to 9,999,999 Lin-Maw Wu Yung-Hsien Chen
From NT$10,000,000 to 14,999,999 Lin-Maw Wu
From NT$15,000,000 to 29,999,999
From NT$30,000,000 to 49,999,999
From NT$50,000,000 to 99,999,999
More than NT$100,000,000
Total

  • Note 1: The names of general manager and deputy general manager shall be listed separately and the payments shall be disclosed collectively. If a director also serves as a general manager or deputy general manager, he/she should fill this form and (1-1) or (1-2) above.

  • Note 2: General manager and deputy general manager’s compensation in 2016 (including salary, professional compensation and severance).

  • Note 3: Compensation of general managers/deputy general managers concurrently holding positions in the company shall include bonuses, performance fees, transport fees, special expenses, various subsidies, accommodation, vehicles, and provision of physical items and services. If housing, vehicle or other means of transportation, or personal expense is provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, please note the compensation paid to such driver. However, such compensation shall not be included. Any compensation listed under IFRS 2 Share-Based Payment, including issuance of employee stock options, new employee-restricted shares and cash capital increase by stock subscription shall also be included.

  • Note 4: Employee compensation (including shares and cash) given to general managers/deputy general managers as approved by the Board of Directors for the most recent fiscal year shall be disclosed. But in case an estimated figure cannot be derived, this year's budgeted compensation shall be calculated based on last year's actual compensation. Please fill Schedule 1-3 with related information. Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to the after-tax net income in individual or consolidated financial reports for the most recent fiscal year.

46

  • Note 5: Total compensation of various items paid out to this Company's General Managers and Deputy General Managers by all companies (including this Company) listed in the consolidated statement shall be disclosed.

Note 6: Names of the Company's general managers and deputy managers shall be disclosed in the range corresponding to the total of compensation paid to them.

  • Note 7: Total compensation of various items paid to every general manager and deputy general manager of this Company by all companies (including this Company) listed in the consolidated statement shall be disclosed. The name of the general manager and deputy general manager shall also be disclosed in the proper compensation range.

  • Note 8: Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to the after-tax net income in individual or consolidated financial reports for the most recent fiscal year.

  • Note 9: a.Compensation of the company's general manager and deputy general manager received from other non-subsidiary companies invested by this company shall be disclosed in this column.

  • b. If this Company's General Managers or Deputy General Managers receive compensation from investments in other companies that are not subsidiaries of this company, the said compensation shall be included in the column E in the compensation bracket table. The name of the column shall also be changed to ―All investments in other companies‖.

  • c. Compensation here refers to rewards, compensation (including compensation as a company employee, director or supervisor) and subsidy of expenses received by the General Managers or Deputy General Managers of this Company for being a director, supervisor, or managerial officer of other non-subsidiary companies invested by this company.

  • ＊ The content of compensation disclosed in this table is derived based on a concept different from the the concept of income stipulated in the Income Tax Act. The purpose of the table is for the disclosure of information, instead of taxation.

47

4.Names of executive officers making decisions on employees' compensation and the status of payment

December 31,2016 December 31,2016 December 31,2016 December 31,2016
Title
(Note 1)		 Name
(Note 1)		 Stock Cash Total Percentage of
total
compensation
to NIAT(%)
Executive Officers President Lin-Maw Wu 0 847 847
0.03
Vice President - Finance Yung-Hsien Chen
Vice President - Global
Marketing& Sales		 Sen-Lung Chen
Vice President - Global
Marketing& Sales		 Shih-Chi Yang
Vice President -
Production		 Yang-Cheng Lan
Vice President - Planning Wei-ChengChen
Vice President -
Technology		 Kuo-Lin Yang
Vice President -
Technology		 Ting-Kuo Shih
Vice President - Steel Pipe
Technology		 Chang-Hsin Ming
Vice President -
Engineering		 Yao-Hsing Chien
Senior Consultant Hsien-TungLiu
Senior Consultant Tien-Chi Chang
Senior Consultant Ching-TsungHuang
Special Assistant Chia-ChengLin
Special Assistant Min-Hsun Chen
Senior Consultant Cheng-ChangWu
Professional Adviser Yung-FangChang
Special Assistant Chen-Wu Chang
Professional Adviser Chiu-Tai Ma
Assistant Vice President Te-Jen Huang
Senior Manager Chi-Chen Li
Assistant Vice President Cheng-FengWu
Senior Manager Shao-Po Tung
Senior Manager Chin-Yuan Cheng
Senior Engineer Yung-Hua Lin
Senior Manager Wen-Chih Liu
Senior Manager Chuan-HsiangHuang
Senior Engineer Tai-An Kung
Associate Manager Hung-Hai Shih
Associate Manager Te Wu
Associate Manager Sheng-Wei Sung
Professional Engineer Ming-Chih Tsai
Associate Manager Shun-Chin Tsao
Professional Engineer Wen-Chao Huang
Associate Manager Chung-Hsin Wu
Assistant Vice President Wen-Pin Lin
Associate Manager Chun-Kai Huang
Associate Manager Chung-Chan Chiang
Associate Manager Wen-ChengPan
Associate Manager Yuan-HsingKuo
Associate Manager Ping-Lin Yang
Assistant Vice President I-FengYang
Associate Manager Wen-I Weng
Associate Manager Ming-Chi Tien
Professional Manager Jung-ChangLiao
Professional Manager Wei-ChengChen
Associate Manager Jung-Chin Chuang
Associate Manager Chiu-Lin Pan
Associate Manager Chien -HungLin
Professional Manager Hui-SungChiang
Associate Manager Wei-KungChang

Note 1: Individual names and titles shall be disclosed, but compensation received can be disclosed as

48

total sum.

  • Note 2: Employee compensation (including shares and cash) given to managers as approved by the Board of Directors for the most recent fiscal year shall be disclosed. But in case an estimated figure cannot be derived, this year's budgeted compensation shall be calculated based on last year's actual compensation. Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to the after-tax net income in individual or consolidated financial reports for the most recent fiscal year.

  • Note 3: The scope of the term "manager" will be applied based on the below standards as stated by Memorandum No. 0920001301 issued on March 27, 2013, by the TPEx:

  • (1) General Manager and its equivalent

  • (2) Deputy General Manager and its equivalent

  • (3) Assistant Manager and its equivalent

  • (4) Supervisor of Finance Department

  • (5) Supervisor of Accounting Department

  • (6) Other personnel authorized to manage company operations and sign for approval.

  • Note 4: If Directors, General Manager, or Deputy General Manager have received employee compensation (including shares and cash), this form shall be filled out in addition to table 1 Director's compensation.

  • (V) Name of employees receiving top 10 highest compensation and status of payment: see page 47 for details.

  • (IV) Compare and analyze the total compensation paid to each of this Company's Directors, Supervisors, General Managers, and Deputy General Managers in the 2 most recent years by all companies listed in this Company's individual and consolidated financial statements as a percentage of NIAT listed in the individual financial report and describe the policies, standards, and packages for payment of and the procedures for determining of such compensation and its linkage to business performance and future risk exposure.

  • Analysis of total compensation paid to this Company’s Directors, Supervisors, General Managers, and Deputy General Managers in the 2 most recent years as a percentage of NIAT:

of NIAT:
2015 2016
Title Total
compensation
paid to
Directors,
Supervisors,
General
Managers, and
Deputy
General
Managers in
2014 and its
proportion to
NIAT.		 Total
compensation paid
to Directors,
Supervisors,
General
Managers, and
Deputy General
Managers in 2014
and its proportion
to NIAT by all
companies
included in the
consolidated
financial
statements.		 Total
compensation
paid to
Directors,
Supervisors,
General
Managers, and
Deputy General
Managers in
2014 and its
proportion to
NIAT.		 Total
compensation paid
to Directors,
Supervisors,
General
Managers, and
Deputy General
Managers in 2014
and its proportion
to NIAT by all
companies
included in the
consolidated
financial
statements.
Director -1.61% -2.30% 0.79% 1.08%
Supervisor -0.03% -0.03% 0.005% 0.005%
President and
Vice Presidents		 -2.1% -2.49% 1.16% 1.38%

(2) Policies, standards and packages of compensation:

1.Monthly car allowance for directors and supervisors, monthly compensation for

49

independent directors and salaries of the Chairman are determined by the board of directors based on the standards commonly practiced in the industry and publicly-listed companies. Other payments and allowances for the Chairman are determined based on the Company’s system of compensation.

The main changes in the Company's compensation of the employee directors and the President and Vice Presidents are bonuses and rewards. Bonus are given based on the company's annual business performance with reference to the performance of each individual employee. In 2016, the Company had substantial growth in the current net profit. Therefore, in addition to the 0.05% of the directors' compensation approved by a Board 's resolution, there is an increase in the bonuses for the employee directors and the Vice Presidents. The audit committee was established, which replaced the supervisory board; therefore, monthly payments are withheld and car allowances are claimed up to June when the term ends. Therefore, the compensation for the supervisors are substantially reduced. In addition, the board of directors passed a resolution to exclude independent directors from the annual compensation of directors.

  1. Compensation of the managers are set based on the Company’s salary system and performance evaluation with reference to industry standards.

  2. (3) Procedures for setting compensation

  3. Compensation of directors and managers are regularly assessed and a compensation structure is set by the Company’s Compensation Committee; the proposed compensation are submitted to the Board of Directors for approval and then implemented based on the structure.

50

4. Implementation of Corporate Governance

(1) Operations of the Board of Directors

The Board of Directors met 9 times (3 times before and 6 times after the election in the shareholders' meeting) in 2016. Information regarding attendance of the members of the supervisory board is provided below:

Title Name (Note 1) Actual
presence
(attendance)		 Number
of proxy
attendan
ce

Rate of
actual
presence
(attendance)
(%)
(Note 2)		 Remark
Chairman Chia Yuan Investment and
Development Co., Ltd
Representative:I. S.Lin		 3 0 100.00% Left the board on June 22, 2016
after election at the shareholders'
meeting.
Chairman Kuo Chiao Investment &
Development Co. Ltd.
Representative:I. S.Lin		 6 0 100.00% Joined the board on June 22,
2016 after the election at the
shareholders' meeting
Director a Kuo Chiao Investment &
Development Co. Ltd.
Representative: Ping-Yung
Liang		 9 0 100.00% Reelected on June 22, 2016 at the
shareholders' meeting.
Director b Kuo Chiao Investment &
Development Co. Ltd.
Representative: Pi-Hsien Li		 2 1 66.67% Left the board on June 22, 2016
after election at the shareholders'
meeting.
Director c Chia Yuan Investment and
Development Co., Ltd
Representative: Lin-Maw
Wu		 3 0 100.00% Left the board on June 22, 2016
after election at the shareholders'
meeting.
Director c Kuo Chiao Investment &
Development Co. Ltd.
Representative: Lin-Maw
Wu		 6 0 100.00% Joined the board on Jun. 22nd,
2016 after the election at the
shareholders' meeting
Director d Yaohui Investment Co., Ltd.
Representative:
Ching-TsungHuang		 3 0 100.00% Left the board on June 22, 2016
after election at the shareholders'
meeting.
Director d Kuo Chiao Investment &
Development Co. Ltd.
Representative:
Ching-TsungHuang		 6 0 100.00% Joined the board on June 22,
2016 after the election at the
shareholders' meeting
Independent
Director a		 Chin-Shu Sun 9 0 100.00% Reelected on June 22, 2016 at the
shareholders' meeting.
Independent
Director b		 Ching-Hui Hsieh 9 0 100.00% Reelected on June 22, 2016 at the
shareholders' meeting.
Independent
Director c		 Te-Yuan Yang 6 0 100.00% Joined the board on June 22,
2017 after the election at the
shareholders' meeting
(first time as an independent
director)
Supervisor a Shin Yang Investment and
Development Co., Ltd.
Representative: Jen-Ying
Cheng		 3 0 100.00% Left the board on June 22, 2016
after election at the shareholders'
meeting.
Supervisor b Shin Yang Investment and
Development Co., Ltd.
Representative: Hung-Chih
Chang		 2 0 66.67% Left the board on June 22, 2016
after election at the shareholders'
meeting.

51

Other required disclosures:
1.
Other matters listed in paragraph 3, Article 14 of the Securities Exchange Act and records or written statements forwarded by
independent directors voicing out opposing opinions or reservations on resolutions of the Board of Directors: The Company has set up an
audit committee; please refer to the section regarding the operations of audit committee for detailed information.
2.
When Directors recuse themselves from certain proposals due to conflict of interest, please state the names of the Directors, the content of
the proposal, reasons for abstentions and the results of voting counts:
The first meeting of the Board in 2016: January 26, 2016
1. Discussed the 2016 annual (including years of service) and performance bonuses for the Chairman approved by the
Compensation Committee.
(The third proposal was related to the annual (including years of service) and performance bonuses for Chairman, I. S. Lin;
therefore, the Chairman recused from the meeting. Chairman, I. S. Lin appointed director, Lin-Maw Wu, to preside over the meeting
when discussing the third proposal. )
2. Discussed the 2016 annual (including years of service) and performance bonuses for the managers approved by the Compensation
Committee.
(The fourth proposal was related to the annual (including years of service) and performance bonuses for President, Lin-Maw Wu and Se
Consultant, Ching-Tsung Huang. Therefore, they recused from the meetiing to avoid conflict of interest. )
The 4th Meeting of the Board: June 22, 2016
1. Discussed compensation for the members of the Compensation Committee.
(Discussions at the meeting were related to the compensation for the members of the Compensation Committee; therefore,
independent directors, I. S. Lin; therefore, Chin-Shu Sun, Ching-Hui Hsieh and Te-Yuan Yang recused from the meeting to avoid
conflict of interest).
2. The Company discussed the compensation of independent directors.
(The meeting discussed compensation for independent directors, Chin-Shu Sun, Ching-Hui Hsieh and Te-Yuan Yang; therefore, they recuse
from the meeting to avoid conflict of interest).
The 5th Meeting of the Board: June 22, 2016
1. Discussed the structure and amount of the Chairman's compensation proposed by the Company's Compensation Committee.
(The proposal was related to the compensation of the Chairman, I. S. Lin; therefore, the Chairman recused from the meeting and appointed
Director, Lin-Maw Wu, to chair the meeting. )
2. Discussed the structure and amount of the managers' compensation proposed by the Company's Compensation Committee.
(The meeting discussed compensation for President, Lin-Maw Wu, and Senior Consultant Ching-Tsung Huang; therefore, they recused
from the meeting to avoid conflict of interest).
The 6th meeting of the Board: August 3, 2016
1. Discussed the adjustment to and amount of the Chairman's compensation proposed by the Company's Compensation Committee.
(The 8th proposal was related to the compensation of the Chairman, I. S. Lin; therefore, the Chairman recused from the meeting and
was requested to appoint a director as proxy.
The Chairman appointed director, Lin-Maw Wu, to preside over the meeting for discussion of this proposal).
2. Discussed the adjustment to and amount of the managers' compensation approved by the Company's Compensation Committee.
(The 9th proposal discussed compensation for President, Lin-Maw Wu, and Senior Consultant, Ching-Tsung Huang; therefore, they
recused from the meeting to avoid conflict of interest).
The 6th meeting of the Board: December 21, 2016
1. The meeting discussed the Company's intent to donate NT$20 million to E-Da Hospital.
(Chairman, I. S. Lin, and Director, Ching-Tsung Huang (both are directors of E-Da Hospital) were requested to recuse from the discussion
appoint a proxy. Chairman, I. S. Lin, appointed Director, Lin-Maw Wu, to preside over the meeting during the discussion of the 2nd propos
3. The goals (such as establishing the Audit Committee and increase information transparency, etc.) of strengthening the functionality of the
Board of Directors in the current and immediately preceding fiscal years, and the evaluation of their executions:
1. The Company officially set up the Audit Committee in 2016.
2. The Company compiled the "Corporate Social Responsibility Report" and disclosed the report on the Company's website after board
approval to ensure information transparency.
The Company’s information is made available to the public in high integrity and timeliness to facilitate two-way communication
between the Company and stakeholders and
enable continuous improvement to meet public expectations.
3. In response to continuous update of corporate governance and corporate social responsibility in domestic and foreign societies, the
Company takes an active approach to help directors understand the importance of corporate governance to the board decisions and value
creation. All of the Company's directors and independent directors have completed the required continuing education hours in 2016.
4. An English version of the Company's financial statements and internal procedures and guidelines are disclosed on the Company's website.
5. Starting from 2017, material information will be simultaneously announced with an English version to enhance information transparency
ensure information availability.		 n


a

52

Note 1: For directors and supervisors who are legal persons, the name of the institutional shareholders and their representatives shall be disclosed.

  • Note 2. (1) Where directors or supervisors resign before the end of the year, the "remark" column shall be annotated with the date of resignation. Actual presence (attendance) rate (%) shall be calculated using the number of Directors’ Meetings convened and actual presence (attendance) during the term of service.

  • (2) Where Directors and Supervisors were re-elected before the end of the year, both the incoming and outgoing Directors and

  • Supervisors shall be listed accordingly. The "remark" column shall be annotated to indicate whether the Director or Supervisor was outgoing, incoming, or re-elected as well as the date of re-election. Actual presence (attendance) rate (%) shall be calculated

using the number of Directors’ Meetings convened and actual presence (attendance) during the term of service.

53

(2) Operations of the Audit Committee:

Operations of the Auditing Committee

The Audit Committee met 4 times (A) in 2016.

Information regarding attendance of the independent directors is provided below:

Title Name Number of
actual
attendance (B)		 Number of
proxy
attendance		 Rate of actual
attendance
(%)
(Ｂ/Ａ) (Note)		 Remark
Independent
Director a		 Chin-Shu
Sun		 4 0 100.00% Appointed on June
22, 2016
Independent
Director b		 Ching-Hui
Hsieh		 4 0 100.00% Appointed on June
22, 2016
Independent
Director c		 Te-Yuan
Yang		 4 0 100.00% Appointed on June
22, 2016
Other required disclosure:
1. Matters listed in Article 14-5 of the Securities and Exchange Act and other matters not approved by the
Audit Committee but approved by more than two-thirds of all directors through a resolution: Note 1
2. List the names of Independent Directors who have recused from proposals that are considered in conflict of
interest, the content of the proposal, cause of the conflict of interest and their participation in the voting:
none.
3. Communication between directors and head of internal audit and CPA (including material issues, audit
methods and results relating to the Company's finances and business).
Notes: (1) Communications between the internal auditor and independent directors:
1. The internal audit manager attends the board meeting to report on the audit operations.
2. After the audit report and tracking improvement report were submitted and approved, a letter and
a copy of the report are sent to each of the independent directors for review by double registered
mail.
The Company's independent directors have maintained optimal communication with the head of
internal audit.
(2) Communication between the Company's CPA and independent directors:
1. The Company's CPA communicates with the Audit Committee on results of audit or review of
financial reports and other matters required by laws and regulations in writing.
2. The Company's CPA and Audit Committee communicate on the scope and method of audit,
potential high-concern issues and the independence of the accounting firm in 2016 through a
meeting.
3. The independent directors of the Companyhave maintained optimal communicate with the CPA.

Note:

  • When (an) independent director(s) resign(s) before the end of the year,specify the date of

54

resignation in the remark column. The actual attendance rate (%) shall be calculated using the number of the Salary and Compensation Committee meetings and the numbers of actual attendant during the term of service.

  • When election of independent directors is held before the end of the year, list the names of both the incoming and outgoing indepedent supervisors in the remark column with annotations specifying whether the independent directors are outgoing, incoming or re-elected, as well as the date of the election. The actual attendance rate (%) shall be calculated based on the number of meetings held during the member’s term in the compensation committee and the number of actual attendance of this member.

55

Note 1

Note1
Board of
Directors		 Proposals and Follow-up Actions #14-5 of the
Securities and
Exchange Act		 Resolutions
passed by 2/3 of
all directors, but
without approval
of the Audit
Committee.
First Board
First Meeting
08/03/2016		 1. Consolidated financial statements for the second
quarter of 2016.
2. A loan to E-DA Metropolis Enterprise Co., Ltd.
in the amount of SGD 400 million.
3. A loan to E-Da Royal Skylark Hotel Co., Ltd. in
the amount of NT$350 million.
4. Revision of the internal control system.
5. An endorsement for a short-term loan from
Mega Bank for subsidiary Shin Yang Steel Co.,
Ltd. in the amount of NT$300 million.
6. An endorsement for a short- to mid-term loan
from Mega Bank for subsidiary Shin Yang Steel
Co., Ltd. in the amount of NT$336 million.
7. Derivative financial instrument, forward
exchange trading,within US$60 million.		 V None
Resolution of the Audit Committee (Aug. 3, 2016): All members of the Audit Committee
voted in favor.
The Company's response to the opinions of the Audit Committee: All directors attending
the meetingvoted in favor.
First Board
Second Meeting
10/12/2016		 1. An endorsement for subsidiary Yieh Phui
(Hong Kong) Holdings Limited in the amount
of US$37 million.
2. Change of CPA due to restructuring of the
commissioned accounting firm.
2. Derivative financial instrument, forward
exchange trading, within US$60 million.
4. Reappointment of the head of finance.		 V None
Resolution of the Audit Committee (Oct. 12, 2016): All member of the Audit Committee
voted in favor of theproposal.
The Company's response to the opinions of the Audit Committee: All directors attending
the meetingvoted in favor.
First Board
Third Meeting
11/03/2016		 1. Revise the internal control system of the
Shareholder Service Unit.		 V None
Resolution of the Audit Committee (Nov. 3, 2016): All member of the Audit Committee
voted in favor of theproposal.
The Company's response to the opinions of the Audit Committee: All directors attending
the meetingvoted in favor.
First Board
Fourth Meeting
12/21/2016		 1. 2017 Audit Plan
1. Donation of NT$20 million to E-Da Hospital.
2. Derivative financial instrument, forward
exchange trading,within US$60 million.		 V None
Resolution of the Audit Committee (Dec. 21, 2016): All member of the Audit Committee
voted in favor of theproposal.
The Company's response to the opinions of the Audit Committee: All directors attending
the meetingvoted in favor.

56

Supervisors’ Participation in the Board meeting

The Board of Directors met 3 times in 2016 (A) with attendance shown below:

Title Name Times of
attendan
ce in
person
(B)		 Actual
attendance
(%) (B / A)
(Note)		 Remark
Supervisor a Shin Yang Investment and
Development Co., Ltd.
Representative: Jen-Ying
Cheng		 3 100.00% Left the board on June 22,
2016 after election at the
shareholders' meeting.
Supervisor b Shin Yang Investment and
Development Co., Ltd.
Representative: Hung-Chih
Chang		 2 66.67% Left the board on June 22,
2016 after election at the
shareholders' meeting.
Other required disclosure:
I. Structure and responsibilities of the Supervisory Board:
（1）
Communication between the supervisors and the employees/shareholders (such as
channel and method of communication): Supervisors communicate with employees
and shareholders directly through telephone calls, verbally, or in writing.
Communication failure has not occurred.
（2）
Communicate between supervisors and the head of internal audit/CPA (e.g. matters,
method and result of communication on the Company's financial and business
operations): Supervisors meet with the head of internal audit once quarterly to discuss
and communication on issues relating to financial reporting.
II. If the Supervisors stated any opinions while attending Directors’ Meetings, the date,
session, contents of the case discussed, and resolution of the Directors’ Meeting as well
as this Company’s disposition of opinions stated by the Supervisors shall be described:
None.

57

(III) Status of corporate governance operations, conformity with the Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies and the cause of non-conformity

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
1. Has the Company established and disclosed its
code of practice on corporate governance
based on "Corporate Governance Best
Practice Principles for TWSE/TPEx Listed
Companies"?		 V The Company revises relevant procedures, guidelines
or regulations in accordance with the latest revision
of the Corporate Governance Best Practice Principles
for TWSE/TPEx Listed Companies.		 Comply with relevant
provisions of the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies.
2. The shareholding structure of the Company and
shareholders' rights
(1) Did the company establish an internal
procedure for handling shareholder
proposals, inquiries, disputes, and
litigations? Are such matters handled
according to the internal procedure?
(2) Did the company maintain a register of major
shareholders with controlling power as
well as a register of persons exercising
ultimate control over those major
shareholders?
(3) Did the company establish and enforce risk
control and firewall systems with its
affiliated businesses?
(4) Did the company stipulate internal rules that
prohibit companyinsiders from trading		 V
V
V		 V (1) The Company's Shareholder Service Department
is a dedicated unit set up to handle suggestions
from and disputes relating to shareholders. The
Shareholder Service Section on the Company's
website is also set up with contact information
to facilitate shareholder contact and inquiry.
(2) The Company has a a list of the major
shareholders of the Company and the
controlling parties of these shareholders.
(3) The Company has established appropriate risk
control mechanisms and firewalls in accordance
with the Procedure for Supervision and
Management of Subsidiaries, the Procedure for
Lending and Guarantee, the Procedure for
Acquisition and Disposal of Assets and
Procedure for Management of Related-Party
Transactions.
(4) The Company has set up the Procedure for
Handlingof Internal Material Information to
(1) No significant difference
is found between the
Company's practices
and Article 13 of the
Corporate Governance
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
Company's practices.
(2) No significant difference
is found between the
Company's practices
and Article 19 of the
Corporate Governance
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
Company's practices.
(3) No significant difference
is found between the
Company'spractices

58

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
securities using information not disclosed
to the market?		 regulate internal practices. and Article 14 of the
Corporate Governance
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
Company's practices.
(4) Conform to the
"Corporate Governance
Best Practice Principles
for TWSE/TPEX
Listed Companies"
III. Organization and responsibilities of the Board
of Directors
(1) Has a policy of diversity been established and
implemented for the composition of the
board of directors?
(2) In addition to Salary and compensation
Committee and Audit Committee established
according to law, has the company voluntarily
established other functional committees?
(3) Did the company stipulate regulations for
assessing the performance of the board of
directors and the process of assessment?
Are these performance assessments carried
out regularly every year?
(4) Does the company regularly evaluate the
independence of CPAs?
V		 V
V
V		 (I) The Company selects its members of the board
based on their professional qualifications and
experiences, regardless of sex and age. All our
directors of the board have complete
professional training and experience and our
technical staff are qualified accountants,
lawyers and scholars in banking, finance and
economics.
(2) The Company set up functional committees in
compliance with relevant regulations.
(3) In the future, the Company will set up a
performance evaluation system, along with
viable methods and implement performance
evaluation annually.
(4) The Company evaluates the independence of the
CPA once a year and forwarded a report to the
board meeting for review in January 17, 2017.
Results of an evaluation on CPAs, Shu-Man
Tsai and Jen-Yao Hsieh, from Crowe Horwath
(TW)CPAs: Not a director,a members of the		 (1) No significant difference
is found between the
Company's practices
and Article 37 of the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
Company's practices.
(2) No significant difference
is
found
between
the
Company's
practices
and
Article 27 of the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies and the
Company's practices.

59

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
supervisory board or holding an influential
position of any companies of the Group, not a
stakeholder, not in direct or indirect conflict of
interest with the Company, not in joint
investment or profit sharing relationship with
the Company, not a natural person shareholder
with more than 1% of the total issued shares of
Yieh Phui or one of the top 10 natural person
shareholders, not a CPA of the Company for 7
consecutive years. The two CPAs assessed meet
all criteria of independence set by the Company
and therefore they are qualified to be CPAs of
the Company. Crowe Horwath (TW) CPAs also
forwarded a Statement of Independence and
Impartiality.		 (4) No significant difference
is found between the
Company's practices
and Article 29 of the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
Company's practices.
IV. If the company is a publically-listed company,
has the company set up a dedicated
(concurrent) unit or personnel to handle
corporate governance related matters
(including but not limited to providing
directors and supervisors information needed
to carry out their duties,
handling matters relating to board of director
and shareholders’ meeting, carrying out
company registration and change of
registration processes and preparing minutes
of board of director and shareholders’
meetings.

V		 The Company’s Shareholder Department under the
Finance Division is in charge of corporate
governance related administration, including but not
limited to providing directors and supervisors
information needed to carry out their duties, handling
matters relating to board of director and shareholders’
meeting, carrying out company registration and
change of registration processes and preparing
minutes of board of director and shareholders’
meetings.
No significant difference is
found between the
Company's practices and
Article 3-1 of the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies and the
Company's practices.
V. Has the company set up channels of
communication for stakeholders (including
but not limited to shareholders,employees,		 V The Company maintains an unobstructed channel of
communication with the transaction banks and other
creditors,employees,customers,suppliers,the		 No significant difference is
found between the
Company'spractices and

60

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
customers and suppliers), dedicated a section
of your company's website for stakeholder
affairs and adequately responded to
stakeholders' inquiries on significant
corporate social responsibilityissues?		 community or stakeholders and respect/safeguard
their rights. The Company also dedicated a section of
the Company's website for stakeholder affairs with
dedicated units appointed as contact windows.		 Article 51 of the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies and the
Company'spractices.
VI. Does the Company commission professional
shareholder services agency to hold
Shareholders' Meeting and other relevant
affairs?		 V The Company’s shareholder service unit is staffed
with professionals with required certification and
continuing education to ensure that the shareholder
meetings are legal, effective, and safe.		 No significant difference is
found between the
Company's practices
and Article 7 of the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
Company'spractices.
VII. Information Disclosure
(1) Did the company establish a website to
disclose information on financial
operations and corporate governance?
(2) Did the company adopt other means of
information disclosure (such as establishing
an English language website, delegating a
professional to collect and disclose company
information, implement a spokesperson
system, and disclosing the process of
investor conferences on the company
website)?		 V
V		 (1) The Company has set up a website for disclosure
of information relating to the Company’s
operations, financial and corporate governance
practices in Chinese and English. Investors can
also view the information at the Market
Observation Post System (MOPS).
(2) The Company has set up an English website and
appointed dedicated personnel to handle
information collection and disclosure. The
Company has also set up a spokesperson system
to ensure timely and adequate disclosure of the
Company’s information.
(1) No significant difference
is found between the
Company's practices
and Article 57 of the
Corporate
Governance Best
Practice Principles
for TWSE/TPEx
Listed Companies
and the Company's
practices.
(2) No significant difference
is found between the
Company's practices and
Article 57 of the Corporate
Governance Best Practice
Principles for TWSE/TPEx

61

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
Listed Companies and the
Company's practices.
VIII. Has the Company disclosed other
information to facilitate a better
understanding of its corporate governance
(Including but not limited to employee's
rights, employee care, investor relations,
supplier relations, stakeholders' rights,
further studies of Directors and
Supervisors, implementation of risk
management policies and measurement
standards, implementation of customer
policies and purchase of liability insurance
for the Directors and Supervisors of the
Company)?		 V 1. For employee rights and benefits, please refer to P.
2. The Company has set up an online platform with
disclosure of the contact number and email of the
Shareholder Service Department to facilitate
shareholder communication and information
transparency, providing the suppliers and
stakeholders an overview of the Company’s
operations and practices.
3. The Company provides the directors updated
information on laws and regulations and schedules
of available opportunities for continuing education.
4. The Company has set up or revise relevant internal
procedures and guidelines to facilitate risk
management.
5. The Company has procured liability insurance for
the directors and supervisors and reported the
content of the coverage to the board of directors.
6. For the Company's "Directors' and Supervisors'
Continuing Education," please refer to the
Directors' Continuing Education section in this
annual report, p 56.
No significant difference is
found between the
Company's practices
and Article 39, 47,
49, 50, 51, 52, and 53
of the Corporate
Governance Best
Practice Principles
for TWSE/TPEx
Listed Companies
and the Company's
practices.

62

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
9. Please specify the Company's measures to improve the items listed in the corporate governance review result by Taiwan Stock Exchange's
Corporate Governance Center and the improvement plans for items yet to be improved. (Leave blank if your company was not evaluated.)

Evaluation Index
Improved
Evaluation Index
Improved
Did the company disclose the
English annual report 7 days
before the dayof the AGM?
Improvement will be made in
the 2016 annual report.
Does the Annual Report
disclose dividend policies in a
clear and coherent manner?
Disclosure has been made in
the 2015 annual report.
Have the Company's directors
and supervisors completed the
hours of further studies
required by "Directions for the
Implementation of Continuing
Education for Directors and
Supervisors of TWSE Listed
and TPEx Listed Companies"?
The Company's directors
completed 6 hours of education
in 2016,
and new independent directors
completed 12 hours.
Does the Company have a
dedicated/semi-dedicated unit
for promoting CSR and
disclose the operation and
execution of that unit in the
annual report and company
website?
Disclosure has been made in
the 2015 annual report.
Does the Company file Chinese
and English material
information simultaneously?
Material information disclosure
in both Chinese and English
started in January 2017.
Has the Company disclose
complete financial reports in
English on the Company’s
website or the MOPS?
In 2016, the Company has
disclosed complete financial
reports in English for 2015 and
first, second and
thirdquarters of 2016.
Has the reports disclosing
non-financial information of the
Company, such as the corporate
social responsibility report,
been certified by a third-party
agency?
The Company's 2016 corporate
social responsibility report has
been reviewed and verified by
SGS.
Has the company’s website
disclosed the profile of the
company, including at least the
history of, products or services
provided by and the
organization and management
team of the company?
The website has complete
disclosure.
Does the company's annual
report disclose the long- and
short-term business
development plans?
Disclosure has been made in
the 2015 annual report.

63

Assessed items Current Operation(Note) Current Operation(Note) Current Operation(Note) Current Operation(Note) Deviations from "the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies" and Reasons
Y N Summary
Evaluation Index Priority improvement and actions for items
notyet improved
Has your company set up a
dedicated unit or appoint an
existing unit for
management of corporate
integrity and has this unit
reported the status of
implementation to the board
on a regular basis?		 The Company has set up an annual plan and
launched a project to establish a concurrent
unit. After the plan is approved, the Company
will proceed to set up the Ethical Corporate
Management Best Practice Principles for
TWSE/TPEx Listed Companies and forward
the document to the board of directors for
approval.
Has your company set up a
whistle-blower mechanism
for reporting of illegal
(including bribery) and
unethical conducts carried
out by your company’s
personnel inside and outside
of the company and has your
company disclosed relevant
information?		 The Company has set up an annual plan and
launched a project to establish a concurrent
unit. After the plan is approved, the Company
will proceed to set up the Ethical Corporate
Management Best Practice Principles for
TWSE/TPEx Listed Companies and forward
the document to the board of directors for
approval.

Note: Provide a brief description in the appropriate column, regardless whether "yes" or "no" is selected.

Director's continuing education in 2016:

Title Name Date Organizer Course Name Number of
Hours
Chairman I. S. Lin 12/7 Taiwan Corporate Governance Association Risk Management and
Internal Control		 3
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
Director Lin-Maw 12/7 Taiwan Corporate Governance Association Risk Management and 3

64

Wu Internal Control
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
9/1 Securities and Futures Institute Business Ethics and
Corporate Social
ResponsibilitySymposium		 3
Director Ping-Yung
Liang		 12/7 Taiwan Corporate Governance Association Risk Management and
Internal Control		 3
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
Director Ching-Tsun
g Huang		 12/7 Taiwan Corporate Governance Association Risk Management and
Internal Control		 3
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
Independent
Director		 Chin-Shu
Sun		 8/23 National Federation of CPA Associations of R.O.C. Business Customs Tax
PlanningPractice		 6
8/22 National Federation of CPA Associations of R.O.C. Real Estate Appraisal
Technical Rules and
Report Review		 3
8/5 Taiwan Corporate Governance Association Obligation of Insider and
Information Disclosure of
Corporate Governance		 3
Independent
Director		 Ching-Hui
Hsieh		 12/7 Taiwan Corporate Governance Association Risk Management and
Internal Control		 3
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
Independent
Director		 Te-Yuan
Yang		 12/7 Taiwan Corporate Governance Association Risk Management and
Internal Control		 3
12/7 Taiwan Corporate Governance Association Business Secret protection
and Fraud Surveillance
Practice		 3
9/1 Securities and Futures Institute Business Ethics and 3

65

Corporate Social
ResponsibilitySymposium
8/5 Securities and Futures Institute Legal Compliance of
Publicly-listed Company
Insider EquityTrading		 3

66

(4). Information on the Members of the Compensation Committee

Title
(Note 1)		 Require
ment
Name		 Do the Directors have five or more
years of work experience
and the following professional
qualifications?		 Do the Directors have five or more
years of work experience
and the following professional
qualifications?		 Do the Directors have five or more
years of work experience
and the following professional
qualifications?		 Independence Independence Independence (note 2) (note 2) Number of
other
publicly-liste
d companies
concurrently
serving as a
member of
the
compensatio
n committee		 Remark
Currently
serving as
an
instructor
or a
higher
post in a
private or
public
college o
runiversit
y in the
field o
fbusiness,l
aw,
finance,ac
counting,o
r
thebusines
s sector of
the
Company
Currently
serving as a
judge,
prosecutor,
lawyer,
accountant, or
other
professional
practice or
technician
that must
undergo
national
examinations
and
specialized
license.
Work
experien
ce
necessar
y for
business
administ
er, legal
affairs,
finance,
accounti
ng, or
business
sector of
the
Compan
y
1		 2 3 4 5 6 7 8
Independe
nt Director
Ching-H
ui Hsieh		 - V - V V V V V V V V 1
Independ
ent
Director		 Chin-Sh
u Sun		 - V - V V V V V V V V 1
Independ
ent
Director		 Te-Yuan
Yang		 V - - V V V V V V V V 0

Note 1: For title, please identify whether the person is a Director, Independent Director or other.

Note 2: Please check the boxes below each criterion if a member meets these conditions within two years prior to being elected and during his/her term of service.

  • （ 1 ） Is not employed by the Company or its affiliated companies.

  • （ 2 ） Is not a Director or Supervisor at the Company or its affiliated companies. (excluding independent directors set up by the Company, its parent company or subsidiaries in compliance of the local regulations).

  • （ 3 ） Is not a shareholder that hold more than 1% of the Company’s total shares or rank among top-ten shareholders, this applies for the Director him/herself, spouse, minor children, or shares held under others’ names.

  • （ 4 ） Is not a spouse, second-degree relative, or direct, blood-related five-degree relative of the personnel listed in the first three criterion.

  • （ 5 ） Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of 
outstanding shares of the Company or that holds shares ranking in the top five in

67

holdings.

  • （ 6 ） Is not a Director, Supervisor, manager, or a shareholder that holds more than 5% of shares at a company or institution that has financial or business exchanges with the Company.

  • （ 7 ） Is not a professional, business owner, partner, director, supervisor, manager, or their spouse at a sole proprietor, partnership, company, or institution that offers business, finance, or accounting services or consultancy for the Company or its affiliated companies.

  • (8) None of the circumstances in the subparagraphs of Article 30 of the Company Act applies.

68

Operations of the Compensation Committee

1. There are three members in the Compensation Committee of the Company. 2 Duration of the current term of service: June 22, 2016, to June 21, 2019. In 2016, the Compensation Committee met 3 times (A). The following lists qualifications of the members and their attendance in these meetings:

Title Name Number
of actual
attendance
(B)		 Number of
proxy
attendance		 Rate of actual
attendance (%)
(Ｂ/Ａ) (Note)
(Note)		 Remark
Convener Ching-Hui
Hsieh		 4 0 100%
Member Chin-Shu
Sun		 4 0 100%
Member Te-Yuan
Yang		 4 0 100%
Other required disclosure:
I. The Compensation Committee met 4 times (A) in 2016.
1. To discuss year-end bonus.
2. To discuss distribution ratio of directors' and managers' compensation.
3. To elect directors and members of the Compensation Committee and to discuss the
performance evaluation and compensation system and structure for the directors and managers
of the Company.
4. To discuss the adjustment to manager's salaries.
All the directors of the board voted in favor of the recommendations of the Compensation
Committee.
II. The Compensation Committee met four times in 2016. No records or written statement has
been issued by any of the committee members to voice out opposing opinions or reservations
to the resolutions.

Note:

  • (1) When a member of the Compensation Committee resigns before the end of the year, the remark column shall be annotated with the date of resignation. Actual attendance rate (%) shall be calculated based on the number of meetings held by the Compensation Committee and the number of actual attendance during the term of service.

(2) When an election is held for the Compensation Committee before end of the year, members of both the new and old committee shall be listed in separate columns and noted as new, old or reelcted members, along with the elected date, in the ―Remark‖ column. The actual attendance rate (%) shall be calculated based on the number of meetings held during the member’s term in the compensation committee and the number of actual attendance of this member.

69

(V). The company's CSR practices, such as environmental protection, social engagement, social contribution, community service, community welfare, consumer rights, human rights, safety and health, the system and methods used to plan and organize CSR activities and the status of implementation:

Corporate Social Responsibility

Corporate Social Responsibility Corporate Social Responsibility Corporate Social Responsibility
Assessed items Current Operation(Note 1) Gaps with the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and root
causes
Y N Brief Description (Note 2)
1. Implementing corporate governance
(1) Has the company stipulated corporate social
responsibility (CSR) policies and systems and
reviewed the effectiveness of CSR actions?
(2) Has the company provided regular training on CSR
topics?
(3) Has the company established an exclusively (or
concurrently) dedicated unit for promoting
CSR? Is the unit empowered by the Board of
Directors to implement CSR activities at upper
management levels? Does the unit report the
progress of such activities to the Board of
Directors?
(4) Has the company established a relevant salary and
compensation policy and combined its
employee performance assessment system with
CSR policies? Has the company established a
clear reward and penalty system?		 ˇ
ˇ
ˇ		 ˇ 1. Implementing corporate governance
(1) Modeled on the business philosophy of
―innovation, growth, responsibility and
sustainability‖ and the goal of ―profit creation,
pursuit of excellence, and customer trust‖
established by the E-United Group, the
Company has been dedicated to fulfillment of
corporate social responsibility since founding.
To fulfill our corporate social responsibility and
actively respond to the issues concerning our
stakeholders, including investors, competent
authority, consumers, employees, suppliers, and
the community, we put forward the following
corporate social responsibility policies:
1. We abide to the Nation’s laws, government
policies, corporate ethics and ethical practice
principles, with firm belief in business
integrity and honesty.
2. We enforce strict corporate governance and
strive to achieve balanced gains among all
stakeholders.
3. We make information available,
communicate with stakeholders through
Operations listed in the left
column are referenced with
Chapter II Exercising Corporate
Governance of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation
are listed below:
(1) No significant difference is
found between the
Company's practices and
Article 9 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

70

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
appropriate means and respond to issues
they care about it.
4. We treasure natural resource, implement
energy saving and waste reduction practices,
reinforce energy management and reduce the
impact from the Company’s operations on
the environment.
5. We provide our employees a safe workplace
and fulfill the responsibilities of safety
management. We see our employees as
family and make the best effort to care for
them. We protect our employees from harms
by raising their safety awareness.
6. We create a healthy workplace for our
employees and actively promote health
enhancing activities, working towards the
goal of ―happy work, safe return and healthy
retirement.‖
7. We do not employ child labor, respect
human rights and prohibit any form of
discrimination.
8. With honesty and integrity and under the
concept of profit sharing, we advocate
cooperative employee-employer relation and
strive built a harmonious workplace.
9. Our comprehensive incentive and promotion
system creates a good environment for
employees career development.
10. We take the responsibility to protect the
environment byavoidinguse of hazardous

Operations listed in the left
column are referenced with
Chapter II Exercising Corporate
Governance of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation

71

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
substances and continuous research and
development of green products. Our green
efforts have made us a model for the
industry.
11. Under the concepts of ethical marketing and
product liability, we safeguard the rights of
the purchasers and users and build a
foundation of trust to maximize customer
satisfaction.
12. We are involved in community development,
invest in social welfare and contribute to the
society.
For information on the Company’s CSR
policies and effectiveness of
implementation, please refer to the
Company’s corporate social responsibility
report.
(2) The Company sends relevant personnel to attend
seminars of corporate social responsibility and
sustainability issues from time to time or invite
experts to lecture at the Company's CSR-related
education and training courses.
(3) To implement corporate social responsibility and
sustainable business management, we integrate
our core competencies into activities that
promote public welfare. Our achievements have
been widely recognized by society and created
business opportunities for our corporation. The
Company set up a "Social Responsibility and
Sustainable Development Committee" chaired
bythe President as chairman. The Committee




are listed below:
(2) Different from Article 9 of
the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies, the
Company's practice is
unscheduled.
(3) No significant difference is
found between the
Company's practice and
Article 7 and 9 of the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies.

72

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
was organized with five functional taskforces
and a secretariat office. Information on the
functions of each taskforce and the responsible
unit is further provided below:
1. The Corporate Governance Taskforce is
responsible for (1) internal control system (2)
accounting system (3) operational
performance (4) risk management (5)
communication with banks (6) compliance;
the Finance Division is responsible for
coordination of the operations.

73

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
2. The Green Energy-saving Taskforce is
responsible for energy-saving, water-saving,
carbon emission reduction, waste reduction
and green processes. The Production
Division is responsible for coordination of
the operations..
3. The Safety and Health Management
Taskforce is responsible for environmental
safety and health, disaster prevention and
control, environmental protection,
organization communication and
environmental audit and improvements. The
Health and Safety Division is responsible for
coordination of the operations.
4. The Product Liability Taskforce is
responsible for quality assurance, product
environmental considerations and design,
communication on product-related
environmental issue, product safety,
technology patents, customer satisfaction and
supply chain management. The Technology
Division is responsible for coordination of
the operations.
5. The Employee and Social Engagement
Taskforce is responsible for recruitment,
employee training, labor relations, employee
care, community engagement and charity
events. The Planning Division is responsible
for coordination of the operations.
6. The Secretariat office and President Staff’s
Office act concurrently to implement CSR
policies, track the progress of corporate
social responsibility goals/policy
implementation and compile the corporate
Operations listed in the left
column are referenced with
Chapter II Exercising Corporate
Governance of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation
are listed below:
(3) No significant difference is
found between the
Company's practice and
Article 7 and 9 of the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies.
(3) No significant difference is
found between the
Company's practice and
Article 9 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

74

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
social responsibility report, which shall be
forwarded to the Board of Directors for
review every year.
(4) The Company’s Compensation Committee
discusses the policies for compensation of
directors, supervisors and managers.
Compensation of employees are set based on
the Guidelines for Management of
Compensation, Guidelines for Reward and
Punishment, Appointment and Promotion
Guidelines and Performance Evaluation
Guidelines, integrating employee
performance evaluation and
reward/punishment into the compensation
system.

75

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
2. Developing Sustainable Environment
(I) Is the company committed to improving usage
efficiency of various resources and utilizing
renewable resources with reduced
environmental impact?
(2) Has the company referred to the nature of its
industry to establish a suitable environment
management system (EMS)?
(3) Is the company concerned with changes to the
global climate and how it may affect business
activities? Has the company implemented
greenhouse gas (GHG) inventory checks and
proposed strategies for reducing energy
consumption, carbon emissions, and
greenhouse gas production?		 ˇ
ˇ
ˇ		 2. Developing Sustainable Environment
(1) Yieh Phui Enterprise Co., Ltd. has begun
investing in various pollution prevention
facilities since its founding in 1988 and
continues to push forward use of clean energy
and pollution prevention processes, including
the following:
1. Regenerative Incinerator
2. Waste Acid Recovery Equipment
3. Waste Management
4. Wastewater Recovery and Reuse Processes
5. Natural Gas Steam Boilers
Yieh Phui Enterprise Co., Ltd. is
committed to conserving resources. Taking
into consideration the impact on the ecology,
the Company implements a series of operations
to minimize the impact on the environment,
including improving manufacturing processes
to reduce the consumption of resources and
energy, reducing use of hazardous substances,
avoiding emission of environmental pollution
and waste and handling waste properly,
enhancing recyclability and reusability of raw
materials and products to maximize
sustainability of renewable resources,
extending use life of the products to cut down
the burden on the environment, and upgrading
the efficiencyto ensure sustainabilityof water
Operations listed in the left
column are referenced with
Chapter III Fostering a
Sustainable Environment of the
Corporate Social Responsibility
Best Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation
are listed below:
(1) No significant difference is
found between Article 12 and
13 of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies.

76

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
resources.

77

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
(2) The Company consumes energy and resources,
such as steel, paint, zinc ingot, water, electricity
and LNG, to manufacture galvanized and
painted steel products, steel structures and
lifting machines and facility. The wastewater
and gas generated from the manufacturing
process meet the effluent standards after they
are processed through the wastewater and gas
processing facilities. Disposal of industrial
waste is commissioned to a certified waste
processing company in accordance with
environmental protection laws and regulations.
Control of noise is conducted through shielding
and insulation to achieve the factory noise
control standards put forward by the
Environmental Protection Administration. From
choice of raw materials to control of emission
and noise generated during the manufacturing
process, the Company has laid out strict control
standards to ensure the health of our employees
and the environment.
―There is only one earth." With this
philosophy, Yieh Phui spares no effort in
environmental protection work. As a ―global
citizen,‖ Yieh Phui is committed to full
implementation of social responsibility and the
no compromise policy on workplace safety
and environmentalprotection. In May1997,
Operations listed in the left
column are referenced with
Chapter III Fostering a
Sustainable Environment of the
Corporate Social Responsibility
Best Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation
are listed below:
(2) No significant difference is
found between the
Company's practice and
Article 11 and 13 of the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies.

78

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
Yieh Phui took the lead in Taiwan's steel
industry to receive the first certification for
ISO 14001 Environmental Management
System.
Yieh Phui executes an environmental audit
following the ISO 14001 Environmental
Management System to identify the significant
environmental issues, which is then followed
up by a series of environment-related meetings
to draft plans and set the goals and tracking
targets for environmental management.
(3) To reduce use of energy and carbon emissions,
the Company calls an energy conservation
meetingsquarterly. The meetingreviews energy		 Operations listed in the left
column are referenced with
Chapter III Fostering a

79

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
use in each plant and discusses the
energy-saving and carbon emission reduction
management programs and the effectiveness of
implementation.
1. In January 2009, the Company introduced
the ISO 14064-1 international greenhouse
gas inventory system and set up a
greenhouse gas inventory and verification
management structure. In August 2009, the
Company received the Greenhouse Gas
Inventory/Verification Statement.
2. Kaohsiung Plant I received the ISO 50001
verification certificate in 2014 and the
Pingtung Plant also received the ISO 50001
verification in 2015. Through promoting the
energy management system and energy
efficiency goals, the Company successively
pushed forward a series of energy efficiency
improvement solutions, including replacing
the fuel for steam boilers from heavy oil to
natural gas, installing inverters to control the
windmills of the production lines, using
high-efficiency, low energy-consumption air
compressors, using high-efficiency
energy-savinglamps and replacinglow EER
Sustainable Environment of the
Corporate Social Responsibility
Best Practice Principles for
TWSE/TPEx Listed Companies.
Results of actual implementation
are listed below:
(3) No significant difference is
found between the
Company's practice and
Article 17 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

80

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
air conditioners. Kaohsiung Plant I is
expected achieve carbon reduction of around
2,342 tons of CO2e in 2016.
3. In June 2016, the Company sent an
application to the Taiwan Power Company
for purchase of 120 thousand kWh of green
power in support of the government’s green
energy policy.
4. The Company received an award from the
Industrial Development Bureau, Ministry of
Economic Affairs on November 25, 2016 for
excellence in greenhouse gas and air
pollutant emission reduction.
3. Asserting Social Welfare
(1) Has the company referred to relevant laws and
international human rights instruments to
stipulate relevant management policies and
procedures?
(2) Has the company established employee appeal
system and channels, and are employee
appeals handled appropriately?
(3) Has the company provided employees with safe
and healthy work environments as well as
regular classes on health and safety?
(4) Has the company established a system to regularly
communicate with its employees, and used
appropriate means to notifyemployees of
ˇ
ˇ
ˇ
ˇ		 3. Asserting Social Welfare
(1) The Company strives to meet full compliance
with labor laws and respect for fundamental
principles of labor rights recognized
internationally. We implement humane
management, respect the opinions of each
individual and enforce non-discriminatory
recruitment policies regardless of sex, race, age,
marital and family status. We implement the
compensation and employment criteria and
provide equal opportunities for training and
promotion, strivingto build a harmonious		 Operations listed in the left
column are referenced with
Chapter IV Preserving Public
Welfare of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(1) No significant difference is
found between Article 18 and

81

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
operation changes that may result in material
impacts?
(5) Has the Company established an effective
competency development career training
program for employees?
(6) Has the company established relevant policies and
systems of appeal for consumer rights for the
processes of research and development,
purchasing, production, operations, and
services?
(7) Is the company compliant with relevant laws and
international laws governing the marketing
and labeling of its products and services?
(8) Prior to conducting business with suppliers, has
the Company evaluated the suppliers in terms
of past records of impacts on the environment
and the society?
(9) Do contracts between the company and its major
suppliers include terms where the company
may terminate or rescind the contract at any
time if the said supplier has violated the
company’s corporate social responsibility
policy and has caused significant impact upon
the environment and society?
ˇ
ˇ
ˇ
ˇ
ˇ		 workplace.
(2) Mechanism and Channel for Lodging Complaint
1. Yieh Phui set up Guidelines for Handling and
Prevention of Sexual Harassment in 2012 and
the Sexual Harassment Prevention Committee
to protect employees and suppliers and
visitors entering the Company for official or
private business from sexual harassment in
the workplace, striving to eradicate
occurrence of workplace sexual harassment
and safeguard gender equality. The following
channels are available for lodging sexual
harassment complaints:
(1) E-mail:
[email protected].
(2) EIP portal "sexual harassment prevention
area".
(3) Sexual Harassment Prevention Committee
and staff. There were no incidents of sexual
harassment in 2016.
2. Human Rights Safeguards and Complaints:
Yieh Phui observes strict adherence to
domestic and foreign labor and human rights
standards, providing all employees with fair
treatment and respect. No incidents of human
rights violation or discrimination occurred in
2016.
A "Say it Out Loud" section has been set
up in the Company’s internal website, which
facilitates employees to communicate or


of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies.
(2) No significant difference is
found between the
Company's practice and
Article 18 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies.

82

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
ˇ
ˇ
ˇ		 lodge complaints directly to the Company. A
total of 10 complaints were received in 2016.
3. Workplace Violence
The Company has set up a Workplace Violence
Prevention Plan in 2016, making channels for
complaint and reporting of criminal violations
available through the Personnel Management
Department.

83

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
(3) Healthy and Safe Workplace
1. Safety and Health Policy
With consideration for the development
of Taiwan, and for the safety and health of
employees and the vision - ―There is only
one earth", Yieh Phui made the declaration
of ―Fulfillment of Social Responsibility and
No Compromise on Workplace Safety and
Environmental protection‖.
Under continuous efforts of all
employees, Yieh Phui passed the verification
process for the OHSAS 18001 Occupational
Health and Safety Management System in
1998, becoming the first steel company in
Taiwan to achieve this standard. In 2011, the
Company achieved successful verification of
OHSAS 18001 and TOSHMS.
2. Safety and Health Activities
(1) Workplace Safety Management:
A. Reinforcing operation safety
a. Introduced the DuPont safety
management concept.
b. Implemented on-site safety
inspection at all levels.
c. Provided a full range of personal
protective gear.
d. Launched regular production line
emergency response drills.
e. Implemented ergonomic
engineering.
B. Improving equipment safety.
C. Raising personnel safety awareness
a. Conduct annual on-job education
and trainingand hazard alert drills		 Operations listed in the left
column are referenced with
Chapter IV Preserving Public
Welfare of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(3) No significant difference is
found between the
Company's practice and
Article 20 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

84

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
and promote safety proposal system
activities.
b. Promote safety culture.
C. Yieh Phui Safety Day Campaign.
(2) Traffic Safety Management:
A. Defensive driving materials and
training for motorcycle and car drivers.
B. Promoting full-coverage helmets for
motorcycle riders.
C. Motorcycle safety inspection
activities.

85

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
(3) Health management and promotion
activities include elite class healthy living
and overall health management planning
services and post-health check-up tracking
care, health promotion seminars, "Tobacco
Hazards Forum" in 2016, "Music Feast" and
"Modern Day Chronic Diseases Seminar,"
smoking cessation classes, weight-loss
classes and influenza vaccination
(government-subsidized vaccine). On
December 26, 2016, Kaohsiung City Health
Bureau commended the Company with a
"Outstanding Achievement" trophy and, in
October, the Company received a
certification of appreciation for the
Company’s participation in the "Stop
Smoking for Love - One Million Happiness"
campaign organized by the Kaohsiung City
Health Bureau.
(4) Comprehensive and Diverse
Communication Channels between
Employer and Employees
1. Communication platform: Yieh-Phui
Enterprise Co., Ltd. holds regular
management-employee meetings and set up
the "Unity Net" and ―Say it Out Loud"
sections to provide platforms for
communication between employees and the		 Operations listed in the left
column are referenced with
Chapter IV Preserving Public
Welfare of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(3) No significant difference is
found between the
Company's practice and
Article 20 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(4) No significant difference is
found between the
Company's practice and
Article 22 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

86

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
Company.
2. Employee Proposal System: Yieh Phui
values employees’ suggestions; therefore, the
Company introduced the "innovative
proposal system", which is open to
innovative employee proposals and
suggestions for shortening the work
processes and improving production
efficiency in daily operations and reducing
costs or increasing profits.
3. Welfare Committee Meeting: The Welfare
Committee Meeting is held monthly.
Members of the Committee may make
forward proposals or suggestions to the
Company on matters relating to welfare
policies, community activities and various
subsidies on behalf of the employees. The
proposals or suggestions are made into
resolutions and decided by the members of
the Committee, providing a channel for
communication.

87

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
4.Public announcement of changes in the
organization and operations: For changes in
the organizational structure and operations of
the E-United Group and Yieh Phui Enterprise
Co., Ltd., the Company announces through
email, the Company's internal website, and
bulletin boards. Every year, the President
publishes a letter to the employees, providing
information on the operations of the current
year and the outlook of the coming year.
5. Occupational Safety and Health Committee
Meeting: The Corporate Safety and Health
Committee and subcommittees meet
quarterly, attended by members of the
Committee and workers’ representatives. The
meeting discusses occupational safety and
health policy, occupational safety and health
management plans, health and safety
education and training plan, workplace
environment monitoring plan, monitoring
results and improvement measures, health
management, occupational disease
prevention and health promotion issues and
various health and safety proposals.
(5) Education, training and career development
Yieh Phui expects that all employees will
have maximum opportunities for development
and learning, personal growth and full
extension ofpotential in the Company. Growth


Operations listed in the left
column are referenced with
Chapter IV Preserving Public
Welfare of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(4) No significant difference is
found between the
Company's practice and
Article 22 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(5) No significant difference is
found between the
Company's practice and
Article 21 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

88

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
of our employees means thriving and
development of the Company’s soft power;
therefore the Company pushes forward
employee education and training and career
development through the competency-specific
education and training system. The program
covers the the following areas:
1. New employee education and training
targets on conveying the Company's
values and the status of policy implementation
to the new employees to facilitate quick
adaptation raise awareness on personal safety.
The program includes five training courses:

89

Assessed items Current Operation(Note 1) Gaps with the Corporate Social
(1) New employee management guidelines
and corporate culture.
(2) Introduction to labor insurance, health
insurance, and group insurance.
(3) TPM activities and implementation
status.
(4) Industrial safety and health knowledge.
(5) Environmental protection general
education.
2. On-job professional education and training
provides our employees the needed
knowledge and skills to perform their work
and assists them in obtaining the needed
certification. The training program includes:
(1) Function-specific professional training
(2) product application engineer
(3) Management system/certification
system training
3. Management Development Education and
Training
To enhance the competence of the
Company’s employees of all levels, this
program provides the necessary professional
knowledge, skills, knowledge on new
technology and industrial trends. Career
development education and training courses
include five categories:
(1)Management competency

Operations listed in the left
column are referenced with
Chapter IV Preserving Public
Welfare of the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(5) No significant difference is
found between the
Company's practice and
Article 21 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.

90

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
(2) Professional competency
(3) Common competencies
(4) General training
(5) Personal development
Education and training courses are
provided to meet the needs of the various
levels. For example, in 2016, staff level
employees received an average of 17.1 hours of
education and training and first line
productions managers an average of 27.6
hours.
4. Function-specific training
(6)Yieh Phui values customers’ feedback and (6) Different from Article 23 of

91

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
opinions. To safeguard the interests of our
customers and fulfill our obligations of
customer service, we implemented the
following practices:
1. Set up a channel for customer complaints
and establish a consumer litigation system or
compensation claiming procedure.
2. Conduct regular customer satisfaction
survey for internal assessment.
3. Provide complete after-sale service,
including product return, service and
recycling.
4. Disclose complete product information and
provide standard contract or risk report upon
selling.
5. The Technical Services (customer service)
Division takes the initiative to visit
customers every year, inquire customer
feedback, listen to customers’ suggestions,
ask about product quality and usage and
give customers recommendations on using
the product.
(7) The Company's products are packaged with
different sizes labels to provide customers
accurate product information. Packaging and
labels are designed with strict standards;
specifications disclose are compliant with
relevant regulations and international
 the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEX
Listed Companies, the
Company only has consumer
rights protection policy and
procedure to lodge
complaint for production,
operations and service
procedures.
(7) No significant difference is
found between the
Company's practice and
Article 24 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(8) Different from Article 26 of
the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies, the
Company's supplier
evaluation only covers
impact on the economy and
the environment.
(9) No significant difference is
found between the
Company's practice and
Article 26 of the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed

92

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Corporate Social
standards.
(8) The Company has set up a "Procedure for
Supplier Evaluation" to ensure that new and
existing suppliers of HSF do not use harmful
substances. Through implementing
management of hazardous substances, Yieh
Phui takes actions to prevent potential
negative impact on the environment and
increase the ratio of of HSF suppliers.
(9) The Company specifies a clause of termination
or cessation for unethical conduct at the time
of purchase, upon signing of the purchase
agreement and when necessary.		 Companies.
IV. Strengthening information disclosure
(1) Does the company disclose relevant and reliable
information relating to CSR on its official
website or the Market Observation Post System
(MOPS)?
ˇˇ		 IV. Strengthening information disclosure
(1) The Company discloses information
regarding corporate social responsibility,
such as corporate governance, on the
external website and MOPS regularly in the
form of Corporate Social Responsibility
Report.		 Operations listed in the left
column are referenced with
Chapter V Enhancing Disclosure
of Corporate Social
Responsibility Information of
the Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies. Results of
actual implementation are listed
below:
(1) No significant difference is
found between the practices of
the Company and Article 9 of the
Corporate Social Responsibility
Best Practice Principles for
TWSE/TPEx Listed Companies.
5. Where the company has stipulated its own Best Practices on CSR according to the Corporate Social Responsibility Best Practice Principles for
TWSE/TPEX Listed Companies, please describe any gaps between theprescribed bestpractices and actual activities taken bythe Company:

93

Assessed items Current Operation (Note 1) Gaps with the Corporate Social Yieh Phui Enterprise set up the "Corporate Social Responsibility Best Practice Principles" on November 3, 2016. In general, the implementation status of the Company's corporate social responsibility practices conform to the corporate social responsibility best practice principles, as disclosed in the [Status of corporate governance operations, conformity with the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and the cause of nonconformity] section above.

  1. Other important information helpful in understanding CSR operation: Ye Hui Enterprise discloses the results of implementation of corporate social responsibility practices in the annual financial reports of the respective year and updates the latest news in the Company's external website from time to time, providing an overview on the status of implementation of corporate social responsibility and results to the stakeholders.

  2. The Company should specify if the Company's CSR Report has passed the relevant accreditation awarded by any validation agency: None. The Company’s 2016 CSR report was verified by Taiwan SGS based on type 1 medium-level assurance standards of AA 1000 AS2008.

Note 1: Provide a brief description in the appropriate column, regardless whether "yes" or "no" is selected. Note 2: Companies who have compiled CSR reports may specify the ways to access the CSR and the page numbers of the cited content in place of the above-requested description.

94

(VI) The Company’s corporate integrity practices and actions taken:

Ethical corporate management

Ethical corporate management Ethical corporate management Ethical corporate management
Assessed items Current Operation(Note 1) Gaps with the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX Listed
Companies, and the cause of
the saidgaps
Y N Summary
1. Formulating policies and plans for integrity operation
(1) Has the company clearly indicated policies and
activities related to ethical corporate management in
its bylaws and external documents, and are the
company’s directors and management actively
fulfilling their commitment to corporate policies?
(2) Has the company stipulated a plan to forestall unethical
conduct? Has the company clearly prescribed
procedures, best practices, and disciplinary and
appeal systems for violations within the said plan? Is
the plan implemented accordingly?
(3) Has the company established preventive measures for
the items prescribed in Article 7, Paragraph 2 of the
Ethical Corporate Management Best Practice
Principles for TWSE/TPEx Listed Companies or
business activities with a higher risk of being
involved in an unethical conduct within the
company’s scope of business?


1. Formulating policies and plans for integrity
operation
(1) The Company’s Board of Directors approved the
Yieh Phui Corporate Management Best
Practice Principles on January 25, 2016, setting
a policy of ethical business practices under the
models of honesty, transparency and
responsibility and establishing a good
corporate governance and risk control
mechanism to create a business environment
for sustainable development.
(2) The company has set up the Employee Work
Rules and Guidelines for Employee Incentives,
Reward and Punishment. The Company’s
stands and rules are imparted to employees
through new employee training and education
courses.
(3) Employees involved in financial operations,
sales and procurement
are required to submit the "Employee
Guarantee" and update the guarantee every three
years.
Employees who fail to submit the "Employee
Guarantee" or update the document every three
years are required to purchase "Fidelity Bond
Insurance."


(1) No significant
difference is found
between the Company's
practices and Article 5
of the Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(2) No significant
difference is found
between the Company's
practices and Article 6
and 7 of the Ethical
Corporate Management
Best Practice Principles
for TWSE/TPEx Listed
Companies.
(3) No significant
difference is found
between the Company's
practices and Article 17
of the Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed

95

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX Listed
Companies, and the cause of
the saidgaps
Y N Summary
Companies.
II. Implementation of ethical business operations
(1) Has the company evaluated ethical records of its
counterparty? Does the contract signed by the
company and its trading counterparty clearly
provide terms on ethical conduct?
(2) Has the company established an exclusively (or
concurrently) dedicated unit for promoting ethical
corporate management that answer to the board of
directors? Does the said unit regularly report to the
board of directors on the state of its activities?
(3) Has the company established policies preventing
conflict of interests, provided proper channels of
appeal, and enforced these policies and channels
accordingly?
(4) Has the company established effective accounting
systems and internal control systems for enforcing
ethical corporate management? Are regular audits
carried out by the company’s internal audit unit or
commissioned to a CPA?
(5) Does the company regularly organize internal and
external training for ethical corporate management?


II. Implementation of ethical business operations
(1) The Company's Procedure for Procurement
Management specifies a clause of termination or
cessation for unethical conduct in the the
purchase agreement.
(2) The Company’s Ethical Corporate Management
Best Practice Team is a dedicated unit (formed
by the President Staff’s Office, the Finance
Division and Management Division) set up for
operations and supervision of corporate
management practices, including drafting,
revision, implementation, interpretation,
consultation, reporting and filing of ethical
corporate business best practice related
operating procedures and code of conducts. The
team reports to the board of directors each year.
(3) The Company set up the Code of Conduct, by
which the directors, supervisors and managers
are bound to act in the best interest of the
Company, deal with official business in an
objective and effective way and refrain their
spouse, parents, children or relative within the
second-degree of kinship from gaining improper
benefits using their positions in the Company.
The directors, supervisors and managers shall
follow the Procedure for the Board of Directors
Meeting when discussing proposal and shall
recuse from discussions and votingif found to

(1) No significant difference
is found between the
Company's practices
and Article 9 of the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(2) No significant difference
is found between the
Company's practices
and Article 17 of the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(3) No significant difference
is found between the
Company's practices
and Article 19 of the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.

96

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX Listed
Companies, and the cause of
the saidgaps
Y N Summary
be a conflict of interest.
(4) The Company set up an accounting system and
an internal control system. In addition to audit
activities conducted by the commissioned
CPA, the Company’s internal audit unit also
implements regular audit plan every year.
(5) The Management Division provides information
on the Company’s work rules and guidelines
for rewards and punishments during new
employee education and training courses.
Employees involving in the Company’s
financial operations are required to to
participate in the ethical business best practice
related courses organized by the Taiwan Stock
Exchange Corporation to meet compliance
with relevant regulations.		 (4) No significant
difference is found
between the Company's
practices and Article 19
of the Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(5) No significant
difference is found
between the Company's
practices and Article 22
of the Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.

97

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX Listed
Companies, and the cause of
the saidgaps
Y N Summary
III. Operation of whistle-blowing mechanism in the
company
(1) Has the company established concrete whistle-blowing
and reward systems and accessible whistle-blowing
channels? Does the company assign a suitable and
dedicated individual for the case being exposed by
the whistle-blower?
(2) Has the company stipulated standard operating
procedures (SOP) and relevant systems of
confidentiality for investigating the case being
exposed by the whistle-blower?
(3) Has the company adopted protection against
inappropriate disciplinary actions for the
whistle-blower?
III. Operation of whistle-blowing mechanism in the
company
(1) The Company set up the whistle-blower
incentive standards in the Employee Work
Rules and the Guidelines for Reward and
Punishment. In addition to the Company’s
internal network, any named employee and
individual not working in the Company may
report directly to the corporate governance
unit. The corporate governance unit assigns a
dedicated personnel to handle the matters.
(2) The Company has set up the "Procedure for
Ethical Corporate Management and Guidelines
for Conduct," which includes the standard
operating procedures for investigation and
related confidentiality mechanisms for
processing reporting related matters.
(3) No actions against whistle blowers have
occurred in the Company.		 No significant difference is
found
between
the
Company's practices
and
Article 23 of the Ethical
Corporate Management Best
Practice
Principles
for
TWSE/TPEx
Listed
Companies.
IV. Strengthening information disclosure
(1) Has the company disclosed the contents of its best
practices for ethical corporate management and the
effectiveness of relevant activities upon its official
website or Market Observation Post System
(MOPS)?		 IV. Strengthening information disclosure
(1) The Company’s Board of Directors approved the
Yieh Phui Corporate Management Best Practice
Principles on January 25, 2016, and published
the content on the Company's public website.
Difference from Article 25
of the Ethical Corporate
Management Best Practice
Principles for TWSE/TPEx
Listed Companies, the
Company has set up the
Yieh Phui Corporate
Management Best Practice
Principles, but quantified
data,as well as evaluation

98

Assessed items Current Operation(Note 1) Current Operation(Note 1) Current Operation(Note 1) Gaps with the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX Listed
Companies, and the cause of
the saidgaps
Y N Summary
on the effectiveness of
implementation are not yet
available.
5. Where the company has stipulated its own best practices on ethical corporate management according to the Ethical Corporate Management Best
Practice Principles for TWSE/TPEx Listed Companies, please describe any gaps between the prescribed best practices and actual activities taken by the
company:
The Company has set up the Yieh Phui Corporate Management Best Practice Principles. In general, the content conforms with the Ethical Corporate
Management Best Practice Principles for TWSE/TPEx Listed Companies.
6. Other information helpful to understand the integrity operation of the company: (e.g., the company's amendment of its principles of integrity operation)
The Company revised the content of the original work rules based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed
Companies to make it more complete and conform to the principles of ethical practices.

Note 1: Provide a brief description in the appropriate column, regardless whether "yes" or "no" is selected.

99

  • (VII) If the Company has set up corporate governance principles and relevant rules, the Company shall disclose methods for inquiry: The Company has set up relevant corporate governance procedures and guidelines, including Rules of Procedure for Shareholders Meetings, Procedure for Board of Directors Meetings, Compensation Committee Charter, Codes of Ethical Conduct, Ethical Corporate Management Best Practice Principles and the Rules Governing the Scope of Powers of Independent Directors. The information can be found on the MOPS; please see the cover of this annual report for the web link.

  • (VIII) Other important information to facilitate better understanding of the Company's corporate governance activities may be disclosed here:

1. The Company has set up the "Procedures for Handling Material Inside Information," which is made available through the Company's internal website by the directors, managers and all employees.

2. For details on the Company's corporate governance operations, please refer to page 37 of this annual report or visit the MOPS; please see the cover of this annual report for the web link.

100

(9) The following information relating to implementation of the internal control system shall be disclosed:

1. The Company's Internal Control Statement

Yieh Phui Enterprise Co., Ltd.

Statement of Internal Control System

Date: March 21, 2017

This Company makes the following statement according to the self-evaluation conducted on its internal control system in 2016: I. The Company acknowledges that the establishment, implementation and conservation of the internal control system are the responsibilities of the Board of Directors and the managers of the Company. The Company has constructed such a system. The objectives of the internal control system include achieving various objectives in business benefits and efficiency (including profitability, performance, and protection of assets and safety); ensuring the reliability, timeliness, transparency, and regulatory compliance of reporting; and providing reasonable assurance. II. The internal control system has inherent constraints, and no matter how comprehensive its design may be, an effective internal control system is only capable of providing adequate assurance for achieving the above-mentioned objectives. Moreover, the effectiveness of the internal control system may be altered from changes in the environment and under different situations. Nevertheless, the Company’s internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies. III. The Company assesses the effectiveness of the internal control system’s design and practices through the effectiveness of internal control system, as stated in the "Protocols and Measures for the Establishment of Internal Control System in Publicly Listed Companies" (hereinafter referred to as "the Protocols"). The criteria adopted by the Regulations identify five key components of managerial internal control:(1) Control Environment;(2) Risk Assessment; (3) Control Activities; (4) Information and Communication; and (5) Monitoring Activities. Each constituent element includes a number of categories. Please refer to "The Regulations" for the aforementioned categories. IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations. V. Based on the above assessment results, the Company determined that the Company’s internal control system (covering monitoring and management of its subsidiaries) as of December 31, 2016 has been effectively designed and implemented and sufficient to ensure that the objectives below are achieved, including understanding the degree of achievement of operational effectiveness and efficiency objectives, reliable, timely and transparent reporting and compliance of applicable rules, laws, regulations and bylaws. VI. This Statement will become an integral part of the Annual Report and the Prospectus of the Company. Any false hold, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act. If the aforementioned content contains illegal matters such as any fradaulent or VII. If the aforementioned content contains illegal matters such as any fraudulent or hidden information, the Company will be in question of breaching Articles 23, 32, 171, and 174 in the Securities and Exchange Act and face legal consequences. Yieh Phui Enterprise Co., Ltd. Chairman of the Board: I. S. Lin (Signature and Seal) President: Lin-Maw Wu (Signature and Seal)

101

2. Any CPA commissioned to conduct a project review of the ICS shall disclose the CPA’s audit report: None.

  • (10) Any legal penalty enacted upon this Company, any penalty imposed to its personnel by the Company for violation of internal control rules, major falacies and status of improvements in the most recent year up to the publication date of this report: None.

(11) Significant resolutions made in/by the Shareholder’s; Meeting and the Board of Directors in the most recent fiscal year up to the date of publication of this Annual Report:

Important resolutions made by the Board of Directors, Shareholders' Meeting and Provisional Meetings in recent years:

  • (1) Minutes of Shareholders' Meeting: June 22, 2016

  • (2) Implementation of Shareholders' Meeting: June 22, 2016

  • (3) Minutes of Board of Directors Meeting: November 3, 2016

  • (4) Minutes of Board of Directors Meeting: December 21, 2016

102

(1) Minutes of Shareholders' Meeting: June 22, 2016

Yieh Phui Enterprise Co., Ltd.

(1) Minutes of Shareholders' Meeting

Time: 9.30 a.m., June 22, 2016

Location: Ziyi Community Center, No. 57, Jinxue Rd., Ziguan Dist., Kaohsiung City

Attendance: Shareholders and shareholders' proxies with a total of 1,494,841,471 shares,

representing 87% of the total number of shares issued by the Company

  • (1,718,090,576 shares). The total has reached the statutory threshold for the meeting.

  • Attendance: Director Mr. Lin-Maw Wu

Independent Director Mr. Chin-Shu Sun

  • Independent Director Mr. Ching-Hui Hsieh

Supervisor Mr. Jen-Ying Cheng

  • Member of Compensation Committee Mr. Chin-Shu Sun

  • Member of Compensation Committee Mr. Ching-Hui Hsieh

  • VP of Finance Mr. Yung-Hsian Chen

VP of Global Marketing and Sales Mr. Sen-Lung Chen

Taiyang & Associates Attorneys & Counselors-at-Law Ching-Yang Lin, Lawyer Crowe Horwath (TW) CPAs Jen-Yao Hsieh, CPA

  • Chairman: Lin-Maw Wu Minutes: Shu-Hui Huang

  • I. Meeting commences (As of 9:30 a.m., the total shares represented by shareholders and proxies reached the statutory threshold).

  • II. Chairman's Message: The Chairman of the board of directors is unable to attend this Shareholders' Meeting. The Chairman appointed me to preside over this Shareholders' Meeting (hereinafter abbreviated).

III. Discussions

Proposal No. 1: proposed by the Board

Subject: Revision of the Company's Articles of Association.

  • Note: 1. According to the TWSE June 22, 2015 Memorandum No. 1041802730 and the MOEA June 11, 2015 Directive No. 10402413890, the Company's Articles of Association were amend in accordance with the amendment to Article 235 and 235-1 of the Company Act.

  • Referenced table stating the content of the articles before and after the revision (Please see pages 30 to 31 and pages 32 to 36 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,929,747, in which 1,464,633,070 voted in

favor, 325,868 voted against and 11,970,809 recused from the voting. )

IV. Report Items

  1. Operating Performance of 2015 (Refer to page 6 of the meeting manual)

  2. Supervisors' Review Report on the 2015 Final Statements (Page 23 of the meeting manual)

  3. Report on the proposed revision to the Company's Procedure for Board of Directors Meetings. (Page 24 of the meeting manual)

103

  1. Report on the proposal to establish the Company's Ethical Corporate Management Best Practice Principles. (Page 24 of the meeting manual)

V. Recognition

Proposal No. 1: proposed by the Board

Subject: Recognition of 2015 final accounts.

Note: 1. For the Company's annual business report, individual financial statements and

  • consolidated financial statements, please refer to pages 6-22 of this manual.

  • The above-mentioned individual financial statements and consolidated financial statements have been audited and certified by CPAs Shu-Man Tsai and Jen-Yao Hsieh from Crowe Horwath (TW) CPAs and verified by the supervisory board.

  • Forwarded for recognition.

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,389,318 voted

in favor, 324,266 voted against and 12,267,572 recused from the voting. )

Proposal No. 2: proposed by the Board

Case: 3.Adoption of the proposal for 2015 Deficit Compensation

Note: The Company proposes to implement 2015 deficit compensation, as shown below in details:

Yieh Phui Enterprise Co., Ltd.

Deficit Compensation Table

2015

Unit: NT$1 thousand Item Amount Ending retained earnings 1,691,116,707 Minues: Remeasurement of defined benefit plans in retained earnings (71,866,109) Minus: the changes in associated companies and joint ventures recognized by the equity method (45,339,503) minus: the Changes in equity ownership of subsidiaries (11,482,595) Minus: net loss after tax (953,786,569) Retained earnings at end of the period 608,641,931

Note: Dividends are not allocated for this year.

Chairman: I. S. Lin Manager: Lin-Maw Wu Head of Accounting: Yung-Hsian Chen

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which1,464,379,348 voted in favor, 334,236 voted against and 12,267,572 recused from the voting. )

104

VI. Discussions

Proposal No. 1: proposed by the Board

Proposal: Discussion for revision of the "Procedure for Lending and Guarantee".

  • Note: 1. Revision of the Company's "Procedure for Lending and Guarantee" was proposed in response to the Company's needs and in accordance with the the Financial Supervisory Commission Dec. 31, 2013 Directive No. 10200531121. Proposal is raised to replace the Supervisory Board with the Audit Committee.

  • Referenced table stating the content of the Procedure for Lending and Guarantee before and after the revision (Please see pages 47 to 52 and pages 53 to 58 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,339,598 voted in favor, 326,659 voted against and 12,314,899 recused from the voting. )

Proposal No. 2: proposed by the Board

Subject: Revision of the Company's "Rules of Procedure for the Shareholders' Meeting".

Note: 1. Revision of the Company's "Rules of Procedure for Shareholders Meetings" was

  • proposed in accordance with the the Financial Supervisory Commission Dec. 31, 2013 Directive No. 10200531121. Proposal is raised to replace the Supervisory Board with the Audit Committee.

  • Referenced table stating the content of the Rules of Procedure for Shareholders Meetings before and after the revision (Please see pages 59 to 60 and pages 61 to 64 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,340,906 voted in favor, 325,879 voted against and 12,314,371 recused from the voting. )

Proposal No. 3: proposed by the Board

Subject: Revision of the Company's "Procedure for Election of Directors".

Note: 1. The proposal to revise the "Procedure for Election of Directors" is raised in response to

  • the Company's needs and in accordance with relevant laws of and regulations.

  • Referenced table stating the content of theProcedure for Election of Directors before and after the revision (Please see pages 65 to 66 and pages 66 to 67 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,340,497 voted in favor, 326,288 voted against and 12,314,371 recused from the voting. )

Proposal 4: proposed by the Board

Subject: Revision to the Company's "Procedure for Acquisition and Disposal of Assets".

Note: 1. Revision of the Company's "Procedure for Acquisition and Disposal of Assets" was proposed in response to the Company's needs and in accordance with the the Financial

105

Supervisory Commission Dec. 31, 2013, Directive No. 10200531121. Proposal is raised to replace the Supervisory Board with the Audit Committee.

  1. Referenced table stating the content of the Procedure for Acquisition and Disposal of Assets before and after the revision (Please see pages 68 to 74 and pages 75 to 84 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,340,536 voted in favor, 326,249 voted against and 12,314,371 recused from the voting. )

Proposal 5: proposed by the Board

Subject: Revision of the Company's Articles of Association.

  • Note: 1. The Company intends to revise Articles 27, 31, 32 and 36 of the Articles of Association of the Company.

  • Referenced table stating the content of the articles before and after the revision (Please see pages 85 to 86 and pages 87 to 91 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,464,340,909 voted in favor, 325,876 voted against and 12,314,371 recused from the voting. )

VII. Matters relating to election

Proposal No. 1: proposed by the Board

Subject: Election of directors

Note: 1. In accordance with Article 18 of the Articles of Association of the Company, the

  • Company shall set up a Board with Seven directors (including three independent directors), Candidates shall be nominated and elected by the shareholders' Meeting every three years and elected directors may serve consecutive terms. The directors shall hold the minimum threshold of shares as stipulated by the Financial Supervisory Commission.

  • The current directors took office on June 20, 2013, and the term ends on June 19, 2016. The board raised a proposal to elect a new board.

  • The new directors will serve the term from June 22, 2016, to June 21, 2019.

  • According to Paragraph 4, Article 2 of the "Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies", the total shares held by all directors of the Company shall be more than 3% of the paid-in capital.

  • Election of directors is conducted in accordance with the Procedure for Election of Directors.

Results of the election:

Title Shareholder No. Shareholder
Name		 Representative Number of
Shares
Held		 Number of
Elected Votes
Director 81896 Kuo Chiao
Investment &		 I. S. Lin 55,557,334 1,957,104,130

106

Development Co.
Ltd.
Director 81896 Kuo Chiao
Investment &
Development Co.
Ltd.		 Lin-Maw Wu 55,557,334 1,941,695,743
Director 81896 Kuo Chiao
Investment &
Development Co.
Ltd.		 Ping-Yung
Liang		 55,557,334 1,934,025,602
Director 81896 Kuo Chiao
Investment &
Development Co.
Ltd.		 Ching-Tsung
Huang		 55,557,334 1,931,676,490
Independent
Director		 Non-shareholder Chin-Shu Sun 0 833,262,272
Independent
Director		 Non-shareholder Ching-Hui Hsieh 0 822,319,749
Independent
Director		 Non-shareholder Te-Yuan Yang 0 819,253,605

VIII. Other Agendas

Proposal No. 1: proposed by the Board

Subject: To remove the "Non-compete Clause" on the Company's Directors. Notes: 1. According to Article 209 of the Company Act, "A director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval."

  1. In view that the "non-compete clause' may affect investment and business development of the Company's directors, this proposal is raised to remove the "non-compete clause" on all directors of the Company.

  2. (3) To remove the "non-compete clause" restricting certain functions of the Chairman (please refer to P. 92 of the meeting manual).

Resolution: passed as proposed.

(The total number of shares with voting rights is 1,476,981,156, in which 1,460,885,633 voted

in favor, 1,887,372 voted against and 14,208,151 recused from the voting. )

IX. Motion: none

Note: Shareholder account number 337709 (Xiehe Dayuan Co., Ltd.) raised several questions. All questions are related to the operations of the Company. The Chairman and relevant personnel provided sufficient information at appropriate times during the shareholders' meeting and the questions have also been recorded and filed for future reference.

107

X. Meeting adjourned

(2) Implementation of Shareholders' Meeting: June 22, 2016

Implementation of shareholders' meeting:

Implementation of shareholders' meeting:
Proposal Subject Resolution Status of
implementation
Proposal 1
Discussion
s		 Subject:
To revise
the
Company'
s Articles
of
Associatio
n.		 (The total number of shares with voting rights is
1,476,929,747, in which 1,464,633,070 voted in favor,
325,868 voted against and 11,970,809 recused from the
voting.		 Approved by the
Ministry of
Economic Affairs
on July 19, 2016
for registration
and announced
the information
on the Company's
website.
Proposal 1
Recognitio
n		 Recogniti
on of
2015 final
accounts.		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,389,318 voted in favor,
324,266 voted against and 12,267,572 recused from the
voting.		 To be
implemented
based on the
content passed in
the resolution.
Proposal 2 To adopt
the 2015
deficit
compensat
ion		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,379,348 voted in favor,
334,236 voted against and 12,267,572 recused from the
voting.		 Due to the losses
in 2015,
dividends are not
allotted for the
year.
Proposal 1
Discussion
s		 Discussio
n for
revision
of the
"Procedur
e for
Lending
and
Guarantee
".		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,339,598 voted in favor,
326,659 voted against and 12,314,899 recused from the
voting.		 The content of the
revised document
was published on
July 1, 2016 on
the Company's
website and the
MOPS and
implemented
according to the
revised content.
Proposal 2 Revision
of the
Company'
s "Rules
of
Procedure
for the
Sharehold
ers'
Meeting".		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,340,906 voted in favor,
325,879 voted against and 12,314,371 recused from the
voting.		 The content of the
revised document
was published on
July 1, 2016 on
the Company's
website and
implemented
according to the
revised content.
Proposal 3 Revision
of the
Company'
s
"Procedur
e for		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,340,497 voted in favor,
326,288 voted against and 12,314,371 recused from the
voting.		 The content of the
revised document
was published on
July 1, 2016 on
the Company's
website and

108

Election
of
Directors"
.		 implemented
according to the
revised content.
Proposal 4 Proposal
to discuss
amendme
nt to the
Company'
s Standard
Procedure
for
Acquisitio
n or
Disposal
of Assets		 The total number of shares with voting rights is
1,476,981,156, in which 1,464,340,536 voted in favor,
326,249 voted against and 12,314,371 recused from the
voting.		 The content of the
revised document
was published on
July 1, 2016 on
the Company's
website and the
MOPS and
implemented
according to the
revised content.
Proposal 5 Subject:
To revise
the
Company'
s Articles
of
Associatio
n.		 The total number of shares with voting rights is 1,476,981,156
in which 1,464,340,909 voted in favor, 325,876 voted against
and 12,314,371 recused from the voting.		 Approved by the
Ministry of
Economic Affairs
on July 19, 2016
for registration
and announced
the information
on the Company's
website.

109

Proposal 1
Matters
relating to
election		 Election
of
directors		 Results of the election: Results of the election: Represen
tative
I. S. Lin
Lin-Ma
w Wu
Ping-Yu
ng Liang
Ching-Ts
ung
Huang		 Approved by the
Ministry of
Economic Affairs
on July 19, 2016
for registration
and announced
the information
on the Company's
website.
Title Shareholder
No.		 Shareholder Name Represen
tative
Director 81896 Kuo Chiao
Investment &
Development Co. Ltd.		 I. S. Lin
Director 81896 Kuo Chiao
Investment &
Development Co. Ltd.		 Lin-Ma
w Wu
Director 81896 Kuo Chiao
Investment &
Development Co. Ltd.		 Ping-Yu
ng Liang
Director 81896 Kuo Chiao
Investment &
Development Co. Ltd.		 Ching-Ts
ung
Huang
Independent
Director		 Non-sharehol
der		 Chin-Shu Sun
Independent
Director		 Non-sharehol
der		 Ching-Hui Hsieh
Independent
Director		 Non-sharehol
der		 Te-Yuan Yang
Proposal 1
Other
Agendas		 To remove
the
"Non-com
pete
Clause"
on the
Company'
s
Directors.		 The total number of shares with voting rights is
1,476,981,156, in which 1,460,885,633 voted in favor,
1,887,372 voted against, and 14,208,151 recused from the
voting.		 To be
implemented
based on the
content passed in
the resolution.

110

(3) Minutes of Board of Directors meeting: November 3, 2016

Yieh Phui Enterprise Co., Ltd.

The 8th Board of Directors Meeting 2015 (regular)

Time: 3:00 p.m., November 3, 2016

Location: Meeting Room, 10F of E-United Group Headquarters

Attendance: The Chairman attended the meeting in person with all 7 directors present.

Directors Attended: Kuo Chiao Investment & Development Co. Ltd Representative: I. S. Lin (Chairman)

Kuo Chiao Investment & Development Co. Ltd Representative: Lin-Maw Wu (Director)

Kuo Chiao Investment & Development Co. Ltd Representative: Ping-Yung Liang (Director) Kuo Chiao Investment & Development Co. Ltd Representative: Ching-Tsung Huang (Director) Independent Director Chin-Shu Sun

Independent Director Ching-Hui Hsieh

Independent Director Te-Yuan Yang

Attending Personnel: Crowe Horwath (TW) CPAs: Bing-Chang Su, CPA Audit Manager: Yu-Chin Lu, VP

Chairman: I. S. Lin Minutes: Yung-Hsian Chen

I. Reports:

  1. Minutes of last meeting and implementation status. (Please refer to Appendix: Minutes and Implementation of the October 12, 2016, Board of Directors Meeting resolutions)

  2. Significant financial report. (See Appendix II)

  3. Internal audit report. (See Appendix III)

  4. Other important reports:

  5. (1). Compilation of 3rd quarter consolidated financial statements of 2016 has been completed.

  6. (2) The above financial statements and the audit report verified by CPAs Ling-Wen Huang and Jen-Yao Hsieh from Crowe Horwath (TW) CPAs are attached for reference (please refer to Appendix 4). The CPAs intend to issue retain-able review reports.

  7. (3) The above financial statements have been verified by the Audit Committee through a discussion.

II. Discussions:

Proposal 1: Revision of the Corporate Social Responsibility Best Practice Principles.

  • Note: 1. Revision of the Company's "Corporate Social Responsibility Best Practice Principles" was proposed in accordance with the the Financial Supervisory Commission Jul. 20, 2016, Directive No. 1050023519.

  • The content of the revised Corporate Social Responsibility Best Practice Principles has been published (please refer to Appendix 5).

Resolution: All directors present voted in favor.

  • Proposal 2: Endorsement of guarantee for subsidiary Shin Yang Steel Co., Ltd. (hereinafter referred to Shin Yang) in the amount of NT$180 million.

Note: 1. Shin Yang's short-term loan with Taishin International Commercial Bank, Lingya

111

Branch in the amount of NT$180 million is coming to term. The Company is planning to endorse for guarantee of the renewal in the amount of NT$180 million.

  1. Accumulated endorsement of guarantee for Shin Yang is NT$1,886 million.

Resolution: All directors present voted in favor.

Proposal 3: To revise the Internal Control System for the Shareholder Service Unit

Note: 1. In accordance with TDCC Memorandum No. 10500014882, the Company's Internal

Control System for the Shareholder Service Unit is revised based on the Sample of Shareholder Service Unit Internal Control Standards (see Appendix VI).

  1. The proposal has been discussed and approved by the Audit Committee and forward to the Board for final resolution.

Resolution: All directors present voted in favor.

3. Motion: no

Meeting adjourned

112

(4) Minutes of Board of Directors Meeting: December 21, 2016

Yieh Phui Enterprise Co., Ltd.

The 9th meeting of the Board of Directors 2016 (regular)

Time: 10.40 a.m., December 21, 2016

Location: Meeting Room, 10F of E-United Group Headquarters

Attendance: The Chairman attended the meeting in person with all 7 directors present.

Directors Attended: Kuo Chiao Investment & Development Co. Ltd Representative: I. S. Lin (Chairman)

Kuo Chiao Investment & Development Co. Ltd Representative: Lin-Maw Wu (Director)

Kuo Chiao Investment & Development Co. Ltd Representative: Ping-Yung Liang (Director)

Kuo Chiao Investment & Development Co. Ltd Representative: Ching-Tsung Huang (Director) Independent Director Chin-Shu Sun

Independent Director Ching-Hui Hsieh

Independent Director Te-Yuan Yang

Attending Personnel: Crowe Horwath (TW) CPAs: Su Bing-Chang, CPA Audit Manager: Lu Yu-Chin, VP

Chairman: I. S. Lin Minutes: Yung-Hsian Chen

I. Reports:

  1. Minutes of last meeting and implementation status. (See Appendix I: November 3, 2016 meeting minutes and of the Board of Directors and status of implementation)

  2. Significant financial report. (See Appendix II)

  3. Internal audit report. (See Appendix III)

  4. Other important reporting matters: The Company has not engaged in forward exchange derivative financial product trading since the last board of director meeting on December 20, 2016.

II. Discussions:

Proposal 1 : The Company's 2017 audit plan 106

Note: 1. The Company's 2017 audit plan was drafted based on the Company's internal control

system (please refer to Appendix 4 for details).

  1. The proposal has been discussed and approved by the Audit Committee and forward to the Board for final resolution.

Resolution : All directors present voted in favor.

  • (Chairman, I. S. Lin and Director, Ching-Tsung Huang (both are directors of E-Da Hospital) were requested to recuse from the discussion. Chairman I. S. Lin appointed Director Lin-Maw Wu as the proxy chair for proposal 2.)

Proposal 2: The Company's intent to donate NT$20 million to E-Da Hospital.

Note: 1. E-Da Hospital has been providing the Company high-quality in-plant medical

  • services, medical services to the employees, preventive care and discounts on medical expenses, providing our employees comprehensive medical care.

  • With the support for public welfare and appreciation for the high-quality services and care E-Da Hospital provided to the employees, the Company intends to donate NT$20 million to the E-Da Hospital.

113

3. The proposal has been discussed and approved by the Audit Committee and

forwarded to the Board for final resolution.

Resolutions: Except those recused from the discussion and voting to avoid conflict of interest, all other directors present voted in favor. The proposal was passed as proposed.

Proposal 3: The Company's intent to engage in forward exchange derivative financial instrument trading.

Note: 1. As needed for certain operations, the Company intend to engage in forward exchange derivative financial instrument trading within US$60 million and authorize the Chairman to conduct trading at reasonable exchange rates. The Chairman will be required to report at the most recent board of director meeting after trading.

  1. The proposal has been discussed and approved by the Audit Committee and forward to the Board for final resolution.

Resolution: All directors present voted in favor.

Proposal 4 : The Company's intent to endorse guarantee for Shing Yang Steel Co., Ltd.

(hereinafter referred to as Shing Yang) in the amount of NT$100 million.

Note: 1. Shin Yang's short-term loan with Huanan Commercial Bank, Gangshan Branch in the amount of NT$100 million is coming to term. The Company is planning to endorse for guarantee of the renewal in the amount of NT$100 million.

  1. Accumulated endorsement of guarantee for Shin Yang is NT$1,886 million. Resolution: All directors present voted in favor.

3. Motion : no

Meeting adjourned

114

(12) Major contents of any dissenting opinions on record or stated in a written statement made by Directors or Supervisors regarding key resolutions of the Directors’ Meeting in the most recent year up to the publication date of this report: None.

(13) In the most recent fiscal year and as of the date of publication of the Annual Report, a summary of the resignation and dismissal of the Company personnel:

The Company appointed Yung-Hsian Chen as the VP of Finance and head of Accounting. Associate VP of Finance, Chian-Hung Lin, now meets the qualification of with the requirements of the "Regulations Governing the Qualification Requirements and Professional Development of Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges." Chian-Hung Lin is now appointed as the head of Accounting and Yung-Hsian Chen is removed from the position.

115

5. Information on the CPA Professional Fees

Accountant Fees by Range (Please tick a range or fill in the amount)

Accounting Firm Name of CPA Name of CPA Auditing Period Remarks
Crowe Horwath (TW)
CPAs		 Shu-Man
Tsai		 Jen-Yao
Hsieh		 01/01/2016 - 06/30/2016
Crowe Horwath (TW)
CPAs		 Ling-Wen
Huang		 Jen-Yao
Hsieh		 07/01/2016 – 12/31/2016

Note: Where this Company replaces the CPA or accounting firm, please list the audit periods of the former and succeeding CPAs or firms

and the reason for the replacement in the remark column.

Unit: NT$1,000
Total
534
4,450
Category of Fees
Interval of the amount		 Audit Fees Non-Audit
Fees		 Total
1 Less than NT$2,000,000 534
2 NT$2,000,000 (incusive) to
NT$4,000,000
3 NT$4,000,000 (inclusive) to
NT$6,000,000		 4,450
4 NT$6,000,000 to NT$8,000,000
5 NT$8,000,000 to NT$10,000,000
6 Over NT$10,000,000(inclusive)

Information on the CPA’s professional charge

Unit: NT$1,000

Name of
Accounti
ng Firm		 Name of
the
account
ants
Audit Fees		 Non-Audit Fees Non-Audit Fees Non-Audit Fees Auditing
period		 Remarks
System
design		 Business
registration		 Human
resource		 Misc.
(Note
2)		 Subtotal
Crowe
Horwath
(TW)
CPAs		 Shu-Ma
n Tsai		 1,370
 0 0 0 25 25 Jan. 1, to
Jun. 30,
2016




 Letter of
Auditor's
Opinion
NT$25
thousand
Jen-Yao
Hsieh
Crowe
Horwath		 Ling-We
n Huang		 3,080 0 4 0 505 509 July 1 to
Dec. 31,

 Transfer
pricingreport

116

==> picture [500 x 167] intentionally omitted <==

----- Start of picture text -----

(TW) 2016 review
CPAs NT$400
thousand,
Letter of
Auditor's
Jen-Yao Opinion
Hsieh NT$55
thousand and
four major
statements
NT$50
thousand.
----- End of picture text -----

  • Note 1: Where this Company replaces the CPA or accounting firm, the auditing periods of the former and successor CPA or firm shall be annotated separately with the reason for replacement noted. The accounting and non-accounting fees paid to the former and successor CPA or firm shall also be disclosed.

  • Note 2: Non-audit fees shall be annotated separately in various service items. If the "Others" column in non-audit fees reaches 25% of the total non-audit fees, the service details should be listed in the "Remarks" column.

117

6. Information on Replacement of Certified Public Accountants

1. About the former accountants

Date of Replacement July1, 2016 July1, 2016 July1, 2016 July1, 2016 July1, 2016
Reason of replacement
and explanation		 The formerly appointed CPAs, Shu-Man Tsai and Jen-Yao Hsieh,
have served up to the five-year limit in the same company.
Therefore, the accounting firm took the initiative to replace the
CPAs. Since the third quarter of 2016, the CPAs for the financial
statements are changed to Ling-Wen Huang and Jen-Yao Hsieh,
CPAs.
Statement on whether
the authorizing party or
the accountant
terminate or reject the
authorization		 Contracting Parties
Situation
CPA		 The authorizing party

Voluntarily terminated
the authorization		 N/A N/A
Reject the (continuing)
authorization		 N/A N/A
The opinions and
reasons in the signed
and issued audit reports
which were not
"noreservations" in the
last twoyears		 N/A
Different opinions from
the issuer
Yes		 Accounting principles orpractices
Disclosure of financial report
Scope orprocedure of auditing
Others
None
Description: Not applicable

118

Other Disclosures (Matters that should be disclosed in accordance None with Item 1-4 to 1-7, Subparagraph 6, Article 10 of the Regulations)

(2)About the succeeding accountant

bout the succeeding accountant
Name of accountingfirm Crowe Horwath (TW) CPAs
Name of CPA Ling-Wen Huangand Jen-Yao Hsieh, CPAs
Date of Appointment July1, 2016
Opinion inquiry on the accounting
methods or
principles for certain transactions and
financial reporting and results
possible arise before appointment
N/A
Successor CPA to former CPA
Written views on disagreements		 N/A
  1. The former CPAs reply with regard to Items 1 & 2-3, Subparagraph 6, Article 10 of the

Regulations.

119

7. Has Any of the Company’s Chairman, General Manager, or Managers Responsible for Finance or Accounting Duties Served in an Accounting Firm of the CPA or Its Affiliated Company within the Last Fiscal Year: None.

8. Transfer or Pledge of Shares by the Company's Directors, Executive Officers and Stockholders with More than 10% of the Company's Shares:

  • (1) Transfer of shares and changes in equity pledge relating to the directors,

managers and primary shareholders:

Title Name 2016 2016 As of March 31 of the
current year		 As of March 31 of the
current year
Number of
Shares Held
Increase
(decrease)		 Increase
(decrease) in
equity pledges
Increase
(decrease)		 Number of
Shares Held
Increase
(decrease)
Increase
(decrease) in
equity pledges
Increase
(decrease)
Manager Hsien-Tung Liu － － (120,000) －
Manager Yung-Hsien Chen (36,000) － － －
Manager Yang-Cheng Lan 23,143 － － －
Manager Hung-Hai Shih (18,000) － (27,000) －
Manager Wen-Chao Huang 39,754 － － －
Manager Ming-Chi Tien (42,000) － (24,000) －
Manager Wen-Chung Tian － － 68,143 －
Major
Shareholder
Wei Chiao Investment
Development Co., Ltd		 － (8,301,000)
－		 (30,002,000)
Major
Shareholder
Yieh United Co., Ltd.		 － 229,000,000 － (40,000,000)
Shares held
in the
names of
other
persons		 Long Yuan Investment and
Development Co., Ltd.		 － 7,401,295 － －
Shares held
in the
names of
other
persons		 Rong Feng Investment and
Development Co., Ltd		 － 5,049,563 － －
Shares held
in the
names of
other
persons		 Chin Chun Investment and
Development Co., Ltd		 － 7,573,586 － －
Shares held
in the
names of
other
persons		 Chi Chang Enterprise Co., Ltd － 1,233,312 － －

120

Title Name 2016 2016 As of March 31 of the
current year		 As of March 31 of the
current year
Number of
Shares Held
Increase
(decrease)		 Increase
(decrease) in
equity pledges
Increase
(decrease)		 Number of
Shares Held
Increase
(decrease)
Increase
(decrease) in
equity pledges
Increase
(decrease)
Shares held
in the
names of
other
persons		 Chao Ying Investment
Development Co.,, Ltd.		 － 2,255,722 － －
Shares held
in the
names of
other
persons		 Chao Ying Investment
Development Co.,, Ltd.		 － 2,207,462 － －
Shares held
in the
names of
other
persons		 Li Hui Development Co., Ltd － 57,251,871
－		 (20,000,000)

Increase in the number of shares held by Yang-Cheng Lan, Huang Wen-Chao, and Tien Wen-Chung have been transferred in from the employee share trust

(2) Equity Transfer Information: Not applicable

(3) Equity pledge information: Not applicable

121

9. Information on the Top 10 Holders of the Company's Shares Who Are Identified as Related Parties, Spouse or Relative within Second-Degree of Kinship

Relationship information between 10 largest shareholders

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
(1) Yieh United Co., Ltd.
Representative: I. S. Lin		 271,278,350 15.79% - - 99,802,811 5.81% Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
Yieh United.

122

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
(2) Wei Chiao Investment
Development Co., Ltd
Representative: I. S. Lin		 184,727,822 10.75% - - - - Yieh United Co., Ltd.
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
Wei Chiao

123

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
(3) Li Hui Development Co., Ltd.
Representative: Huang-Tsai Ye		 71,362,871 4.15% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao
Hui
Investment
&
Development Co.,Ltd		 Its chairman is a
director of Li
Hui
Kuo Chiao Investment and
Development Co., Ltd		 -
(4) E-Da Hospital
Representative: I. S. Lin		 58,990,790 3.43% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.

124

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
E-Da Hospital
(5) Kuo Chiao Investment and
Development Co., Ltd
Representative: He-Hsing Lai		 55,557,334 3.23% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao
Hui
Investment
&
Development Co.,Ltd		 Its chairman is a
director of Kuo
chiao
Li Hui Development Co.,Ltd -
(6) Wei Hong Investment and
Development Co., Ltd.
Representative: I. S. Lin		 50,258,264 2.93% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.

125

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
Wei Hung
(7) Hsing-Long Investment and
Development Co., Ltd.
Representative: I. S. Lin		 43,481,169 2.53% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its directors is
the Chairman of
Hsing-Lung

126

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
(8) Lian Shuo Investment
Development Co., Ltd.
Representative: I. S. Lin		 41,654,740 2.42% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
Lian Shuo
(9) Chi Yi Investment Co., Ltd.
Representative: I. S. Lin		 37,896,055 2.21% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.

127

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its directors is
the Chairman of
Chi Yi
(10) Yao Hui Investment &
Development Co., Ltd
Representative: I. S. Lin		 37,528,093 2.18% - - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co.,Ltd.		 Chairman is the
same person.
Kuo Chiao Investment and
Development Co., Ltd
Li Hui Development Co., Ltd		 Its director is the
Chairman of
Yao Hui

128

Name (Note 1) Shares Held Personally
when elected		 Shares Held Personally
when elected		 Shares held
under spouse
or minor
children’s
names		 Shares held
under spouse
or minor
children’s
names		 Shares held in
others’ names		 Shares held in
others’ names		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Alias or name and relationship of the top 10
shareholders who are defined by the Statement
of Financial Accounting Standard No.6 to be
related persons or spouse and relatives within
the second-degree of kinshipNote 3		 Remark
Number of Shares Percentage of
Shares		 Number
of
Shares		 Percen
tage of
Shares		 Number of
Shares		 Percent
age of
Shares		 Name Relationship
(11) I. S. Lin 143,888 0.00% 47,117 - - - Yieh United Co., Ltd.
Wei Chiao Investment
Development Co., Ltd
E-Da Hospital
Wei Hong Investment and
Development Co., Ltd.
Hsing Lung Investment &
Development Co., Ltd
Lian Shuo Investment
Development Co., Ltd
Chi Yi Investment Co., Ltd.
Yao Hui Investment &
Development Co.,Ltd		 Chairman is the
same person.
(12) Huang-Tsai Ye 127 0.00% - - - - Li Hui Development Co., Ltd Chairman is the
same person.
(13) He-Hsing Lai 0 0.00% - - - - Kuo Chiao Investment and
Development Co., Ltd		 Chairman is the
sameperson.

Note 1: Please separately identify the names of corporate shareholders and their respective representatives within substantial shareholders.

Note 2: the calculation of shareholding ratio should separately indicate percentage of shares held under the person’s own identity, under spouse, minor children, and others’ identities. Note 3: The relationships between the shareholders listed above, including legal persons and natural persons, shall be disclosed.

129

10. Information on the Number of Shares of the Company Invested by the Company, any of the Company’s Directors and Supervisors and Executive Officers or a Company Directly or Indirectly Controlled by the Company and Consolidated Percentage of Shareholding:

Consolidated Shareholding Percentage

Consolidated Shareholding Percentage Consolidated Shareholding Percentage Consolidated Shareholding Percentage Consolidated Shareholding Percentage Consolidated Shareholding Percentage Consolidated Shareholding Percentage
December 31, 2016
Unit: shares %
Investment
(Note)		 Investments by this Company Investments
of
Directors,
Supervisors,
Managers
and
directly or indirectly controlled
businesses


Comprehensive Investment
Number of
Shares		 Shareholding
Percentage		 Number of
Shares		 Shareholding
Percentage		 Number of
Shares
Shareholding
Percentage
Goodhonor Holdings Ltd. 46,400
100.00%
0
0.00%
46,400
100.00%
Yieh Phui (Hong Kong)
Holdings Limited		 233,500,000
100.00%
0
0.00%		 233,500,000
100.00%
WorthingHonor Holdings Ltd. 100,000
100.00%
0
0.00%
100,000
100.00%
Golden Developments
Holdings Ltd.		 100,000
100.00%
0
0.00%
100,000
100.00%
Shin Phui Steel Corporation 30,967,724
100.00%
0
0.00%		 30,967,724
100.00%
Shin YangSteel Co.,Ltd. 87,000,000
100.00%
0
0.00%		 87,000,000
100.00%
Sin Bang Investment &
Development Co.,Ltd.		 22,312,500
100.00%
0
0.00%		 22,312,500
100.00%
HsingJui Investment Limited 5,000
100.00%
0
0.00%
5,000
100.00%
Champion Logistic Inc.
(SAMOA)		 57,000,000
97.44%
1,500,000
2.56%		 58,500,000
100.00%
Chian Huan Technology Co.,
Ltd.		 2,392,192
86.99%
0
0.00%
2,392,192
86.99%
EMMT Systems Co.,Ltd. 28,650,599 77.54%
2,737,769		 7.41% 31,388,368
84.95%
Yieh HsingEnterprise Co.,Ltd. 355,646,587
56.39%
259,836
0.04%		 355,906,423
56.43%
Da Yao Engineering &
ConsultingCo.,Ltd.		 980,000
49.00%
19,900
1.00%
999,900
50.00%
E-United Japan Co.,Ltd. 470
47.00%
0
0.00%
470
47.00%
Kuo ChangEnterprise Co.,Ltd.
51,547,567
54.04%
0
0.00%		 51,547,567
54.04%
Lian Hui Development Co.,
Ltd.		 108,110,740
79.50%
0
0.00%		 108,110,740
79.50%
ChengHsingSecurityCo.,Ltd. 1,400,000
35.00%
400,000
10.00%
1,800,000
45.00%
Eliter International Corp. 283,583,868
32.84%
135,102,264
15.65%		 418,686,132
48.49%
Cheng Hsin Building
Management Consultancy Co.,
Ltd.		 319,998
32.00%
75,000
7.50%
394,998
39.50%
Synn Industrial Co.,Ltd. 45,975,000
30.00%
0
0.00%		 45,975,000
30.00%
Tycoons Steel International
Co.,Ltd.		 14,700,000
28.27%
20,300,000
39.04%		 35,000,000
67.31%
E-Da Development Co.,Ltd 186,865,605
28.44%
46,996,563
7.15%		 233,862,168
35.60%
Yieh Mao Industrial Co.,Ltd. 40,977,200
23.00%
5,500
0.00%		 40,982,700
23.00%
Asiazone Co.,Ltd. 15,090,000
32.80%
0
0.00%		 15,090,000
32.80%
E-Da Cultural and Creative
Co.,Ltd.		 3,800,000
19.00%
0
0.00%
3,800,000
19.00%
E-Da Tour Bus Co.,Ltd. 950,000
19.00%
0
0.00%
950,000
19.00%
E-Da Bus Co.,Ltd. 3,608,618
17.09%
0
0.00%
3,608,618
17.09%
Skylark Hot-Spring Resort Co.,
Ltd.		 1,170,000
14.63%
1,999,000
24.99%
3,169,000
39.61%

130

Investment
(Note)		 Investments by this Company Investments by this Company Investments
of
Directors,
Supervisors,
Managers
and
directly or indirectly controlled
businesses		 Investments
of
Directors,
Supervisors,
Managers
and
directly or indirectly controlled
businesses


Comprehensive Investment


Comprehensive Investment
Number of
Shares		 Shareholding
Percentage		 Number of
Shares		 Shareholding
Percentage		 Number of
Shares		 Shareholding
Percentage
TangEngIron Works Co., Ltd. 39,553,000
11.30%
70,000,000
20.00%		 109,553,000
31.30%
Hong Yuh Assets Management
Co.,Ltd.		 37,000,000
67.27%
0
0.00%		 37,000,000
67.27%
Lian So(HK)Co.,Ltd. 480,000
80.00%
0
0.00%
480,000
80.00%
E-Da Leisure Co.,Ltd. 7,410,000
19.00%
0
0.00%
7,410,000
19.00%
Li Hui Development Co.,Ltd 56,468,300
44.56%
0
0.00%		 56,468,300
44.56%
Chi ChangEnterprise Co.,Ltd 945,990
45.00%
0
0.00%
945,990
45.00%
Yieh United Co.,Ltd. 609,802,515
24.39%
131,519,772
5.26%		 741,322,287
29.65%
E-Da Visual Effects Co.,Ltd. 1,470,000
49.00%
0
0.00%
1,470,000
49.00%
Applied Wireless
Indentification Group,Inc.		 0.00%
40,488,461
91.47%		 40,488,461
91.47%
Yi Chun TechnologyCo.,Ltd. 0.00%
8,330,000
92.50%
8,330,000
92.50%
Awid Asia Co.,Ltd. 0.00%
3,030,000
100.00%
3,030,000
100.00%
Awid China Co., Ltd.
(Shanghai)		 0.00%
0
100.00%
0
100.00%
Awid China Co., Ltd.
(Changshu)		 0.00%
0
100.00%
0
100.00%
Yieh Phui (China)
Technomaterial Co.,Ltd		 0.00%
0
100.00%
0
100.00%
Changshu Changhui Trading
Co.,Ltd.		 0.00%
0
100.00%
0
100.00%
Tianjin Lianfa Precision Steel
Co.,Ltd		 0.00%
0
100.00%
0
100.00%
Yi Hua International Co.,Ltd 0.00%
420,000
70.00%
420,000
70.00%
PT. E-United Ferro Indonesia
(EFI)		 0.00%
24,195,000
100.00%		 24,195,000
100.00%
PT. Yieh Ferro Indonesia(YFI) 0.00%
500,000
100.00%
500,000
100.00%
Chao Ying Investment
Development Co.,,Ltd.		 0.00%
30,400,000
100.00%		 30,400,000
100.00%
Zhen Hua International Co.,
Ltd.		 0.00%
215,000,000
100.00%		 215,000,000
100.00%
Great Emperor Hotel CO.,
LTD.		 0.00%
210,000,000
100.00%		 210,000,000
100.00%
Guang Lian Steel
(Vietnam)Co.,Ltd.		 0.00%
43,900,000
100.00%		 43,900,000
100.00%

Note: The equity method was employed for this Company’s long-term investments.

131

IV. Funding Status

1. Capital and Shares (1) Source of Share Capital

Unit: NT$1,000

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year and
month		 Issued
Price		 Authorized Capital Paid-in capital Remark
Number of
Shares		 Amount Number of
Shares		 Amount Sources of capital Settlement of
payment for
shares
with assets
other than
cash		 Others
1995.05 10 600,000
6,000,000
339,422
3,394,220		 Recapitalization
of Retained
Earnings
950,227		 None May 10, 1995 TDDC (1) No. 27765
1996.04 10 600,000
6,000,000
424,278
4,242,780		 Recapitalization
of Retained
Earnings
848,556		 None Mar. 3, 1996 TDDC (1) No. 21718
1997.01 10 600,000
6,000,000
484,278
4,842,780
Cash Capital
Increase
600,000		 None Oct. 22, 1996 TDDC (1) No. 59340
1997.06 10 600,000
6,000,000
508,492
5,084,920		 Recapitalization
of Retained
Earnings
242,139		 None May 30, 1997 TDDC (1) No. 43183
1998.06 10 750,000
7,500,000
584,766
5,847,660		 Recapitalization
of Retained
Earnings
762,738		 None Apr. 30, 1998 TDDC (1) No. 35445
1999.09 10 750,000
7,500,000
672,481
6,724,810		 Recapitalization
of Retained
Earnings
877,149		 None Aug. 10, 1999 TDDC (1) No. 73628
1999.11 10 750,000
7,500,000
747,481
7,474,810
Cash Capital
Increase
750,000		 None Nov. 11, 1999 TDDC (1) No. 87166
2000.06 10 1,000,000
10,000,000
837,178
8,371,780		 Recapitalization
of Retained
Earnings
896,977		 None Jun.. 21, 2000 TDDC (1) No. 53713
2001.02 10 1,000,000
10,000,000
797,178
7,971,780
and Capital
Reduction
(write-off treasury
shares)
400,000		 None Nov.14, 2000 TDCC (1) No. 85102
Nov.29, 2000 TDCC (1) No. 97250
Jan. 17, 2001 TDCC No. 102095
Feb. 08, 2001 TDCC (3) No.
107419
2001.10 10 1,000,000
10,000,000
829,065
8,290,659		 Recapitalization
of Retained
Earnings
318,871		 None Jul. 14, 2001 TDCC (1) No. 144750
2001.12 10 1,000,000
10,000,000
809,065
8,090,660
and Capital
Reduction
(write-off treasury
shares)
200,000		 None Sep. 5, 2001 TDCC (3) No. 156354
2003.09 10 1,250.000 12,500,000 922,335 9,223,352 Recapitalization
of Retained
Earnings
1,132,692		 None Aug., 12, 2003 TDCC (1) No.
0920136291
2003.12 10 1,250,000 12,500,000 994.605 9.946.051 Domestic
Corporate Bonds
Conversion
722,699		 None Jan. 20, 2004 MOEA No.
09301010420
2004.03 10 1,250,000 12,500,000 1,034,618 10,346,181 Domestic
Corporate Bonds
Conversion
400,130		 None Apr. 21, 2004 MOEA No.
09301068070
2004.09 10 1,250,000 12,500,000 1,074,722 10,747,216 Domestic and
overseas
Convertible bonds
401,035		 None Nov 10, 2004 MOEA No.
09301213380

132

Year and
month		 Issued
Price		 Authorized Capital Authorized Capital Paid-in capital Paid-in capital Remark Remark Remark
Number of
Shares		 Amount Number of
Shares		 Amount Sources of capital Settlement of
payment for
shares
with assets
other than
cash		 Others
2004.12 10 1,250,000 12,500,000 1,095,303 10,953,026 Domestic and
overseas
Corporate bond
conversion
205,811		 None Feb.24, 2005 MOEA No.
09401031080
2005.03 10 1,320,000 13,200,000 1,195,303 11,953,026 Cash Capital
Increase
1,000,000		 None Mar.28, 2005 MOEA No.
09401048940
2005.03 10 1,320,000 13,200,000 1,196,258 11,962,580 Domestic and
overseas
Corporate bond
conversion
9,553		 None Apr.26, 2005 MOEA No.
09401072640
2005.08 10 1,520,000 15,200,000 1,256,071 12,560,709 Recapitalization of
Retained Earnings
598,129
None		 Sep.19, 2005 MOEA No.
09401176700
2005.08 10 1,520,000 15,200,000 1,260,930 12,609,299 Consolidated
capital increase
48,590		 None Sep.30, 2005 MOEA No.
09401184830
2006.10 10 2,000,000 20,000,000 1,349,195 13,491,950 Recapitalization of
Retained Earnings
882,651
None		 Oct.25, 2006 MOEA No.
09501235990
2007.09 10 2,000,000 20,000,000 1,389,671 13,896,708 Recapitalization of
Retained Earnings
404,758
None		 Oct.16, 2007 MOEA No.
09601251540
2008.10 10 2,000,000 20,000,000 1,459,154 14,591,543 Recapitalization of
Retained Earnings
69,483
None		 Oct.21, 2008 MOEA No.
09701268630
2009.03 10 2,000,000 20,000,000 1,411,863 14,118,633 and Capital
Reduction
(write-off treasury
shares)
47,291		 None Mar.27, 2009 MOEA No.
09801060200
2009.09 10 2,000,000 20,000,000 1,454,219 14,542,192 Recapitalization of
Retained Earnings
42,356
None		 Sep.22, 2009 MOEA No.
09801218880
2010.10 10 2,000,000 20,000,000 1,526,930 15,269,302 Recapitalization of
Retained Earnings
72,711
None		 Oct.05, 2010 MOEA No.
09901224020
2011.10 10 2,000,000 20,000,000 1,603,276 16,032,767 Recapitalization of
Retained Earnings
76,346
None		 Oct.11, 2011 MOEA No.
10001229410
2012.10 10 2,000,000 20,000,000 1,635,342 16,353,422 Recapitalization of
Retained Earnings
32,065
None		 Oct.03, 2012 MOEA No.
10101203790
2014.09 10 2,000,000 20,000,000 1,668,049 16,680,491 Recapitalization of
Retained Earnings
32,707
None		 Sep. 12, 2014 MOEA No.
10301190130
2015.09 10 2,000,000 20,000,000 1,718,090 17,180,905 Recapitalization of
Retained Earnings
50,041
None		 Sep.21, 2015 MOEA No.
10401195830

Note 1: The annual data shall be updated as of the publication date of this annual report. Note 2: The effective (approval) date together with the doc. No. should be added for any capital increase. Note 3: Those that issue the stock below the par value shall indicate so in a clear manner.

Note 4: Provide information on those who pledged currency debts, technology or business reputation in exchange for shares, including the type and amount of the pledges.

Note 5: Indicate shareholders invested in the Company through private funding with highlights.

133

Unit: shares

Unit: shares
Shares
Category		 Authorized Capital Remark
Outstanding Shares
(Note)		 Unissued Shares Total
Registered
Shares		 1,718,090,576 281,909,424 2,000,000,000 Shares of
publicly-listed
company

Information on the shelf registration system

Unit: NT1,000

Types
of
securiti
es		 Amount of scheduled
issuance		 Amount of scheduled
issuance		 Amount issued Amount issued The purpose and
expected benefits of
the issued shares		 Unissued shares
Scheduled time of
issuance		 Remarks
Total
number of
shares
Approved
amount		 Number
of Shares
Price
N/A

(2) Structure of Shareholders:

Shareholder Structure

Shareholder Structure Shareholder Structure Shareholder Structure Shareholder Structure Shareholder Structure
April 24,2017
Shareholder
Structure
Quantity

Government
Agencies		 Financial
Institutions		 Other Legal
Persons		 Natural
Persons		 Foreign
company or
individual		 Total
Number of
Individuals		 1
4
102		 73,401
162
73,670
Shares Held 89
6,426,423
1,030,424,923		 496,443,675 184,795,466
1,718,090,576
Shareholding
percentage		 0.00%
0.37%
59.97%		 28.90%
10.76%
100.00%
ShareholdingbyChinese Investors: 0%
  • Note: Companies primarily listed on TWSE and Taipei Exchange shall disclose the proportion of its shares held by investors from mainland China. Investors from mainland China refers to natural persons, legal persons, organizations, institutions or companies in areas other than Taiwan and mainland China invested by persons of such identity as defined in Article 3 of the Regulations Governing Investment of Mainland Chinese in Taiwan.

134

(3) Conditions of Share Distribution

Status of Stock dispersion

April 24,2017 April 24,2017 April 24,2017 April 24,2017
Shareholding range Number of
shareholders		 Shares held Shareholding
percentage
1 to 999 38,694
7,533,628
0.44%
1,000 to 5,000 20,051
45,521,511
2.65%
5,001 to 10,000 6,114
43,428,482
2.53%
10,001 to 15,000 3,132
39,109,204
2.28%
15,001 to 20,000 1,238
21,966,450
1.28%
20,001 to 30,000 1,595
39,751,318
2.31%
30,001 to 50,000 1,160
45,207,387
2.63%
50,001 to 100,000 908
63,134,983
3.67%
100,001 to 200,000 387
53,369,256
3.11%
200,001 to 400,000 195
54,406,562
3.17%
400,001 to 600,000 66
32,435,312
1.89%
600,001 to 800,000 27
18,435,875
1.07%
800,001 to 1,000,000 11
9,735,238
0.57%
1,000,001 and more
Create new ranges as needed		 92
1,244,055,370
72.40%
Total 73,670
1,718,090,576
100%

Special shares

Per share face value NT$

April 24, 2017

Shareholder Ownership (Unit:
share)		 Number of
Shareholders		 Number of
Shares Held		 Shareholding
percentage
Create new ranges as needed N/A
Total

(4) List of Major Shareholders:

List of Major Shareholders

Share
Name of Substantial Shareholders		 s

Shares Held		 Shareholding percentage
Yieh United Co., Ltd. 271,278,350 15.79%

135

Wei Chiao Investment
Development Co.,Ltd		 184,727,822 10.75%
Li Hui Development Co.,Ltd 71,362,871 4.15%
E-Da Hospital 58,990,790 3.43%
Kuo Chiao Investment and
Development Co.,Ltd		 55,557,334 3.23%
Wei Hong Investment and
Development Co.,Ltd.		 50,258,264 2.93%
Hsing Lung Investment &
Development Co.,Ltd		 43,481,169 2.53%
Lian Shuo Investment
Development Co.,Ltd		 41,654,740 2.42%
Chi Yi Investment Co.,Ltd. 37,896,055 2.21%
Yao Hui Investment &
Development Co.,Ltd		 37,528,093 2.18%

(5) Fair Market Value, Net Worth, Profit, Dividend per Share and Other Relevant Information for the Most Recent Two Years: Market Value Per Share, Net Values, Earnings and Dividends

Item Year
2015		 2016 From the
beginning of the
year to
March 31, 2017
(Note 8)
Price
Market Price
(Note 1)		 Max 9.8 13.3 15.1
Min 6.6 7 11.1
Average 8.41 9.25 13.73
Net value per
share (Note
2)
Before issuance		 15.06 16.03 -
After issuance 15.06 14.74 -
Earning per
share		 Weighted Average Shares 1,718,090,000
shares		 1,718,090,000
shares		 1,718,090,000
shares
Earnings per share (note 3) -0.56 1.46 0.51
Price Cash dividend 0 0.4 -

136

(DPS) Stock
Dividends		 Dividends
from Retained
Earnings
0		 0.6 -
Capital Surplus
Distribution
-		 - -
Accumulated dividend not
paid out (note 4)
-		 - -
Return on
Investment		 Price-earnings ratio (note
5)
-15.02		 6.34 -
Price-dividend ratio (note
6)
N/A		 23.13 -
Yield on cash dividend
(note 7)
N/A		 0.04 -

  • *If any revenue or capital surplus is transferred to capital increase or common stock, further disclose

  • information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.

  • Note 1: List the highest and lowest market price of the common shares for each year, and refer to the transaction value and transaction volume to calculate average market price for each year.

  • Note 2: this should be filled by using the shares already issued by year-end as a basis, and also by referencing the allocation that the shareholders meeting has decided on for the subsequent year.

  • Note 3: if there are any retroactive adjustments needed due to stock grants, Earnings per share before and after the adjustment should be listed.

  • Note 4: If there are any conditions in issuing equity securities that allow for unpaid out dividend for the year to be accumulated to subsequent years in which there is profit, the Company should separately disclose the accumulated unpaid out dividend up to that year.

  • Note 5: P/E Ratio = Average closing price for each share for the year/earnings per share

  • Note 6: P/D Ratio = Average closing price for each share for the year/cash dividend per share

  • Note 7: Cash dividend yield = cash dividend per share/average closing price per share for the year

  • Note 8: for net worth per share and net earnings per share, data from the latest quarter that has been verified

  • by a CPA up until the date of publication of the Annual Report should be filled. For all other columns, the Company should fill the year’s information until the date of publication of the Annual Report.

(6) Company Dividend Policy and Implementations:

1. Dividend Policy in the Company’s Articles of Incorporation:

Article 31: The retained earning derived from the final accounting is distributed according to the following principles:

  • A. Dividend Policy:

The life cycle of the Company's industry is in the mature period. The dividend policy is in line with the current and future development plans, taking into account the investment environment, demand for capital, domestic and foreign competitions and shareholder benefits. Each year, no less than the retained

137

earning is distributed to the shareholders as dividends. However, when the accumulated distributable earning is less than 20% of the paid-in capital, dividends will not be allotted.

  • B. Conditions and timing of distribution:

In addition to the portions allotted for taxes and deficit compensation, 10% of the remaining retained earning shall be allotted for the statutory reserve and then appropriate or reverse the special reserve before adding the accumulated distributable earnings. The Board of Directors shall make a plan for distribution of the earnings and forward the plan to the Shareholders’ Meeting for approval.

  • C. Type of Dividend:

  • Evaluate the demand for capital taking into consideration the expansion plan and profitability. In principle, distribute stock dividends to retain the required capital. Estimated cash dividends based on profitability. The ratio shall be 20 to 100% and stock dividends may be from 0 to 80%.

  • D. Distribution of dividends depends on the operation results. The Board of Directors plans distribution of dividends and forwards the plan to the Shareholders’ Meeting for final decision.

  • Dividend distribution plan to be forwarded to this year's Shareholders’

Meeting:

The 2016 distribution of retained earning is shown in the table below: Yieh Phui Enterprise Co., Ltd.

PROFIT DISTRIBUTION TABLE

2016

Unit: NT$1,000

Item Amount

Beginning retained earning 608,641,931 Minus: Remeasurement of defined benefit plans in retained earnings (76,845,020) Minus: the changes in associated companies and joint ventures recognized by the equity method (11,647,538) Minus: the Changes in equity ownership of subsidiaries (11,205,942) Plus: current net income after tax 2,502,004,855 Minus: statutory reserve (250,200,486) Earnings available for distribution 2,760,747,800 Minus: Distribution of Shareholder Dividends (1,718,090,580) Ending retained earning 1,042,657,220

138

(7) Effect upon Business Performance and Earnings per Share of any Stock Dividend Distribution Proposed or Adopted at the Most Recent Shareholders’ Meeting:

Unit: NT$1,000 (earnings per share - NT$)

Year
Item		 Year
Item		 Year
Item
2017 (Note 1)
(Estimated)
Beginning paid-in capital 17,180,905
Distribution of
dividends this year		 Cash dividendper share 0.4
Surplus to capital increase stock dividendper share 0.6
Capital reserve to capital increase stock dividend per
share
-
Changes in
Operating
Performance		 OperatingProfit Not applicable
(Note 2)
Ratio of increase (decrease) in operating profit over the
sameperiod lastyear
Net income after tax
Ratio of increase (decrease) in NIAT over the same
period lastyear
Earning per share
Ratio of increase (decrease) in EPS over the same
period lastyear
Annual average return on investment (reciprocal of
average annual interest rate)
Pro forma earnings
per share and P/E
ratio		 If the surplus to capital
increase is realized through
cash dividend		 Pro forma per share
earning		 Not applicable
(Note 2)
Pro forma average annual
return on investment
If capital reserve to capital
increase is not implemented		 Pro forma per share
earning
Pro forma average annual
return on investment
If the capital reserve is not
paid and the surplus to
capital increase is paid
through cash dividend		 Pro forma per share
earning
Pro forma average annual
return on investment

Note 1: To be approved by the 2017 Shareholders' Meeting.

Note 2: According to the Regulations Governing the Publication of Financial Forecasts of Public Companies, the Company is not required to disclose financial projections for 2017.

(8) Employee Bonuses and Compensation for Directors:

  1. The number or range of compensation of employees and Directors as stated in the Company’s Articles of Association:

  2. Article 30-1 of the Articles of Association of the Company provides the following: If the the Company makes a profit in the year (the so-called profit refers to the before tax profit before deducting compensation of employees and directors/supervisors), more than 0.2% shall be allotted for employees’ compensation and 0.1% or less for compensation of the directors and supervisors. But the Company shall reserve a portion of profit to make up for accumulated losses, if any.

139

  1. Accounting basis for discrepancies between the estimated and actual distributed amount of compensation in the form of shares to the Compny’s employees, directors and supervisors in this period. .

    • A. Estimation Basis: When the profit gained in this year is at the same level of the previous year, use the distribution structure for estimation of this year's distribution.

    • B. Calculation basis for compensation paid with shares: the Company pays compensation of employees, directors and supervisors in cash, never with stock dividends.

    • C. Accounting practice when the amount of actual distribution is different from the estimated amount: If there is a difference between the actual distributed amount and the estimated amount, the difference shall be adjusted in the month recognized by the shareholders' meeting. The company shall pay the compensation of employees, directors and supervisors in the amount recognized by the shareholders’ meeting.

  2. Information on approval by the Board of Directors of distribution of compensation: (1). Compensation of employees, directors and supervisors in the forms of cash or shares. If differences are found in the estimated expenses in the year, the difference, cause and reconciliation of the difference shall be disclosed:

Unit: NTD

Estimated
amount for
2016		 Mar. 21,
2017 The
board of
directors
approved the
amount.		 Differences causes Status
Employee
Compensation		 6,043,632 6,043,632 0 None None
Directors'
compensation		 3,021,816 1,510,908 1,510,908 The board
passed a
resolution to
distribute
0.05%.		 The
difference
was
adjusted in
March
2017.

  • (2). The percentage of employee compensation paid in shares to the NIAT of individual company or financial reporting entity and total of employee compensation

  • Not applicable.

  • 4.Actual distribution of compensation to employees, directors and supervisors in the previous year (including number of shares, total and per-share price) and the difference to the estimated amount, stating the amount of difference, cause and reconciliation.

In 2015, the Company made a loss, so compensation to employees, directors and supervisors are not allotted.

140

Estimated
amount for
2015		 Jun. 22, 2016
The
Shareholders'
Meeting
recognized the
amount.		 Amount of
actual
payment		 Difference
between
estimate and
actual
payment		 causes Status
Employee
compensation
in cash		 0 0 0 1,688,309 The estimated
amount for
2014 was
NT$0.4 per
share, but the
resolution of
Shareholders
Meeting
decided on
NT$0.5 per
share.		 The
difference
has been
adjusted in
the costs of
2015 at the
June 18,
2015
Shareholders'
Meeting.
Employee
compensation
in cash		 0 0 0 _
Directors'
compensation		 0 0 0 337,662
  • (9) Repurchase of shares by the Company: The Company has not implemented repurchase of the Company's shares in the most recent year up to the publication date of this annual report.

2. Issuance of Corporate Bonds: The Company has not issued any corporate bonds in the most recent year up to the publication date of this annual report.

3. Issuance of Preferred Shares: The Company has not issued any preferred shares in the most recent year up to the publication date of this annual report.

4. Issuance of Overseas Depository Receipts: The Company has not issued any depository receipts in the most recent year up to the publication date of this annual report.

5. Issuance of Employee Stock Options: None.

6. Issuance of New Shares in Connection with Mergers and Acquisitions: None.

7. Implementation of the Capital Utilization Plan: None

141

V. Operational Highlights

1. Business Content:

(1) Scope of Business:

  1. Company's consolidated business scope:

Horticulture Basic Industrial Chemical Manufacturing Other Non-metallic Mineral Products Manufacturing Iron and Steel Refining Iron and Steel Rolls over Extends and Crowding Iron and Steel Casting Iron and Steel Rolling, Drawing, and Extruding Steel Wires and Cables Manufacturing Metal Architectural Components Manufacturing Metal line Products Manufacturing Other Fabricated Metal Products Manufacturing Not Elsewhere Classified Metal Surface Treating Machinery and Equipment Manufacturing Other Machinery Manufacturing Not Elsewhere Classified Electronic Parts and Components Manufacturing Automobiles and Parts Manufacturing Motor Vehicles and Parts Manufacturing Wholesale of Flowers Wholesale of Ironware Wholesale of Building Materials Wholesale of Machinery Wholesale of Motor Vehicle Parts and Supplies Other Wholesale Trade Retail sale of Flowers Retail Sale of Ironware Retail Sale of Building Materials Retail Sale of Machinery and Equipment Retail Sale of Motor Vehicle Parts and Supplies Retail Sale of Other Retail Trade Not Elsewhere Classified International Trade Steel Construction Residence and Buildings Lease Construction and Development Specialized Field Construction and Development New County and Community Construction and Investment Real Estate Commerce Real Estate Rental and Leasing Rental and Leasing Business Wired Communication Equipment and Apparatus Manufacturing Telecommunication Equipment and Apparatus Manufacturing Computer and peripheral equipment manufacturing industry

142

Parts Manufacturing Precision Instruments Manufacturing Medical Materials and Equipment Manufacturing Electric Appliance Installation Apparatus Installation Construction International Trade Software Design Services Electric Appliance and Audiovisual Electric Products Repair Shops Electrical Machinery, Avionics and Supplies Manufacturing Energy technology service Industry Surface treatment, manufacturing, processing, wholesale, retail, domestic sale and export of stainless steel wire material, carbon steel wire material, free-cutting steel wire material, alloy steel wire material, rolling door material, steel pipe, stainless steel pipe, mechanical parts, steel strip, steel strip, can, alloy steel and stainless steel.

Processing, manufacturing, trade, domestic sale and export of various types of parts and hardware for scooter and bicycles.

Delegate construction companies in building public housing, lease and sale of commercial building.

Design, processing and sale of iron plate and composite steel frame.

Design, processing, manufacturing and sale of mechanical frame.

Processing, manufacturing and sale of galvanized iron plate, coated iron plate and cold pressed steel plate.

Processing, manufacturing, domestic sale and export of rolled steel, steel, structural steel, steel wire, iron strip and iron wire.

Operation of farm, livestock farm.

Manufacture, processing, trade and import and export of various types of paper pulp, paper and their raw materials.

Design, manufacture, installation and maintenance of machinery and equipment for steel mill, power plant, petrochemical plant, incineration plant and water treatment plant, including piping, pipe support, ventilation equipment, flue pipe, dust collector, fire extinguishing system, pressure vessel, furnace, annealing tank, heating furnace, conveyer and crane.

All business items that are not prohibited or restricted by the law, except those that are subject to special approval.

2. Proportion of consolidated businesses

Mainproducts Amount Ratio %
Pickled steel coil 8,069 0.02
Rolled steel coil 690,977 1.31
Galvanized steel coil 21,249,730 40.21
Coated steel coil 16,375,340 30.99
Steelpipe 1,854,340 3.51
Wire 6,859,675 12.98
Construction revenue 835,237 1.58
Electronicproducts 738,386 1.40
Others 4,235,656 8.00
Total revenue 52,847,410 100.00

143

  1. The Company's current consolidated product items include: manufacturing, processing, and trade of pickled steel coil, cold-rolled steel coil, (aluminum) zinc plated steel coil, coated steel coil, steel coil products, mechanical parts, piping engineering design, stainless steel wire, carbon steel wire, alloy steel wire and free-cutting steel wire, steel bar and straight bar, OEM/ODM, RFID products, walkie-talkie, smart monitoring system for LED street light.

4. Consolidated planned new product development:

Item Goals
1. Anti-bacteria and
fingerprint-resistant
plated steel product		 Develops low-temperature anti-bacteria and fingerprint-
resistant plated steel product so that product is equipped
with self-cleaning and anti-bacterial features, able to
reduce contact between human body and bacteria, and
improve operating environment. The product is
applicable for fluepipe and floor deck.
2. HSLA steel products Develops high-strength low-alloy (HSLA) galvanized
steel plate, reduces carbon content to avoid decrease in
weldability. The product is applicable for automotive
structuralparts. .
3. Cold-Rolled Products of
SEDDQ grade		 Develops SEDDQ cold-rolled steel plate for extra deep
drawing, increases products' added value. The product is
applicable for automotivepanel.
4. Phosphorus-added
high-strength IF
cold-rolled steel		 Develops Phosphorus-added high-strength IF cold-rolled
steel, increases products' added value, product
diversification and satisfies customers' special
requirements. The product is applicable for automotive
panel.
5. Bake hardening
cold-rolled steel products		 Develops bake hardening cold-rolled steel products,
increases products' added value and product
diversification, and satisfies customers' special
requirements. The product is applicable for automotive
panel.
6. Duplex steel cold-rolled
steel products		 Develops duplex cold-rolled steels products, increases
products' added value and product diversification, and
satisfies customers' special requirements. The product is
applicable for automotive structuralparts.
7. Aluminized steel
products		 Develops aluminized steel products, increases products'
added value and product diversification, and satisfies
customers' special requirements. The product is
applicable for automotiveparts.
8. Tank with high precision
cutting fluid filtration
function		 Develops tank with high precision cutting fluid filtration
function, to extend cutting fluid's recycling useful life,
thus reducingcost. Applicable for rollgrindingmachines.
9. Welding wheel with
self-cleaning and
self-cooling functions		 Develops welding wheel with self-cleaning and
self-cooling function, increases efficiency of the welding
machine and success rate of welding. Applicable for
galvanized wire.
10. Self-lubricating steel
products		 Develops fingerprint resistant plated steel product with
self-lubricating function, increasing product's processing
and forming performance.

144

Item Goals
11. HSLA Cold-Rolled
Products		 Develops high-strength low-alloy (HSLA) cold-rolled
steel plate, reduces steel plate's carbon content to avoid
drop in weldability. The product is applicable for
automotive structuralparts.
12. High corrosion resistant
zinc-aluminum coated steel
products		 To cater to the requirements of materials for ABB
electrical box, develops high corrosion-resistant
zinc-aluminum coated steel products under salt spray
testing.
13. Cut and corrosion
resistant PVDF color
coated steel products		 Develops cut and corrosion resistant PVDF color coated
steel products, satisfying customer's special requirements.
The product is applicable for engineering work in harsh
environment.
14. Strip simulated
annealing test
equipment		 Self-develops test equipment for use in simulated
annealing, to reduce input and loss during online testing.
15. Portable metallographic
testing method		 Research and develop simple and fast metallographic
detection methods, to be used in fast metallographic
detection for advanced car steel (duplex steel, TRIP steel)
manufactured
16. Pickling
communication disk
temperature control
system		 Real-time monitoring of environmental temperature of
electrical control room, prevent protective power outage
due to overheating.
17. A type of new back roll
development		 Change back roll forming in existing rolling mill to
prevent slanted steelplate
18. A type of equipment
with highly efficient
HCLgas absorption		 Use in ARP HCL recovery and reuse, to reduce loss of
materials and environmental pollution
19. A type of new air knife
system that reduces
over galvanization at
the edge		 Use to improve coated products' thick edge problem
20. A type of highly
efficient online testing
for surface defects		 Use in PLTCM for fast online examination of detect
resistance on the surface, to avoid defects from entering
the rollingmill resultingin breakage
21. Galvanized products for
steel-plastic composite
plate
Surface and forming quality are emphasized in the
development of this product. It is currently used in China
and North America container body market. It has high
tensile strength, is convenient and light weight, and has
added values such as economical value, safety,
energy-savingand environmentallyfriendly.
22. High weather resistance
and self-cleaning coated
steel plate		 Develop new type of self-cleaning coated steel plate,
with hydrophilic additives added to the coating material,
giving the product surface excellent self-cleaning and
stain resistant characteristics. It is applicable for outdoor
buildingmaterials of high added value.
23. Cold-rolled
transformation induced
plasticity steel products		 Develops cold-rolled transformation induced plasticity
steel products, increases products' added value, product
diversification and satisfies customers' special
requirements. The product is applicable for automotive
structuralparts.

145

Item Goals
24. Cold-rolled products
for flux cored wire		 Develops cold-rolled products for flux cored wire,
increases products' added value, product diversification
and satisfies customers' special requirements.
25. Cold-rolled products
for Bundy tube		 Develops cold-rolled products for Bundy tube, increases
products' added value, product diversification and
satisfies customers' special requirements, applicable for
refrigerator.
26. Cold-rolled products
for rice cooker		 Develops cold-rolled products for rice cooker, increases
products' added value, product diversification and
satisfies customers' special requirements.

(2) Industry Overview:

  1. Current state and development of the industry

Iron and steel industry is a high capital and high tech-intensive industry. However, industrial development relies on the support of industrial mining, electrical machinery, civil engineering, transportation and information industry, and cooperation of downstream industries. It is the head of a country's industry, creating many job opportunities from upstream to mid and downstream industries, as well as in the related industries. It generates huge annual production value, a significant contribution to the economic growth rate, hence has a deep influence on domestic economy. Therefore, reviving iron and steel industry facilitates industrial structure improvement and enhances overall economic development.

If upstream steel mills are able to supply low cost and competitive raw materials to mid and downstream companies, and let midstream and downstream companies to turn to processing, export or for domestic sale, it will effectively increase the performance of processing and export, enhance the growth of gross domestic product (GDP). In addition, if upstream steel mills are able to further provide mid and downstream companies with in-depth processing, creating raw materials with higher added values, it would be able to bring out the effect of upstream, midstream and downstream supply chain integration. The industry's foundation will then continue to expand, and midstream and downstream companies will be able to better obtain industrial upgrade opportunities, create cluster effect, increase investment proportion in Taiwan, and create more job opportunities.

  1. Relationship between upstream, mid-stream and downstream companies:

From the production history of iron and steel advanced countries, plated steel has the effect of replacing hot-rolled and cold-rolled steel. The rapid growth of the demand can be seen from the continued demand growth of global plated steel materials in recent years. Also, plated steel materials such as galvanized and coated steel plate are equipped with features such as excellent corrosion resistance, easy processing, nice exterior, long useful life, low maintenance cost, recyclable and reusable, and are able to replace wood, etc. With global climate anomalies and increase in environmental protection awareness in recent years, it has become an ideal and environment-friendly material for infrastructure.

Yieh Phui is in the midstream of domestic iron and steel industrial chain, and one of the plating and coating plants. It is also the biggest domestic customer of its upstream hot-rolled coiled steel raw materials supplier, CSC Group. Hence, CSC need not worry about its raw materials sales, as the Company continues to procure large quantity of domestic raw materials, contributing to the stable sell through rate of domestic hot

146

rolling raw materials.

The Company is a professional manufacturer of plated steel materials such as galvanized products, coated steel coil, etc. Before the 1990s, the supply of domestic plated steel material was less than demand, and had to rely on import to satisfy the gap after the significant increase in consumption. As such, the Company strived to replace imports with self-manufactured products. Besides attaining the goal of replacing imports with domestic products, it also relieves downstream processing companies of the inconvenience of delay in delivery date, unstable quality, tying down of funds, exchange rate risk, etc., that arise due to import. It directly increases operating efficiency and improves international competitiveness.

3. Product competitiveness and development trend:

In recent years, global plated steel material consumption continues to see a stable growth, leading to continued increase in production capacity. Influenced by globalization trend, the change of market share accelerated. Adapting to the change and adjusting the operating strategies to adapt to the global market pose a challenge. In terms of Free Trade Agreement (FTA), Taiwan is relatively weaker than other competing countries, resulting in decrease in export competitiveness due to difference in tariff. Improvement in the short run is not expected.

However, the Company will strive to maintain flexible operation, and continue to enhance our product categories, dimension combination, equipment capacity, etc. which are more superior to our peers'. We will also expand our marketing channels, providing customers with more comprehensive services and feedback on raw materials purchase. Besides actively increasing product quality and image, we will also actively develop new products, to realize the blue ocean strategy, exceed our competitors, and conform to environmental protection trend. Our product specifications are geared towards environmentally friendly green products, in the aim to increase operating performance.

(3) Overview of Technology and R&D:

  1. Consolidated research and development expenses invested in last fiscal year, up to the date of printing of this annual report:

NT$189,425 thousand in 2016 and NT$49,076 thousand from January to March 2017

2. Consolidated products successfully researched and developed

Item Date of
development		 Results
55% aluminum-zine
coated steel plate for
air-conditioner
compressor case		 February 2015 Replaced the more expensive traditional way of
molding and assembling the galvanized steel plate,
followed by coating, and successfully used for
manufacturing of products of major brands in Japan
and Taiwan.
Hot protective film for
coated steel plate		 July 2015 Self-developed hot protective film machine to paste
hot protective film continuously on coated steel plate.
Besides able to protect high quality coated steel plate
from damage during transportation, processing and
installation, the protective film can be easily removed
after formingandprocessing.
Environmentally
friendly SGLC product		 February 2016 Successfully developed SGLC products (thickness
0.2mm - 0.3mm) of good flatness, and with substrate

147

Item Date of
development		 Results
development care and
mobile device		 content and process adjustment, is applicable for
electronic and electrical products for shallow drawn
forming and welding, to meet the requirements of
lightweight and low cost.
Environmentally
friendly HSLA
galvanized steel plate		 November
2016		 Successfully developed HSLA galvanized products
steel plate with thickness of more than 2.0 mm and
tensile strength of 410 MPa and 480 MPa, applicable
for high processing and welding in motorcars and
station wagon. This product complies with the
requirements of European Union's RoHS and
automotive instructions.
Oil field RFID antenna February 2015 Oil drilling equipment RFID UHF loop antenna can be
used for reading the RFID tag pasted on the oil field
drill pipe. It has the characteristics of high temperature
resistance, waterproof, dust-proof and
explosion-proof.
Applicable for high-speed, mobile RFID tags.
Smart faucet controller April 2015 Smart faucet controller that makes use of infra-red
sensor to trigger the stepper motor, which
automatically adjusts the faucet's water volume,
temperature and switch, suitable for equipment in
automated kitchen and bathroom.
1C009-01A constant
temperature diode		 June 2015 Installing 0.6W flexible heater on diodes, giving it a
stable feature, where the diodes can maintain a
constant temperature of 80 °C under environmental
temperature change.
KR0001 Japanese
Rainbow Reader + Lock
electronic lock module		 December
2015		 KR0001 combines Rainbow Reader / Rainbow Lock's
two-in-one control panel and e-cylinder drive panel.
Equipped with characteristics such as light, thin, short,
small and low cost. E-cylinder design that combines
with Japanese customers' excellent product exterior
and structural design, and received patents from
various countries, in becoming a competitive RFID
(NFC) access card module for gates of general
housingand condominiums.
Rolled steel product
with high formability		 December
2015		 Developed rolled plate equipped with bendable
without cracking characteristics, supply for
supermarket shelf manufacturers.
High anti-corrosive
fridge board		 December
2015		 Developed high anti-corrosive fridge board, increasing
the material's useful life, and making the product more
competitive.
Matt PVDF color coated
steel product		 December
2015		 Developed PVDF coated steel plate that does not
generate transfer marks, increasing product's corrosion
and weather resistance without affecting its aesthetics.
The product is applicable for construction, renovation
and home appliances.
Color coated steel
product with high
workability		 December
2015		 Developed color coated steel plate with forming, no
peeling, and crack-free properties, increasing the
products' workability. The product can be used in
construction,renovation and home appliances.

148

Item Date of
development		 Results
Tank with high precision
cutting fluid filtration
function
December
2015		 Developed tank with high precision cutting fluid
filtration function, to extend cutting fluid's recycling
useful life, thus reducing cost. Applicable for roller
grindingmachine.
HSLA cold-rolled
products		 November
2015		 Developed HSLA cold-rolled steel plate with a tensile
strength of 340MPa grade, applicable for automotive
structuralparts.
Cold-rolled products for
oil drums		 November
2015		 Developed cold-rolled products for oil drums,
increasing company products' added value, product
diversification and satisfying customers' special
requirements, applicable for oil drum body, bottom
and cover.
HSLA cold-rolled
products		 January 2016 Successfully developed HSLA cold-rolled steel plate
of 260MPa grade tensile strength, applicable for
automotive structuralparts.
HSLA plated product March 2016 Successfully developed HSLA cold-rolled plated steel
plate of 260MPa grade tensile strength, applicable for
automotive structuralparts.

(4) Short- and Long-Term Business Development Plans

1. Long-Term Business Development Plans:

Long-term business development direction is the fundamentals of continuing to develop niche products and niche market. The Company flexibly adjusts product profile based on customer requirements and continues to develop market or products for end use to cater to the rapid market growth in Asia regions and other emerging industrial countries, as well as catering to existing sales channels.

2. Short-term business development plan

Taiwan is a thin market, and the Company estimates that its domestic hot-dip galvanized market share in 2016 is about 20% to 25%, the second largest supplier in the market. In terms of domestic coating market, it has a market share of about 15 to 20%, and is also the second largest supplier in the market. Though domestic sales do not make up majority of overall sales, it is the basis of sales, especially significant during violent international market condition.

The Company's short-term target is to actively expand its domestic market share, strengthen product profile, promote green products to conform to international trend, satisfy the requirements of quality improvement of domestic raw materials, and increase the Company's business scope.

149

2. Overview of Market, Production and Sales

(1) Market Analysis:

  1. Product's main sales regions:

The Company's plated and coated products continue to be marketed to the world, with sales channels in various places around the world. Besides the basic domestic market, export markets include China, Southeast Asia, Middle East, United States, Canada, Europe, Australia and other regions.

  1. Market share and market's future supply and demand situation and growth:

According to Demand Forecasting of Steel in Taiwan (from 2016 to 2021) published by Taiwan Steel & Iron Industries Associations in 2016, 2015's annual domestic demand for hot-dip galvanized (include GI, GA, GF and GL) products is approximately 1.48 million tons, a decrease of 8.68% compared to about 1.62 tons in 2014. This is because steel price continue to fall in 2014 and 2015, and domestic market is affected by low price imports. However, 2016 annual demand for hot-dip galvanized products is projected to be about 1.69 million tons, an increase of 14.03% compared to 2015. With China's strong promotion of cutting excessive iron and steel capacity in 2016, crude steel production and steel materials export reach their peaks. In addition, with the significant increase in coal and iron price, 2016 international steel market has made a sharp rebound. 2017 market condition is expected to continue the prosperity.

In recent years, the Company continues to market to the world. 2016 export ratio is maintained at approximately 60%-70%. This year, besides fully satisfying domestic market, it will continue to set a higher ratio of product volume in the international market, and make flexible adjustment of customer orders according to changes in market conditions, to ensure operating performance.

  1. Positive and negative factors affecting competitive niches and development prospects, as well as response strategies:

Favorable Factors:

  • A. Compared with our competitors in the industry, the Company continues to implement internal management activities, which facilitates improvement of production and sales. The Company has committed to the improvement of TPM management for several years, and has gradually expanded its activities over the years. Following the vision of becoming world's largest, best, most profitable and safest plating and coating steel mill in 2009, the Company has established its mid-term vision, which is "Becoming world's best iron and steel manufacturing and service enterprise by 2020".

  • B. With the frequent global climate anomalies, and increasing attention paid to environmental protection, galvanized and coated steel products processed from steel and iron raw materials are equipped with environmentally friendly, recyclable and reusable properties, possessing high development potential in the future. According to the statistics of an internationally renowned steel journal, 2016 global plated steel

150

plate consumption was about 175.09 million tons, still an increase of 2.3% at 3.96 million tons, compared to 171.13 million tons in 2015. During the 10 years from 2006 to 2016, the average compound annual growth rate of consumption has reached 4.8%, much higher than the global economic growth rate.

  • C. Plating and coating production volume ranks first in the industry and has the most comprehensive product portfolio. Satisfying the production condition of the scale of the economy, it is able to fully supply various types of products required by the market, and has higher cost competitiveness compared to its peers. In recent years, the Company actively develops various green eco-friendly products, and is able to increase the products' added value and fulfill the customers' various order requirements.

  • D. Hot rolling raw materials are mainly from the stable domestic raw materials, which allow the Company to effectively avoid the risk of exchange rate and delivery date, thus less affected by international economic fluctuations.

Unfavorable factors

  • A. The progress of the signing of Free Trade Agreement (FTA) between Taiwan and other countries is slow, resulting in a gradual decrease in Taiwan's foreign trade competitiveness, and making sales in the global market more difficult. Following ASEAN Plus Three, China, Japan and South Korea have higher competitiveness due to import tariff advantage in the Southeast Asia market, and similar situations will gradually occur in other countries or regions.

  • B. The slowdown of domestic infrastructure investment in recent years makes it difficult to boost domestic iron and steel demand. After joining WTO for zero tariff iron and steel import, though our Company enjoys quality advantage, competition from low price imports is inevitable, making operations more challenging.

  • C. The Company adopts a high export ratio strategy. As international market depends on the ups and downs of the economy, it is not as stable as the domestic market, and hence has a higher risk.

(2) Major application and manufacturing processes of the Company's main products

  1. Main Products:

Product Item Main usage Pickled steel coil For use in electrical appliances, furniture and motor cars, industrial machinery, etc. Cold-rolled steel coil For use in electrical appliances, furniture and motor cars, industrial machinery, etc. Galvanized steel coil Raw materials for construction industry, household appliances, hardware, automobile industry, machinery

151

Coated steel coil

Steel coil products

Raw materials for construction industry, household appliances, hardware, automobile industry, machinery

Raw materials for construction industry, household appliances, automobile industry (scooter, bicycle), machinery

Building's steel structure Building structure of residential buildings, office buildings, supermarkets, etc.

Plant's steel structure Plant structure for electronic plant, power plant, steel mill, incineration plant,

etc.

Bridge's steel structure For use in roads and bridges

Frame crane Bridge crane for transportation and hoisting in industrial plants

Straddle Carrier Lifting equipment for arranging and transportation of containers at container

yard

Container crane Lifting equipment for hoisting of container at ports and harbors

Steel pipe

Raw materials for construction industry, furniture, automobile industry (scooter, bicycle), machinery

2. Manufacturing process:

==> picture [450 x 483] intentionally omitted <==

----- Start of picture text -----

Hot-rolled steel
coil
Pickling Pickled steel coil
Finished
product
inspection Warehouse
outbound
Cold rolling Cold rolled steel
coil
Galvanization Galvanized steel Warehouse
coil inbound
Coating Coated steel coil
Hot-rolled/cold-rolled steel
coil
Slitting
Finished
product Warehouse
inspection outbound
Tubing Hot-rolled/cold-r
olled steel pipe
Warehouse
152 inbound
Galvanization Galvanized steel
pipe
----- End of picture text -----

==> picture [445 x 121] intentionally omitted <==

----- Start of picture text -----

Hot-rolled/pickled/cold-rolled
steel coil Finished Warehouse
product outbound
inspection
Hot rolling/Pickling/cold
rolling
Cutting/Slitting Cutting steel plate, steel Warehouse
strip inbound
----- End of picture text -----

Manufacturing process

==> picture [418 x 219] intentionally omitted <==

----- Start of picture text -----

Steel plate/structural
steel
Raw material
Square tube, H-beam
production
Cold working Product: Building's steel
Hoisting at site
structure
Product: Plant's steel
Welding Warehouse inbound
structure
Coating Finished product Product: Bridge's steel
inspection structure
----- End of picture text -----

==> picture [429 x 208] intentionally omitted <==

----- Start of picture text -----

Steel plate/machinery/electrical
product
Cold working On-site Product: Overhead crane
inspection
Welding Hoisting Product: Straddle Carrier
Machining Factory test
Product: Container crane
Coating Assembly
----- End of picture text -----

153

(3) Supply Status of Primary Raw Materials:

Main raw materials Supply by domestic
suppliers		 Supply by foreign
suppliers
Steel coil 94.45%
5.55%
Paint 100.00%
0.00%
Zinc (aluminum)
ingots		 35.06%
64.94%
Steel billet 87.98%
12.02%

154

(4) Information on the Customers that Contribute to More Than 10% of Total Purchases and Sales in the Last Two Years: 1. List of suppliers that contribute to more than 10% of the Company's net purchase:

Information of major suppliers in the last two years

2015 2015 2015 2015 2016 2016 2016 2016 As of the last quarter before publishing of this report in 2017 (Note 2) As of the last quarter before publishing of this report in 2017 (Note 2) As of the last quarter before publishing of this report in 2017 (Note 2) As of the last quarter before publishing of this report in 2017 (Note 2)
I A % of annual Relationship with A % of annual Relationship with A Percentage to net purchase in
h h i		 Relationship with
tem Name mount net purchase the issuer Name mount net purchase the issuer Name mount te year up to te prevous
quarter(%)		 the issuer
1 04017 10,645,951
28.78%
Non-related
parties

4017		 11,731,966
27.09%
Non-related
parties

4017		 3,567,693
24.64%
Non-related
parties
2 16070 5,647,159
15.27%
Related parties
16070		 5,166,866
11.93%
Related parties
99626		 1,862,074
12.86%
Non-related
parties
3 A00141 4,622,778
10.67%
Non-related
parties
Others 20,692,017
55.95%		 Others 21,789,495
50.31%		 Others 9,048,931
62.50%
Net
purchase
Net


36,985,127
100.00%		 Net
purchase

43,311,105
100.00%		 Net
purchase

14,478,698
100.00%

Note 1: List the name, purchase amount and percentage of purchase, of suppliers whose purchase amount is more than 10% of the company’s total purchase in the last 2 years. If the supplier's name cannot be disclosed due to non-disclosure clauses in the contract, or the counterparty is a non-related individual, then the name maybe expressed in code.

Note 2: Until the date of publication of the annual report, a company whose stock is listed on the stock exchange or traded over the counter, shall disclose the most recent financial statement audited or attested by the CPA, if any.

Reason for increase or decrease: cater to business requirements

155

  1. List of customers that contribute to more than 10% of the Company's consolidated net sales:

Information of major customers for the last two years

2015 2015 2015 2015 2016 2016 2016 2016 As of the last quarter before publishing of this
report in 2017(Note 2)		 As of the last quarter before publishing of this
report in 2017(Note 2)		 As of the last quarter before publishing of this
report in 2017(Note 2)		 As of the last quarter before publishing of this
report in 2017(Note 2)
Item Name Amount % of
annual net
sales		 Relationsh
ip with the
issuer
Name		 Amount % of
annual
net sales		 Relationship
with the
issuer
Name		 Amount Percentage to
net sales in
the year up to
the previous
quarter(%)

Relationsh
ip with the
issuer
1
2
3
4
5
6
7
8
9
10
Others 49,784,834 100 Others 52,847,410 100 Others
Net Sales 49,784,834 100 Net Sales 52,847,410 100 Net Sales 100

Note 1: List the name, sales amount and percentage of sales, of customers whose sales amount account for more than 10% of the company’s total sales in the last 2 years. If the customer's name cannot be disclosed due to non-disclosure clauses in the contract, or the counterparty is a non-related individual, then the name maybe expressed in code.

Note 2: Until the date of publication of the annual report, a company whose stock is listed on the stock exchange or traded over the counter, shall disclose the most recent financial statement audited or attested by the CPA, if any.

156

(5) Production Volume and Value of the Last Two Years

Unit: tons; NT$1,000

Unit: tons;NT$1,000 Unit: tons;NT$1,000 Unit: tons;NT$1,000
Year
Production volume
Main product		 2016 2015
Production
capacity		 Production
volume		 Production
value		 Production
capacity		 Production
volume		 Production
value
Pickled steel coil 2,110,000
1,361,984
16,514,876		 2,110,000
1,322,454
16,680,056
Rolled steel coil 1,620,000
1,173,456
14,958,060		 1,620,000
1,457,073
22,659,124
Galvanized steel coil 1,900,000
1,849,310
28,976,128		 1,900,000
1,691,938
28,564,412
Coated steel coil 710,000
584,418
12,408,070
710,000
556,095
12,936,577
Trading -
-
-
-
-
-
OEM steel coil -
76,424
116,279
-
36,949
58,076
Wire 500,000
312,643
7,095,811
500,000
320,944
7,538,923
Steel pipe 300,000
204,562
3,246,853
300,000
197,104
3,318,069
Bridge crane -
8
374,932
-
15
275,440
Steel structure -
28,459
1,205,308
-
24,914
1,077,739
Others -
103,339
849,419
-
102,560
829,999
Total 7,140,000
5,694,604
85,745,735		 7,140,000
5,710,047
93,938,413

Note 1: Production capacity refers to the volume of product that can be produced by a company using existing production equipment and under normal operation, after taking into consideration factors such as necessary downtime, holiday, etc.

Note 2: Substitutable production capacity may be included in the production capacity and be stated in the note.

(6) Sales Volume and Value of the Last Two Years

Unit: tons; NT$1,000

Unit: tons; NT$1,000 Unit: tons; NT$1,000 Unit: tons; NT$1,000 Unit: tons; NT$1,000
Year
Sales volume
and amount
Main products (or
department)		 2016 2015
Domestic sales Export Domestic sales Export
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Pickled steel coil 60
595
680		 7,475
97
514
385
3,601
Rolled steel coil 2,298
25,387
45,409		 635,012
2,030
17,681
26,431
298,714
Galvanized steel coil 295,331
6,110,908
904,874		 17,623,093 237,201
3,385,551
886,528
18,044,976
Coated steel coil 87,167
2,904,446
490,693		 12,618,249
88,205
2,906,257
458,619
12,284,629
Trade 70,187
851,426
-		 -
47,311
578,305
-
-
OEM steel coil 30,396
127,918
11,251		 5,662
13,523
40,161
6,284
3,185
Wire 385,585
4,746,111
42,990		 2,626,270 299,012
5,196,246
33,943
2,468,025
Steelpipe 64,469
1,156,435
40,009		 779,971
66,257
1,113,649
51,623
1,276,880
Bridge crane 8
418,099
-		 581
15
286,575
-
725
Steel structure 28,459
1,233,755
-		 -
24,914
1,085,820
-
-
Others 49,829
418,122
79,634		 557,897
44,319
353,874
60,327
439,465
Total 913,787 17,993,200 1,615,540 34,854,210 822,885
14,964,634
1,524,140
34,820,200

157

3. Employee Information in the Last Two Years up to the Publishing of This

Annual Report:

Year 2015 2016 From the beginning of the year to
March 31, 2017
(Note)
Number of employees Male 3343
3405
3421

Female		 553
559
547
Total 3896
3964
3968
Average age 45.82
43.34
46.78
Averageyear of services 6.12
5.26
5.47
Education level Ph.D. 0.03%
0.23%
0.18%
Master 5.83%
6.38%
6.25%
Bachlor 56.96%
55.95%
55.80%
Senior (Vocational) High 33.60%
33.70%
34.25%
Below high school 3.58%
3.73%
3.53%

Note: The annual data shall be updated as of the publication date of this annual report.

4. Environmental Expenditures:

(1) Total damages (include compensation) and punishment due to environmental pollution in last fiscal year up till February 22, 2017:

Item 2013 2014 2015 2016 February 22,
2017
Pollution (type, extent) None None In violation of
the Waste
Disposal Act,
storing
hazardous
industrial waste
for one year,
without
requesting for
extension two
months prior to
the due date.		 None None
Compensation recipient
or unit imposing the
punishment		 None None The unit
imposing the
punishment is
Environmental
Protection
Bureau,
Kaohsiung City
Government		 None None
Compensation amount
or punishment		 None None Fine of
NT$60,000 and 2
hours of
environmental
education
workshop.
None		 None

158

Other damages None None None None None

(2) Future countermeasures and possible expenditure:

  1. Improvement plans:

(1) Implement environmental protection plans and abide by the various environmental protection laws and regulations.

(2) Abide by ISO 14001 and carry out regular checks and identification in accordance to the environmental protection laws and regulations.

(3) Actively implement management by wandering around in the plant, and deficiency correction preventive measures.

(4) Participate in various environmental law seminars and strengthen communication and coordination with the competent authority.

Items 2016 2017 2018 2019
Pollution
control
equipment to be
purchase or
expenditure
1. Supplies replacement
and cleaning of air
pollution control
equipment.
2. VOC emission charge.
3. Sulfur oxides and
nitrogen oxides
emission charge.		 1. Supplies
replacement and
cleaning of air
pollution control
equipment.
2. VOCs air pollution
charges.
3. Sulfur oxides and
nitrogen oxides
emission charge.
1. Supplies
replacement and
cleaning of air
pollution control
equipment.
2. VOCs air pollution
charges.
3. Sulfur oxides and
nitrogen oxides
emission charge.
1. Supplies
replacement and
cleaning of air
pollution control
equipment.
2. VOCs air pollution
charges.
3. Sulfur oxides and
nitrogen oxides
emission charge.
Expected
Improvements		 1. Replace Raschig ring,
heat storage materials
and dust filter bag
regularly to improve
air quality
(approximately
NT$3224.5 thousand).
2. Payment of VOC
emission charge of
approximately
NT$357.5 thousand
per year.
3. Payment of sulfur
oxides and nitrogen
oxides emission
charges of NT$181.5
thousand per year.		 1. Replace Raschig
ring, heat storage
materials and dust
filter bag regularly
to improve air
quality
(approximately
NT$3224.5
thousand).
2. Expected to pay
VOC emission
charges of
NT$357.5
thousand per year.
3. Expected to pay
sulfur oxides and
nitrogen oxides
emission charges
of NT$181.5
thousandperyear.		 1. Replace Raschig
ring, heat storage
materials and dust
filter bag regularly
to improve air
quality
(approximately
NT$3224.5
thousand).
2. Expected to pay
VOC emission
charges of
NT$357.5
thousand per year.
3. Expected to pay
sulfur oxides and
nitrogen oxides
emission charges
of NT$181.5 per
year.		 1. Replace Raschig
ring, heat storage
materials and dust
filter bag regularly
to improve air
quality
(approximately
NT$3224.5
thousand).
2. Expected to pay
VOC emission
charges of
NT$357.5
thousand per year.
3. Expected to pay
sulfur oxides and
nitrogen oxides
emission charges
of NT$181.5
thousandperyear.
Amount Approx. NT$3763.5
thousand		 Approx.$ 3763.5
thousand		 Approx. NT$3763.5
thousand		 Approx. NT$3763.5
thousand

  1. Expected environmental protection capital expenditures for next three years

  2. Impact after improvements

3. Impact after improvements
Item 2016 2017 2018 2019
Impact on netprofit Low impact Low impact Low impact Low impact
Impact on competitive position Continue to increase environmental protection performance, promote
harmonyin neighborhood,and maintaingood corporate image.

159

5. Labor Relations:

(1) Existing important labor-management agreements and implementation situation:

Our Company belongs to the iron and steel industry, our employees are competent, and we implement people-oriented management. Our employees actively participate in labor-related issues, and we adopt an open approach, creating an operation environment with harmonious labor-management relationship together with the employees. The following are the Company's labor-management agreements:

  1. Communication and Rewards

  2. (1) The Company spares no effort in setting up internal communication channel. GroupWise e-mail system is now widely used by the employees, reducing the overuse of paper and printed reports.

  3. (2) Sets up labor-management meetings, providing a communication platform for both labor and management.

  4. (3) The Company information corner is set up in the Company's internal website to allow employees to obtain timely information of the Company's directions through diversified communication platform. The setup of employee's voice provides employees a timely and two-way communication channel, making communication more efficient.

  5. (4) The Company has internal rewards and punishments system, rewarding employees with outstanding performance or contribution. Besides awarding great merit, merit and commendation, it may also issue award based on the employees' power and responsibilities as a form of encouragement.

  6. (5) To encourage the Company's employees to raise suggestions on improving operation, and attain the goal of improving performance, the Company has an innovation proposal management mechanism, where benefits and awards are calculated based on the benefits from the improvement proposals.

  7. Welfare and Training

  8. (1) The Company treats its staff as one of its important assets. Besides purchasing labor and health insurance in accordance with the regulations, employees may also be protected by group insurance and travel insurance, which cover life insurance and business travel insurance, with premiums fully paid by the Company, providing employees with better security in terms of work and life.

  9. (2) Besides enjoying the benefits of group insurance for themselves, employees may also purchase insurances in critical illness, medical, cancer insurance and personal accident for their immediate family members and spouse at a discount, so that both the employees and their families are well taken care of.

  10. (3) The Company provides various kinds of subsidies and benefits, including subsidies in childbirth, marriage, travel, funeral and burial, hospitalization due to general injury or occupational injury, as well as student grants and incentives for employees' children.

  11. (4) The Company has a well-established Staff Welfare Committee, comprising of members appointed from various departments. Besides convening regular meetings to organize staff welfare measures and activities, it also organizes various types of clubs to promote recreational activities to establish staff cohesiveness.

  12. (5) The Company has set up a health management center equipped with fitness equipment, and is guided by a coach. The Company not only conducts total productive maintenance (TPM) on machinery and equipment, but also pays attention to the daily healthcare and fitness of its employees.

160

  • (6) Yearly medical checkups are provided for each employee, serving as a preliminary health check for the employees.

  • (7) Cooperates with E-Da Hospital in engaging on-site doctors to provide services such as medical consultation, health consultation, talks, etc.

  • (8) Cooperates with E-Da Hospital in organizing "Overall health Management Planning and Services for Company's Employees". Dedicated health managers are appointed to provide services such as health management, health information, medical consultation, etc., based on the employees' yearly medical results.

  • (9) Employees who have served more than three months may apply for Yieh Phui's stock ownership. 20% of stock ownership is set aside as awards every year, to attain the objective of long-term savings, accumulated wealth, and a stable lifestyle in the future.

  • (10) Cooperates with Mega International Commercial Bank in providing employees with no more than 10 times of inter-bank withdrawals, ATM transfers and internet bank transfers per month with no administrative charges.

  • (11) Employees may apply special leave on 2-hourly basis so that they can strike a better balance between work and family.

  • (12) The Group's Leisure and Entertainment Business provides the employees with exclusive discounts, means and discounts on leisure and relaxation.

  • (13) Finance personnel obtaining relevant qualifications specified by the competent authority:

    • A. The Company's chief financial officer took and passed the "Professional Certification for Accounting Manager of Public Listed Company" organized by the Accounting Research and Development Foundation.

    • B. Two audit personnel from the Company have obtained "Basic Proficiency Test for Corporate Internal Control" organized by the Securities and Futures Institute.

    • C. One finance personnel from the Company has obtained "Certificate of Competency in Corporate Action" awarded by the Securities and Futures Institute.

    • D. One finance personnel from the Company has obtained "Certified Public Accountant" license awarded by the Ministry of Examination.

  • Retirement measures and implementation:

  • (1) To ensure a stable lifestyle for employees after their retirement, the Company, in accordance with the Labor Standards Act, has established employees retirement mechanism. The Company's full-time employees who comply with the retirement conditions as specified in Article 53 and 54 of the Labor Standards Act, shall be given employees retirement fund in accordance with the law, based on their years of service in the Company.

  • (2) The Company, according to the Regulations for the Allocation and Management of the Workers' Retirement Reserve Funds, sets aside 6% of employees' actual salary as retirement reserve every month, fills in the "Retirement Reserve Deposit Slip", and deposit into Bank of Taiwan before the 20th of the following month.

(2) List of damages due to labor-management disputes in the last two years: None

6. Important Contracts:

161

Nature Contracting
Parties		 Contract start/end
date		 Major Content Restrictive
Clauses
Surface rights
contract		 Shin Phui Steel
Corporation		 June 15, 2001 - June 14,
2051		 1. Royalties payment method:
Payment of NT$120,000
thousand to be amortized over
50 years.
2. As of December 31, 2016,
NT$37,300 thousand has been
amortized.
Surface rights
contract		 Shin Yang Steel
Co., Ltd.		 May 1, 2011 - April 30,
2021		 1. Rental collection method:
The monthly rental of
NT$1,262 thousand has been
adjusted to NT$983 thousand
per month upon agreement by
both parties on April 1, 2015,
payable at the beginning of
each month.
2. Rental income recognized in
2016 was NT$11,796 thousand.
Construction
contract		 Dongwei
Chinpin
congregate
housing
construction
project		 June 6, 2013 - June 30,
2017		 Total contract value:
NT$159,348 thousand.
Construction
contract		 Taiwan
Kumagi's
International
Commercial
Building
construction
project		 July 31, 2013 - June 30,
2017		 Total contract value:
NT$213,778 thousand.
Construction
contract		 Sun Pao Tsun
Construction's
Xinban
Commercial
Building main
construction		 April 30, 2014 – February
25, 2017		 Total contract value:
NT$154,469 thousand.
Construction
contract		 Six travelling
container
cranes at track
40T of Pier 120
rear storage
area, Kaohsiung
Harbor, Port of
Keelung
August 14, 2015 -
March 31, 2017		 Total contract value:
NT$311,100 thousand.
Construction New Spring March 30,2015 – June 30, Total contract value:

162

Nature Contracting
Parties		 Contract start/end
date		 Major Content Restrictive
Clauses
contract Construction's
E-DA Asia
Plaza ground
structure
construction
project		 2018 NT$1,820,539 thousand.
Construction
contract		 Chung-Lu YKK
Taiwan's
Chungli Third
Factory
construction
project
June 14, 2016 – June 30,
2017		 Total contract value:
NT$253,773 thousand.

163

VI. Financial Conditions

1. Condensed Balance Sheet and Consolidated Income Statement for the Last Five Years

(1) Condensed Balance Sheet (Consolidated)

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year
Item		 Financial Information for the last 5 years Financial
Information from
the beginning of the
year to
March 31, 2017
(Consolidated)
2012 2013 2014 2015 2016
Current assets 24,557,316 23,353,350 23,840,021
21,294,005
24,414,242
26,645,510
Property, plant and
equipment		 29,848,486 29,323,857 33,374,278
36,094,705
37,867,059
37,474,911
Intangible assets 5,080 3,220 4,485
2,702
9,533
9,309
Other assets 13,439,841 12,690,607 14,675,645
18,968,584
19,745,656
20,212,425
Total assets 67,850,723 65,371,034 71,894,429
76,359,996
82,036,490
84,342,155
Current
liabilities		 Before
distributi
on		 17,463,240 23,963,037 25,216,875
17,614,075
23,911,787
25,208,695
After
distributi
on		 － － － － － －
Non-current 19,853,583 12,759,380 17,429,383
29,742,076
27,880,724
29,494,076
liabilities
Total
liabilities		 Before
distributi
on		 37,316,823 36,722,417 42,646,258
47,356,151		 54,702,771
After
distributi
on		 － － － － － －
Equity attributable to
owners of parent
company		 24,992,424 25,817,865 26,990,339
25,884,541
27,537,651
27,788,949
Share Capital 16,353,422 16,353,422 16,680,490
17,180,905
17,180,905
17,180,905
Capital reserve 4,618,106 4,622,016 4,627,688
4,673,787
4,737,131
4,874,811
Retained
Earnings		 Before
distributi
on		 3,970,619 4,726,222 5,301,159
3,384,660
5,786,966
6,633,805
After
distributi
on		 － － － － － －
Other equity 50,277 116,205 381,002
645,189		 -167,351
-900,572
Treasury stock － － － － － －
Non-controlling
interest		 5,541,476 2,830,752 2,257,832
3,119,304
2,706,328
1,850,435

interest
Equity
Total		 Before
distributi
on		 30,533,900 28,648,617 29,248,171
29,003,845
30,243,979
29,639,384
After
distributi
on		 － － － － － －

Source: The above Q1 2017 consolidated financial statements have been audited by the CPA

164

Unit: NT$1,000

Condensed Balance Sheet (Individual)

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year
Item		 Financial Information for the last 5 years
2012 2013 2014 2015 2016
Current assets 7,974,967 8,114,943 6,725,377
6,291,122
8,199,957
Property, plant and equipment 9,240,453 8,819,880 8,824,415
8,939,016
8,559,554
Intangible assets － － － － －
Other assets 25,259,915 26,211,820 29,049,882
30,096,771
31,473,561
Total assets 42,475,335 43,146,643 44,599,674
45,326,909
48,233,072
Current liabilities Before
distribution		 10,167,173 11,840,232 14,514,126
10,676,939
11,076,491
After
distribution		 － － － － －
Non-current liabilities 7,315,738 5,488,546 3,095,209
8,765,429
9,618,930
Total liabilities Before
distribution		 17,482,911 17,328,778 17,609,335
19,442,368
20,695,421
After
distribution		 － － － － －
Share Capital 16,353,422 16,353,422 16,680,490
17,180,905
17,180,905
Capital reserve 4,618,106 4,622,016 4,627,688
4,673,787
4,737,131
Retained
earnings		 Before
distribution		 3,970,619 4,726,222 5,301,159
3,384,660
5,786,966
After
distribution		 － － － － －
Other equity 50,277 116,205 381,002
645,189
-167,351
Treasury stock － － － － －
Equity 24,992,424 25,817,865 26,990,339
25,884,541
27,537,651

(2) Condensed Income Statement (Consolidated)

Unit: NT$1,000

Year
tem		 Financial Information for the last 5 years Financial Information for the last 5 years Financial Information for the last 5 years Financial Information for the last 5 years Financial Information for the last 5 years Financial
Information
from the
beginning of
the year to
March 31,
2017
(Consolidated)
2012 2013 2014 2015 2016
Operating
evenue		 56,624,377 54,861,313 60,567,319
49,784,834		 52,847,410 18,558,315
Grossprofit 1,990,690 3,683,122 4,436,083
3,704,492
7,206,359
2,140,309
Operating
ncome(loss)		 (405,046) 1,121,041 1,442,003
861,677
3,844,037		 1,125,958
Non-operating
evenues and
expenses		 (975,858) (506,485) (81,685)
(2,458,392)
(471,965)
63,425
Net profit
before tax		 (1,380,904) 614,556 1,360,318 (1,596,715)
3,372,072
1,189,383

165

Current net
income (loss)
from continuing
operations
Net income
(loss)		 (1,418,238) 363,348 941,034
(1,614,837)
2,378,545
875,776
Loss from
discontinued
operations		 － － － － － －
Current net
income (loss)		 (1,418,238) 363,348 941,034
(1,614,837)
2,378,545
875,776
Other
comprehensive
income (loss) for
the year
(Net income
after tax)		 (594,472) 227,875 276,020
190,111
(904,716)
(742,770)
Total
comprehensive
income (loss) for
the year		 (2,012,710) 591,223 1,217,054 (1,424,726)
1,473,829
133,006
Net income
attributable to
owners of parent
company		 (1,040,862) 771,983 1,238,852 (953,786)
2,502,005
884,787
Net income
attributable to
non-controlling
interests		 (377,376) (408,365) (297,818)
(661,051)
(123,460)
(9,011)
Total
comprehensive
income (loss)
attributable to
owners of parent
company		 (1,509,972) 822,158 1,498,222 (761,465)
1,612,620
151,566
Total
comprehensive
income (loss)
attributable to
non-controlling
interests		 (502,738) (230,935) (281,168)
(663,261)
(138,791)
(18,560)
Earnings per
share		 -0.64 0.46 0.72 -0.56 1.46 0.51

Source: The above Q1 2017 consolidated financial statements have been audited by the CPA.

166

Unit: NT$1,000

Consolidated Income Statement (Individual)

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year
Item		 Financial Information for the last 5 years
2012 2013 2014 2015 2016
Operatingrevenue 27,770,046 26,745,406 29,202,735
22,223,598
23,867,665
Grossprofit 1,259,314 2,333,017 2,221,765
1,869,039
3,857,918
Operatingincome(loss) (94,952) 978,443 734,204
558,658
2,064,727
Non-operating revenues
and expenses		 (947,900) (42,916) 675,205
(1,623,316)
948,024
Net profit before tax (1,042,852) 953,527 1,409,409
(1,064,658)		 3,012,751
Current net income
(loss) from continuing
operations		 (1,040,862) 771,983 1,238,852
(953,786)
2,502,005
Loss from discontinued
operations		 － － － － －
(1,040,862) 771,983 1,238,852
(953,786)		 2,502,005
Other comprehensive
income (loss) for the
year
(Net income after tax)		 (469,110) 50,175 259,370
192,321
(889,385)
Total comprehensive
income (loss) for the
year		 (1,509,972) 822,158 1,498,222
(761,465)
1,612,620
Earningsper share -0.64 0.46 0.72 -0.56 1.46

(3) Names of CPAs for the last 5 years and audit opinions

1. Names of CPAs for the last 5 years and their audit opinions

Year Name of accounting firm Name of CPA Audit opinion
2012 Crowe Horwath (TW) CPAs Shu-Man Tsai, Jen-Yao
Hsieh		 Modified unqualified opinion
2013 Crowe Horwath (TW) CPAs Shu-Man Tsai, Jen-Yao
Hsieh		 Modified unqualified opinion
2014 Crowe Horwath (TW) CPAs Shu-Man Tsai, Jen-Yao
Hsieh		 Modified unqualified opinion
2015 Crowe Horwath (TW) CPAs Shu-Man Tsai, Jen-Yao
Hsieh		 Modified unqualified opinion
2016 Crowe Horwath (TW) CPAs Lin-Wen Huang,
Jen-Yao Hsieh		 Unqualified opinion

The engaged accounting firm, Horwath Chien Hsing CPAs, was renamed to Crowe Horwath (TW) CPAs after merging on January 1, 2013.

  1. Change of CPA in the last five years, if any: In response to the need of duties adjustment by Crowe Horwath (TW) CPAs, the CPAs were changed from CPAs Shu-Man Tsai and Jen-Yao Hsieh to CPAs Ling-Wen Huang and Jen-Yao Hsieh in Q3 2016.

167

2. Financial Analysis of the Last Five Years:

– ' Financial Analysis Taiwan s Financial Accounting Standards


Financial analysis of last 5 years
Financial analysis of last 5 years
Financial analysis of last 5 years
Financial analysis of last 5 years
Financial analysis of last 5 years
Financial analysis of last 5 years
Analysis Items
Year		 2011
(Individual)		 2011
(Consolidated)
2012
(Individual)		 2012
(Consolidated)		 2013
(Individual)		 2013
(Consolidated
Financial
Structure		 Debt-asset Ratio
(%)		 38.02
52.99
41.07
55.12
40.16
56.18
Long-term capital
to fixed assets ratio		 381.78
185.87
376.00
172.74
354.95
140.61
Solvency Current ratio (%) 112.40
148.78
79.07
142.63
68.54
96.94
Quick ratio (%) 62.00
81.41
45.14
84.05
38.59
60.09
Interest coverage
ratio		 3.06
1.78
-2.71
-0.47
3.87
1.61
Operating
Ability		 Receivables
turnover rate
(times)		 14.28
17.10
17.38
15.34
18.36
15.04
Average collection
days for receivables		 25.56
21.34
21.00
23.79
19.88
24.26
Inventory turnover
rate(times)		 7.32
7.39
7.30
6.95
7.77
7.23
Payables turnover
rate(times)		 27.65
22.41
20.62
41.85
17.41
19.84
Average days for
sale		 49.84
49.37
50.00
52.49
46.97
50.48
Fixed assets
turnover rate
(times)		 3.69
2.46
3.35
2.00
2.96
1.85
Total assets
turnover rate
(times)		 0.77
0.96
0.67
0.85
0.62
0.82
Profitability Return on assets
(%)		 1.87
2.14
-1.96
-0.94
2.43
1.43
Return on
shareholders' equity		 2.09
2.05
-4.19
-4.62
3.04
1.23

Ratio of income
before tax to
paid-upcapital(%)		 10.41
4.70
-6.60
-8.66
3.76
-
Net profit margin
(%)		 1.66
0.95
-3.84
-2.55
2.89
0.66
Earnings per share
(NT$)		 0.34
0.39
-0.65
-0.88
0.47
0.47
Cash flow Cash flow ratio (%) 39.44
12.47
10.01
2.42
14.88
9.04
Cash flow adequacy
ratio(%)
169.73
113.04
170.95
99.57
169.55
95.03
Cash re-investment
ratio(%)		 6.03
2.66
1.23
0.62
4.11
3.55
Leverage Operating leverage 51.48
65.86
-146.30
-124.47
27.33
48.94
Financial leverage 1.89
23.94
0.39
0.32
1.50
9.25

Note 1: Fiscal years for which reports were not audited or attested by the CPAs shall be stated.

Note 2: A company that is listed on the TWSE or traded at the place of business of a securities firm shall include in its analysis the then current financial data up to and until the quarter immediately preceding the printing date of the annual report's publication date.

Note 3: The following calculation formulas shall be listed at the end of this Table in the annual report: 1. Financial Structure

168

(1) Debt-asset ratio = total liabilities / total assets.

(2) Long-term capital to fixed assets ratio = (shareholders' equity + long-term liabilities)/net fixed assets. 2. Solvency

(1) Current ratio = current assets / current liabilities.

(2) Quick ratio = (current assets – inventory – prepaid expense) / current liabilities.

(3) Interest protection multiples = net income before income tax and interest expense / current interest expense.

  1. Operating Ability

(1) Receivables (including accounts receivable and notes receivable arising from business operations) turnover rate = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period

(2) Average collection period = 365 / receivables turnover ratio.

(3) Inventory turnover ratio = cost of goods sold / average inventory amount.

(4) Payable (including accounts payable and business-related notes payable) turnover ratio = cost of goods sold / average payable balance of the period (including accounts payable and business-related notes payable).

(5) Average days of sales = 365 / inventory turnover.

(6) Fixed asset turnover ratio = net sales / net worth of fixed assets.

(7) Total inventory turnover rate = net sales / total asset value.

  1. Profitability

(1) Return on assets = (net income + interest expense x (1– tax rate)) / average total assets.

(2) Return on equity = profit and loss after tax / average shareholders' equity.

(3) Net profit margin = net income / net sales.

(4) Earnings per share = (net profit after tax – dividends on preferred shares) / weighted average number of issued shares. (Note 4)

  1. Cash flow

(1) Cash flow ratio = net operating cash flow / current liabilities.

(2) Net cash flow adequacy ratio = net operating cash flow in last 5 years / (capital expenditures + inventory increase + cash dividend) in last 5 years. (3) Cash re-investment ratio = (Net cash flow from operating activities – cash dividend) / (gross fixed assets value + long-term investment + other assets + working capital). (Note 5)

  1. Leverage:

(1) Operating leverage = (Net operating revenue - variable operating change cost and expense) / Operating income (Note 6).

(2) Financial leverage = Operating income / (operating income - interest expenses).

Note 4: The following shall be noted when using the above formula for earnings per share:

  1. It should be based on the weighted average number of shares of common stock rather than the number of issued shares at the end of the year. 2. When there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.

  2. In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

  3. If the preferred share cannot be converted into cumulative preferred shares, then the dividend of the year (whether it has been issued or not) shall be deducted from net income after tax, or included as a net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from net profit after tax; no adjustment is required in case of loss. Note 5: Special attention should be paid to the following matters when carrying out cash flow analysis: 1. Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

  4. Capital expenditures refer to the cash outflows for annual capital investment.

  5. The increase in inventory is counted only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.

  6. Cash dividend includes cash dividends from common stocks and preferred stocks.

  7. Gross fixed assets value refers to the total value of fixed assets before subtracting accumulated depreciation. Note 6: The issuer shall classify the operating costs and operating expenses as fixed or variable according to their nature. If it involves estimation or subjective judgment, attention should be paid to its reasonableness and consistency.

169

Financial Analysis (Please refer to page 168 of the annual report for last 5 years' financial analysis)

for last 5 for last 5 years' financial analysis) years' financial analysis) years' financial analysis) years' financial analysis) years' financial analysis) years' financial analysis)
Year
Analysis Items		 Financial analysis of last 5 years Financial
Information from
the beginning of
the year to
March 31, 2017
(Consolidated)
2014
(Individu
al)		 2014
(Consolid
ated)		 2015
(Individ
ual)		 2015
(Consoli
dated)		 2016
(Indivi
dual)		 2016
(Conso
lidated)
Financial
Structure
(%)		 Debt to Assets Ratio 39.48
59.32
42.89
62.02
42.91
63.13
64.86
Long-term capital to
property, plant, and
equipment ratio		 340.94
139.86
387.63
162.75
434.09
153.50
157.79
Solvency
(%)		 Current ratio 46.34
94.54
58.92
120.89
74.03
102.10
105.70
Quick ratio 25.21
57.19
36.44
77.76
38.51
58.52
55.13
Interest protection multiples 5.64
2.50
-2.34
-0.88
9.47
5.27
5.37
Operating
Ability		 Receivables turnover ratio
(times)		 16.10
16.96
11.96
15.81
16.59
16.05
17.99
Average collection period
(days)		 22.67
21.52
30.52
23.09
22.00
22.74
20.29
Inventory turnover ratio
(times)		 8.46
7.53
7.93
6.95
6.85
6.50
7.41
Accounts payables turnover
ratio(times)		 20.81
19.71
17.22
18.53
16.25
18.27
20.08
Average days for sale 43.14
48.47
46.03
52.52
53.28
56.15
49.26
Property, plant, and
equipment (PP&E) turnover
ratio (times)		 3.31
1.92
2.50
1.43
2.73
1.43
1.97
Total asset turnover ratio
(times)		 0.67
0.88
0.49
0.67
0.51
0.67
0.89
Profitabilit
y		 Return on assets(%) 3.43
2.28
-1.53
-1.23
5.98
3.83
1.32
Return on equity (%) 4.69
3.25
-3.61
-5.54
9.37
8.03
2.92
Income before tax to paid-up
capital ratio (%)		 8.45
8.16
-6.20
-9.29		 17.54
19.63
6.92
Netprofit margin(%) 4.24
1.55
-4.29
-3.24
10.48
4.50
4.72
Earningsper share(NT$) 0.74
0.74
-0.56
-0.56
1.46
1.46
0.51
Cash flow Cash flow ratio (%) 0
4.33
25.07
20.14
18.09
14.11
7.61
Cash flow adequacy ratio (%)
153.27
73.72
195.97
50.31
138.01
44.44
47.93
Cash re-investment ratio (%) 0.00
2.11
5.82
4.36
4.10
4.14
2.32
Leverage Operating leverage 39.77
42.00
39.78
57.78
11.56
13.75
16.48
Financial leverage 1.71
2.68
2.33
80.10
1.21
1.26
1.32

170

Please state the causes of changes in each financial ratio for the preceding two fiscal years. (Except when the change is less than 20%).

Q1 2017 consolidated financial statements have been audited by the CPA.

  1. Decrease in quick ratio: Due to increase of long-term liabilities within one year or one operating cycle, compared to the same period last year.

  2. Increase in interest protection multiples: Mainly due to increase in net profit before tax.

  3. Increase in return on assets: Mainly due to increase in current net profit.

  4. Increase in return on equity: Mainly due to increase in current net profit.

  5. Increase in ratio of income before tax to paid-up capital: Mainly due to increase in current net profit before tax compared to the same period last year.

  6. Increase in net profit margin: Mainly due to increase in current net profit.

  7. Increase in earnings per share: Mainly due to increase in current net profit.

  8. Decrease in cash flow ratio: Mainly due to decrease in net operating cash flow, and increase in current liabilities.

  9. Decrease in operating leverage: Mainly due to increase in current net operating profit.

  10. Decrease in financial leverage: Mainly due to increase in net operating profit.

  11. Note 1: Fiscal years for which reports were not audited or attested by the CPA shall be stated. Note 2: Until the date of publication of the annual report, a company whose stock is listed on the stock exchange or traded over the counter shall disclose the most recent financial statement audited or attested by the CPA, if any.

  12. Note 3: The following calculation formulas shall be listed at the end of this Table in the annual report: 1. Financial Structure

    • (1) Debt-to-asset ratio = total liabilities / total assets.

    • (2) Long-term capital to property, plant and equipment ratio = (total equity + non-current liabilities)/net property, plant and equipment.

    • Solvency

    • (1) Current ratio = current assets/current liabilities.

    • (2) Quick ratio = (current assets – inventory – prepaid expense) / current liabilities.

    • (3) Interest protection multiples = net income before income tax and interest expense / current interest expense.

    • Operating Ability

    • (1) Receivables (including accounts receivable and notes receivable arising from business operations) turnover rate = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period

    • (2) Average collection period = 365 / receivables turnover ratio.

    • (3) Inventory turnover ratio = cost of goods sold / average inventory amount.

    • (4) Payable (including accounts payable and business-related notes payable) turnover ratio = cost of goods sold / average payable balance of the period (including accounts payable and business-related notes payable).

    • (5) Average days for sale = 365 / inventory turnover rate.

    • (6) Property, plant, and equipment (PP&E) turnover ratio = net sales/average PP&E

    • (7) Total asset turnover ratio = net sales / average total assets.

    • Profitability

    • (1) Return on assets = (net income + interest expense x (1– tax rate)) / average total assets.

    • (2) Return on equity = net income after tax/ average total equity

    • (3) Net profit margin = net income / net sales.

    • (4) Earnings per share = (income or loss attributable to owners of parent company – dividends on preferred shares) / weighted average number of issued shares. (Note 4)

    • Cash flow

    • (1) Cash flow ratio = net operating cash flow / current liabilities.

    • (2) Net cash flow adequacy ratio = net operating cash flow in last 5 years / (capital expenditures + inventory increase + cash dividend) in last 5 years.

    • (3) Cash re-investment ratio = (Net operating cash flow – cash dividend) / (gross property, plant and equipment + long-term investment + other non-current assets + working capital). (Note 5)

    • Leverage:

171

  • (1) Operating leverage = (Net operating revenue - variable operating change cost and expense) / Operating income (Note 6).

  • (2) Financial leverage = Operating income / (operating income - interest expenses).

  • Note 4: The following shall be noted when using the above formula for earnings per share:

  • It should be based on the weighted average number of shares of common stock rather than the number of issued shares at the end of the year.

  • When there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.

  • In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

  • If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether issued or not) shall be subtracted from net profit after tax, or added to net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from net profit after tax; no adjustment is required in case of loss.

  • Note 5: Special attention should be paid to the following matters when carrying out cash flow analysis:

  • Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

  • Capital expenditures refer to the cash outflows for annual capital investment.

  • The increase in inventory is counted only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.

  • Cash dividend includes cash dividends from common stocks and preferred stocks.

  • Gross property, plant and equipment value refers to the total value of property, plant and equipment before subtracting accumulated depreciation.

  • Note 6: The issuer shall classify the operating costs and operating expenses as fixed or variable according to their nature. If it involves estimation or subjective judgment, attention should be paid to its reasonableness and consistency.

  • Note 7: Where company shares have no par value or where the par value per share is not NT$10, any calculations that involve paid-up capital ratio shall be replaced with the equity ratio attributable to the owners of the parent company as stated in the balance sheet.

172

3. The Audit Committee’s Audit Report on the Most Recent Fiscal Year:

The Board of Directors has prepared the Company's 2016 business report, consolidated financial statements (include individual financial statements) and surplus distribution proposal, where the financial statements have been audited by Crowe Horwath (TW) CPAs, and an audit report has been issued.

The aforementioned business report, financial statements and surplus distribution proposal have been audited by the Company's Audit Committee, and deemed no incompatibility. The above reports are presented in accordance to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

To

Yieh Phui Enterprise Co., Ltd.

2017 Shareholders’ Meeting

Audit Committee Convener: Chin-Shu Sun

21 March 2017

173

4. Last Fiscal Year's Consolidated Financial Statements of the Parent Company and Subsidiaries Audited and Attested by the CPA: Please see details on page 211 (Appendix I)

5. Individual Financial Statement for the Last Fiscal Year: Please see details on page 344 (Appendix II)

6. Impact on the Company's Financial Status due to Financial Difficulties Experienced by the Company and Its Related Companies during the Last Fiscal Year up to the Publication Date of This Report: None.

174

VII. Review, Analysis, and Risks of Financial Status and Performance

1. Review and Analysis of Financial Status:

Comparative analysis of financial conditions

Unit: NT$1,000 Unit: NT$1,000
Year
Item
2016		 2015 Difference
Amount %
Current assets 24,414,242
21,294,005
3,120,237
14.65%
Non-current Assets 57,622,248
55,065,991
2,556,257
4.64%
Total assets 82,036,490
76,359,996
5,676,494
7.43%
Current liabilities 23,911,787
17,614,075
6,297,712
35.75%
Non-current liabilities 27,880,724
29,742,076
(1,861,352)		 (6.26%)
Total liabilities 51,792,511
47,356,151
4,436,360
9.37%
Total equity of owners of
parent company		 27,537,651 25,884,541 1,653,110
6.39%
Non-controllinginterest 2,706,328
3,119,304
(412,976)		 (13.24%)
Total equity 30,243,979
29,003,845
1,240,134
4.28%
Total liabilities and equity 82,036,490
76,359,996
5,676,494
7.43%
Analysis of percentage of change:
1. Increase in current liabilities: As the repayment grace period of some syndicated loans is over,
loans are being amortized over the years. In addition, with the increase in amortization
proportion in the previous period, long-term liabilities that are due within one year or operating
cycle increase by NT$3,993,269 thousand compared to same period last year.

175

2. Review and Analysis of Financial Performance:

  1. Comparative analysis of financial performance

Unit: NT$1,000

Year
Item
2016		 2015 Increases
(decreases)		 Ratio of
change %
Total sales revenues 53,212,527
50,330,598
2,881,929
5.73%
Less: Sales returns (16,657)
(33,113)
16,456
49.70%
Sales discount (348,460)
(512,651)
164,191
32.03%
Net revenue 52,847,410
49,784,834
3,062,576
6.15%
Operatingcost 45,641,051
46,080,342
(439,291)		 (0.95%)
Grossprofit(loss) 7,206,359
3,704,492
3,501,867
94.53%
Operatingexpenses 3,362,322
2,842,815
519,507
18.27%
Net operating profit(loss) 3,844,037
861,677
2,982,360
346.11%
Non-operating revenues
and expenses		 (471,965)
(2,458,392)
1,986,427
80.80%
Netprofit(loss)before tax 3,372,072
(1,596,715)
4,968,787
311.19%
Income tax expense(gain) 993,527
18,122
975,405
5382.44%
Current netprofit(loss) 2,378,545
(1,614,837)
3,993,382
247.29%
Other comprehensive
income(net)		 (904,716)
190,111
(1,094,827)		 (575.89%)
Total comprehensive
income(loss)for theyear		 1,473,829
(1,424,726)
2,898,555
203.45%

176

Analysis of change in ratios:

  1. Increase in gross profit and net operating profit: As the iron and steel market warms up, this year's steel price shows a rebound. The gradual increase in raw materials price, and China's active promotion of supply-side reform, have generated significant results from cutting excessive capacity in the iron and steel industry, resulting in a sharp increase in the Company's profit compared to the same period last year.

  2. Increase in non-operating revenues and expenses: Due to the previous period's sluggish iron and steel market, the invested companies showed poor performance, resulting in the Company showing a loss of up to NT$1.665 billion using the equity method of recognizing investment. This year, with the warm up of the iron and steel market, the invested companies show a significant improvement in their performance. Our Company's share on the profit and loss of the affiliated companies and joint ventures recognized using the equity method increases correspondingly.

  3. Increase in net profit before tax: In summary, the warm up of the global iron and steel market, and China cutting excessive capacity, result in increase in gross profit and net operating profit. In addition, the invested company showed improvement from their loss situations this period, resulting in significant increase in current net profit before tax compared to the same period last year.

  4. Increase in tax expense: Due to significant increase in current profit. 5. Increase in other comprehensive profit or loss: Mainly due to depreciation of RMB against USD in the current period, and exchange difference from conversion of big amount recognition of foreign business organization financial statements.

177

  1. Explanation of significant changes in gross margin of main product type or department type in the last two years

(1) Gross margin changes in the last two years

Unit: NT$1,000

Unit: NT$1,000
Year 2015 2016
Product Category Operating
Revenue		 Gross Profit Gross
Margin
Operating
Revenue		 Gross Profit Gross
Margin		 Change
Galvanized steel coil 21,080,751.32 1,473,812.58 6.99% 23,734,000.56 3,305,754.05 13.93% 99.22%
Coated steel coil 15,190,885.34 2,064,513.74 13.59% 15,522,696.26 3,165,130.79 20.39% 50.03%
Steelpipe 2,390,529.90 64,143.00 2.68% 1,936,405.96 170,037.49 8.78% 227.26%
Wire 7,664,270.00 -100,609.00 -1.31% 7,372,381.00 58,362.00 0.79% 160.31%
Others 3,458,397.44 202,631.67 5.86% 4,281,926.22 507,074.67 11.84% 102.12%
Total 49,784,834.00 3,704,492.00 7.44% 52,847,410.00 7,206,359.00 13.64% 83.26%

Details of main products with 20% change in gross margin between 2015 and 2016:

Unit: NT$1,000 /ton

Year
2015		 2016
Item
Galvanized steel coil Unit Cost 17.448
17.021
Unit Price 18.760
19.775
Sales Volume 1,123,729 1,200,204
Coated steel coil Unit Cost 24.005
21.385
Unit Price 27.780
26.862
Sales Volume 546,824
577,859
Steel pipe Unit Cost 19.735
16.907
Unit Price 20.279 18.534
Sales Volume 117,880
104,478
Wire Unit cost 23.321
22.260
Unit Price 23.019 22.437
Sales Volume 332,954
328,575
Others Unit Cost 14.429 11.863
Unit Price 15.327
13.456
Sales Volume 225,638
318,211
Unit: NT$1,000
Mainproduct Analysis Items 2015 - 2016
Galvanized steel coil 1. Variance analysis of operatingrevenue
(Q’-Q)×P 1,434,644
(P’-P)×Q 1,140,957
(P’-P)×(Q’-Q) 77,648
P’Q’-PQ 2,653,249
2. Variance analysis of operatingcost
(Q’-Q)×P 1,334,345
(P’-P)×Q (480,347)

178

(P’-P)×(Q’-Q) (32,690)
P’Q’-PQ 821,308
3. Grossprofit change 1,831,941
Coated steel coil 1. Variance analysis of operatingrevenue
(Q’-Q)×P 862,181
(P’-P)×Q (501,885)
(P’-P)×(Q’-Q) (28,485)
P’Q’-PQ 331,811
2. Variance analysis of operatingcost
(Q’-Q)×P 745,007
(P’-P)×Q (1,432,509)
(P’-P)×(Q’-Q) (81,304)
P’Q’-PQ (768,806)
3. Grossprofit change 1,100,617
Steel pipe 1. Variance analysis of operatingrevenue
(Q’-Q)×P (271,788)
(P’-P)×Q (205,725)
(P’-P)×(Q’-Q) 23,390
P’Q’-PQ (454,124)
2. Variance analysis of operatingcost
(Q’-Q)×P (264,496)
(P’-P)×Q (333,432)
(P’-P)×(Q’-Q) 37,909
P’Q’-PQ (560,018)
3. Grossprofit change 105,894
Wire 1. Variance analysis of operatingrevenue
(Q’-Q)×P (100,796)
(P’-P)×Q (193,640)
(P’-P)×(Q’-Q) 2,547
P’Q’-PQ (291,889)
2. Variance analysis of operatingcost
(Q’-Q)×P (102,119)
(P’-P)×Q (353,388)
(P’-P)×(Q’-Q) 4,648
P’Q’-PQ (450,860)
3. Grossprofit change 158,971
Others 1. Variance analysis of operatingrevenue
(Q’-Q)×P 1,418,879
(P’-P)×Q (422,153)
(P’-P)×(Q’-Q) (173,197)
P’Q’-PQ 823,529
2. Variance analysis of operatingcost
(Q’-Q)×P 1,335,746
(P’-P)×Q (579,080)

179

(P’-P)×(Q’-Q) (237,580)
P’Q’-PQ 519,086
3. Grossprofit change 304,443

Note: P’Q’ ： Recent years' unit price, quantity

P Q: Previous year's unit price, quantity

Reasons for difference in price and volume:

1. Galvanized steel coil:

2016's unit price of galvanized steel coil products increases compared to 2015, generating favorable sales price variance of NT$1,140,957 thousand. In terms of cost, due to the reduction in unit cost in 2016, there is a favorable cost variance of NT$480,347 thousand. The reduction amount in unit cost is less than the amount increase in unit selling price, and its sales volume increases, resulting in galvanized steel coil products gross margin in 2016 to increase by NT$1,831,941 thousand.

2. Coated steel coil:

2016 coated steel coil products' unit selling price drops, compared to 2015, generating unfavorable sales price variance of NT$501,885 thousand. In terms of cost, with the drop in unit cost in 2016, there is a favorable cost variance of NT$1,432,509 thousand. However, as its reduction amount of unit cost was higher than the reduction amount of unit price, and with the increase in sales, it results in 2016 gross profit of coated steel coil products to increase by NT$1,100,617 thousand compared to 2015.

3. Steel pipe:

2016 steel pipe products' unit price decreases compared to 2015, generating unfavorable sales price variance of NT$205,725 thousand. In terms of cost, due to drop in unit cost in 2016, there is a favorable cost variance of NT$333,432 thousand. However, the amount of reduction in unit cost is higher than the amount of reduction in unit price, resulting in 2016 gross margin of steel pipe products in increase by NT$105,894 thousand compared to 2015.

  1. Wire:

2016 wire products' unit selling price drops compared to 2015, generating unfavorable sales price variance of NT$193,640 thousand. In terms of cost, due to the drop in unit cost in 2016, there is a favorable cost variance of NT$353,388 thousand. However, the amount of decrease in unit cost is higher than the amount of decrease in unit selling price, resulting in 2016 gross margin of wire products to increase by NT$158,971 thousand compared to 2015. 5. Others:

In 2016, the unit selling prices of other products drop compared to 2015, generating unfavorable sales price variance of NT$422,153 thousand. In terms of cost, due to the drop in unit cost in 2016, there is a favorable cost variance of NT$579,080 thousand. However, the amount of reduction in unit cost is higher than the amount of reduction in unit selling price, and with the increase in sales volume, it results in 2016 gross margin of other products to increase by NT$304,443 thousand compared to 2015.

  1. Expected sales volume and basis

2017 Expected Sales Volume

Main Products Quantity (tons)
Pickled steel coil 8
Rolled steel coil 682,506
Galvanized steel coil 1,183,855
Coated steel coil 550,845
Steel structure
engineering		 30,000

180

Bridge crane (number) 48
Wire 281,700
Stainless steel 82,500
Steel pipe 132,130
Others 166,099

With the 2017 production capacity planning by the sales departments of each company in assessing production volume and product sales, the projected 2017 sales volume by main product types are as follows:

Pickled steel coil: Majority of the pickled steel coil manufactured is put into the production line. Besides about 8 tons of scrap steel coil sold, majority of the remaining steel coil is put into production line.

Rolled steel coil: Majority of the rolled steel coil manufactured is put into the production line. Besides 682,506 tons estimated for sales, majority of the remaining steel coil is put into production line.

Galvanized steel coil: Due to the increase in international iron and steel price and increase in steel demand, the estimated sales volume is approximately 1,183,855 tons.

Coated steel coil: Due to the increase in international iron and steel price and increase in steel demand, the estimated sales volume is approximately 550,845 tons.

Wire: Due to the increase in international iron and steel price and increase in steel demand, sales volume is estimated to be approximately 281,700 tons.

Steel pipe: Due to the increase in international steel price and increase in steel market demand, sales volume is expected to be approximately 132,130 tons.

Others: Mainly include steel structure , steel plate, stainless steel, scrap and by-products.

181

3. Cash Flow:

Analysis of changes in cash flow for the past year, improvement plans for liquidity shortage, and cash liquidity analysis for the next year

  1. Analysis of changes in 2016 cash flow and improvement plans for liquidity shortage
Year
Item
2016		 2015 Percentage of
change
Cash flow ratio 14.14% 20.14% 29.79%
Cash flow adequacyratio 44.44% 50.31% 11.67%
Cash re-investment ratio 4.14% 4.36% 5.05%
1. Cash flow ratio: Mainly due to increase of current liabilities by NT$6,297,712
thousand.
  • 2016 Unit: NT$1,000
2016 Unit: NT$1,000 Unit: NT$1,000
Beginning cash
balance		 Net operating
cash flow for the
year		 Cash outflow
throughout the
year		 Cash surplus
(inadequacy)		 Remedial measures
for cash inadequacy

Investmen
tplans		 Financial
plans
9,588,066 3,375,039 4,829,924 8,133,181 ─ ─
1. Analysis of current year's cash flow change:
(1) Operating activities: Mainly due to the warm up of iron and steel market in current
period, increase in revenue, generating net cash inflow of NT$3,375,039 thousand.
(2) Investment activities: Net cash outflow of NT$5,246,961 thousand, mainly due to
equity investment increase of NT$636,350 thousand and purchase of property,
plant and equipment of NT$4,174,303 thousand, increase of other financial assets
of NT$396,034 thousand, resulting in current investment activities generating net
cash outflow.
(3) Financing activities: Net cash inflow of NT$85,367 thousand is mainly due to
repayment of short-term loan of NT$1,669,412 thousand, repaying corporate bond
of NT$1,237,560 thousand, incurring long-term loan of NT$4,284,850 thousand,
repaying long-term loan of NT$979,287 thousand.
2. Remedial measures for cash inadequacies: No cash inadequacies.

2. Cash liquidity analysis for the following year

Unit: NT$1,000

Beginning cash
balance (1)		 Expected net
operating cash flow
for theyear(2)
Expected cash
outflow for the
year(3)		 Expected cash
surplus
(inadequacy)
(1)+(2)-(3)		 Remedial measures for
expected cash
inadequacy

182

Investment
plans		 Financing
plans
8,133,181 2,505,998 3,515,611 7,123,568 - -

  1. Analysis of next one year's cash flow change:

  2. Operating activities: As global iron and steel industry continue to see a stable operating growth, current period's operating activities is expected to generate a net cash inflow of NT$2,505,998 thousand.

  3. Investment activities: Besides normal equipment replacement, the main investment include the expansion and new construction by Yieh Phui (China) Technomaterial Co., Ltd., incurring about NT$865,376 thousand, and the beginning of construction by Great Emperor Hotel CO., LTD. and Kingsgarden International Co., Ltd., incurring approximately NT$3,598,391 thousand, resulting in current period's investment activities expected to generate net cash outflow of about NT$4,692,271 thousand.

  4. Financing activities: Catering to the investment in expansion and new

    • construction, short and long-term loans are expected to be obtained from the banks, resulting in current period's financing activities expected to generate cash inflow of NT$1,176,660 thousand.

  5. (2) Remedial measures for expected cash inadequacy: None

4. Major Capital Expenditures in the Last Fiscal Year and Their Impact on the Company's Financial Affairs: None.

5. Investment Policies for the Last Fiscal Year, the Main Reasons for the Profits or Losses Generated thereby, Improvement Plans, and Investment

Plans for the Coming Year.

  1. Investment policies for last year:

For long-term business development considerations, besides maintaining our market advantage in our core business, carbon steel, and maintain profitability, we also branch into stainless steel domain, increasing diversified income by adopting a diversified investment strategy.

  1. Main reasons for profit or loss in investments, and its improvement plans:

  2. (1) Tang Eng Iron Works Co., Ltd.

Main reasons for 2016 profit:

Last year, with the recovery of stainless steel market and stabilization of global nickel prices, Ferrochrome raw material prices saw a significant increase. Also, orders boomed with appropriate business sales strategy; by purchasing raw materials at low price at the right time, operations turned around. In addition, the

183

Company's commitment to strategies such as promoting product diversification, strengthening of customer relationship management, promoting staff cohesiveness, etc., increase operational efficiency, generating an earnings per share of NT$1.44, the highest in seven years.

  • (2) Yieh United Steel Corporation Main reasons for 2016 profit:

  • Stainless steel price rebound with the increase of nickel and chromium raw material prices, driving the industrial economy. Also, the increase in number of orders and smooth delivery result in significant improvement in operation. In addition, operational strategy is adjusted to "increase volume and reduce cost" production model, manpower is reallocated, and flexible adjustment made to the organization. The Company also cooperates with strategic partners in gaining advantage in material sources to strengthen the product's cost competitiveness, thereby strengthen the competitiveness of the group's products in the stainless steel market, enabling the Company to turn a profit successfully.

  • (3) Yieh Hsing Enterprise Co., Ltd. Main reason for 2016 loss:

Since the second half of 2016, the prices of iron ore, nickel, ferrochrome increase tremendously, driven by the price increase of raw materials from China, with a high degree of capital market speculation. Growth in downstream demand is not visible, and overall situation still sees an oversupply, hence unable to generate gain. In addition, as downstream inventory is generally high, it was not able to transfer the price increase, resulting in slow orders and sales volume is not as expected. Improvement plans: 

  1. Continue to reduce carbon steel raw material cost and expand steel billet's source of material.

  2. Actively expand stainless steel wire coil channel and expand market share.

  3. Continue to enhance product research and development and sales.

  4. Save energy and carry out cost reduction program. Our company will continue to conduct new product research and development. Besides developing high value-added products, it also branches into different industries, by investing in E-DA Asia Plaza development project, achieving the highest profitability by using the company's asset, creating new opportunities for transformation.

  1. Investment plans for next year:

  2. In line with the overall development strategy of the group, it will continue to look for and invest in industries with investment values.

6. Risk Analysis and Evaluation:

(1) Impact on the company's consolidated profit and loss due to changes in interest rate, exchange rates, and inflation, as well as the future countermeasures:

  1. Impact of 2016 interest income and exchange rate changes on the Company:
Unit: NT$1,000
Item Subject 2016 Amount/
Percentage of
Impact		 Future response measures

184

Interest rate Interest
income
(expense)		 (789,831) For main funding currencies in 2016, besides NTD
and USD continuing to maintain at a low interest
rate level, as The People's Bank of China continues
to reduce benchmark interest rate since 2016, RMB
interest rate level is able to continue to maintain
within 2% of revenue. Looking forward to changes
in domestic and overseas' main funding currency
interest rate levels in 2017, the Company shall pay
close attention to the movement of capital market's
interest rate, and maintain strict monitoring of
interest expense.

Percentage of
Revenue (%)
1.495%
Exchange
rates		 Exchange
gain(loss)		 (81,260) Besides adopting natural hedging and swap
transaction, the Company will also make
adjustment by selling when foreign currency
exchange rate increases.
Percentage of
Revenue(%)
0.1538%
Operating
Revenue		 52,847,410
  1. Our Company's products are widely used as intermediate materials for plants, residential door plank and home appliances. In the future, it will expand to automobile steel plate, and will be affected by the economy. Hence, it will add service elements in its existing management activities to promote YPS (Yieh Phui Production Services System) activities, in the aim to increase work quality, continue zero-waste operations, and reduce cost, to reduce the impact to the Company due to inflation.

(2) The policies to engage in high-risk, high-leverage investments, lending funds to others, endorsements and guarantees, and the transactions of derivative products, the main reasons for profits and losses, and the future countermeasures:

The Company does not invest in high risk and highly leveraged investments. Endorsements and guarantees shall be carried out in accordance with the Company's "Operating Procedures for Loaning of Funds and Making of Endorsements and Guarantees". Derivative product transactions shall comprise mainly of exchange rate and interest hedging products. Hence, there is no material gain or loss. In the future, the Company will continue to carry out prudent assessment, and avoid investments and transactions with excessive risks.

(3) Future research and development plans and projected R&D investment amount:

With the rise in health awareness, consumers not only expect steel materials to comply with environmental protection requirements. In 2008, Yieh Phui invested in the R&D of reducing the contact between human and bacteria, thereby improving the anti-bacterial steel for healthy environment, which were well received by consumers. At present, Yieh Phui Enterprise's "Anti-bacteria, healthy eco-friendly steel plate" is fully used on the air-conditioning and duct system of National Cheng Kung University's "Yun-Suan Sun Green Building Research Center" (also known as "The Magic School of Green Technologies"). The university is the first in the world to have a 100% green building, and is also Taiwan's first zero-carbon emission building. This innovative building with the characteristics of green energy was awarded EEWH's highest "Diamond Grade Building Label" by the Ministry of the Interior in April 2011. In May 2011, it was again awarded U.S. Green Building Council LEED's highest level of "Platinum Grade

185

Building Label". In Q1 2015, Yieh Phui once again developed a nano-grade environmentally friendly, fingerprint resistant steel plate that passed the certification by the Industrial Development Bureau, Ministry of Economic Affairs, and was awarded "Nano Label", setting a new milestone in innovative research and development. Pertaining to the above, Yieh Phui has continued its current successful research and development model, and cooperates with suppliers of surface treatment and coating materials to develop new products, and integrates with the supply chain's sales system such as dealers or molding plants, to maximize the products' benefits. In 2014, the Company plans to once again cooperate with hot-rolling and cold-rolling suppliers to develop high forming and high tensile strength steel for structural building materials and steel plate for automotive molding. Also, it will develop low cost processing products that conform to Australia's G450 and Japan's STK 700 specifications, and rose metallic paint, wood grain and marble grain coated steel plate, to be used on home appliances or indoor purposes, creating greater added value for the Company. Also, in response to the concept of global village, EU has implemented directives, RoHS and WEEE, in 2006, which emphasize that electronic and electrical appliances are to comply with the requirements of product, environmentally friendly processing and recycle and reuse. It has also received response and attention from governments and industries throughout the world. At that time, as Yieh Phui has completed the research and development of eco-friendly products and processes, it received large amount and long-term orders from home appliance brands. In the past two years, the European Union again implemented new instructions, by including building materials such as plated and coated products into environmentally friendly long-term research and development program for 2017 and 2018. In 2016, catering to customer demands, coated products was used on building materials, a seamless replacement by environmentally friendly product was carried out, which once again producing outstanding performance in promotion and sales.

This year's research and development projects are expected to be completed by Q4 2017, with an estimated investment amount of around NT$94,500 thousand. Upon successful research and development, it will provide more complete product portfolio of environmentally friendly home appliances and building materials. Also, with the promotion and production of high quality and usage products, it would be able to generate higher profit.

(4) The impact of changes of important domestic and foreign policies and laws on the Company’s finance and business, and the countermeasures: None

(5) The impact of changes in technologies and industries on the Company’s finance and business, and the countermeasures:

Our Company's products are traditional iron and steel products. With more than 50 years of technological development, our technologies are considerably stable, and we do not see major changes. Hence, technology and industry changes do not have significant impact on the Company's products.

(6) The impacts of changes of corporate image on the company's crisis management and the countermeasures:

In line with the vision of "Becoming world's best iron and steel manufacturing and service enterprise by 2018", the Company set annual targets to be participated and executed by all staffs in a top-down approach. Trainings and counselling are also improved to enhance corporate image.

186

(7) Anticipated benefits of mergers and possible risks:

(8) Anticipated benefits and possible risks of plant expansion:

Our Company's China subsidiary, Yieh Phui (China) Technomaterial Co., Ltd., is expanding its plant in Changshu Economic Development Zone, to achieve an annual capacity of 620,000 tons of galvanized steel roll, and 420,000 tons of color coated steel roll. It is estimated that with the mass production in the future, besides increasing the sale of steel plate for motor cars, it can also provide more comprehensive color steel roll products, thereby increasing revenue. However, there is still a potential threat of demand reduction of iron and steel from the world and China due to economic slowdown.

(9) Risks due to concentrated procurement and sales, and the countermeasures:

Besides choosing suppliers that we have long-term cooperation and good relationship with to be our raw materials supplier, we also maintain good relationship with potential suppliers, so as to ensure stable supply of materials, high production yield, and higher advantage over competitors in terms of long-term cost.

Our products are sold to countries all over the world, and we choose the largest local dealers and customers, with the strongest sales capabilities, establishing high market diversification. Also, our Company carries products with all dimensions, which gives the Company excellent market transfer capability in response to the constantly changing sales market.

(10) The impact on the Company, and risks arising from major exchange or transfer of shares by directors, supervisors or major shareholders with over 10% of shareholdings, and the countermeasures:

The Company's directors, supervisor and major shareholders with more than 10% shareholding, due to their high shareholding and low movement, pose no risk of significant equity transfer or change.

  • (11) The impact on the Company, and risk due to changes in managerial authority, and the countermeasures: None

  • (12) For any litigious or non-litigious matters, the Company and the Company's directors, supervisors, general managers, person with actual responsibility in the company, and major shareholders holding more than 10% of the company's shares, shall be disclosed. If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the company that was finalized or remained pending during the most recent 2 fiscal years or during the current fiscal year up to the printing date of the annual report, the report shall disclose the facts in dispute, amount in dispute, commencement date, main parties involved, and current status of the case as at the date of printing of the report: None.

(13) Other material risks and countermeasures: None

7. Other Important Matters: None

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VIII. Special Items

1. Affiliation Information:

1. Related companies:

(I) Consolidated Operating Report of Affiliates

(1). Organization chart of related companies: as of December 31, 2016

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|Yieh Phui Enterprise Co., Ltd.|
|80%|67.27%|100%|100%|100%|86.99%|77.54%|100%|56.39%|100%|97.44%|79.50%|49%|28.27%|54.04%|100%|100%|100%|
|Lian So (H.K.) Co., Limited|Xin Bon Investment Co., Ltd.|Yieh Phui (Hong Kong)|Good Honor Holdings Ltd|Gen-Wan Technology Corp|EMMT Systems Corporat|Shin Phui Steel|Yieh Hsing Enterpr|Worthing Honor Holdings Ltd|United Brightening Development|1%|Da Yao Engineering & Consulting Co., Ltd.|Kuo Chang Enterpr|Hsing Jui Investments Limited|Golden Developments Ings Ltd.|
|Holdings|ion|Corpora|ise Co.,|Corp.|ise|
|90%|2.56%|
|100%|Shin Yang|
|Champion|
|7.41%|0.58%|Tycoons Steel|Steel Co.,|
|Hong Yu Asset|Yieh Phui (China)|91.47%|49.97%|42.53%|Logistic Inc.|100%|International Co., Ltd.|Ltd.|
|Management|
|Technomaterial|Groupco|
|Co., Ltd.|
|Co., Ltd|Applied|Technology|
|Wireless|
|Inc.|Zhao Ying|
|Identifications|100%|
|Investment|
|10%|100%|Group Inc.|100%|100%|
|and|
|100%|100%|
|Development|Guang Lian|
|100%|Steel (Viet|
|PT. Yieh|PT.|Tianjin|Changshu|Kingsgarden|Z|Great Emperor|38.46%|Nam) Co., Ltd|
|Ferro|E-United|Lianfa|AWID Asia Co.,|International|Hotel CO., LTD.|
|Indonesia|Ferro|Precisio|Changhui|Ltd.|Co., Ltd.|
|(YFI)|Indonesia|Trading|100%|100%|
|n Steel|
|(EFI)|Co.,|
|Co., Ltd|Ltd.|
|70%|
|AWID China|AWID China|
|Co., Ltd.|Co., Ltd.|I-Hwa|
|(Shanghai)|(Changshu)|Interna|
|tional|
|Co.,|

----- End of picture text -----

188

(2). Basic information of each affiliated company

ic information of each affiliated company
Data date: December 31,2016;Unit: NT$1,000(exchange rate for USD: 32.25;for RMB: 4.649)
Date of
Incorporation
Address
Paid-up capital
Main businesses
04/14/1978No. 369, Yuliao Road, Qiaotou District, Kaohsiung
City
NT$17,180,906Galvanized,
coated steel coil
07/24/1995Tropic Isle Building P.O.BOX 438, Road Town,
Tortola B.V.I.
US$ 100Investment
business
12/04/1995Tropic Isle Building P.O.BOX 438, Road Town,
Tortola B.V.I.
US$ 46Investment
business
06/25/19901st Floor, No.25, Lane 175, Daren Road, Taishang
Village, Gangshan District, Kaohsiung City
NT$309,677Trading of steel
products
06/10/201020th Floor, Tesbury Centre, 28 Queen's Road, Hong
Kong
US$ 233,500Investment
business
01/28/2002No.1, Yehui Road, Riverside Industrial Park,
Changshu City, Jiangsu Province, China
RMB$ 1,689,322Galvanized,
coated steel coil
05/01/2000No. 366, Zhongcheng Street, Gangshan Village,
GangshangDistrict,KaohsiungCity
NT$27,500Telecommunicatio
n subcontract
10/04/1988No. 16-1, South 2nd Road, Taichung Export
Processing Zone, Tanzi District, Taichung City
NT$369,497
Manufacture of
military standard
printed circuit
boards and
module boards
09/05/20061st Floor, No. 100, Shengli 3rd Street, Ganzhe Village,
Tanzi Village, Taichung City
NT$90,050
Wholesale of
telecommunicatio
ns equipment and
electronic
materials
07/09/1997Gorporation Trust Center, 1209 Orange Street,
Wilmington,Delaware,USA
US$ 441RFID technology
product
Name of Company Date of
Incorporation
Address		 Paid-up capital Main businesses
Yieh Phui Enterprise Co., Ltd. 04/14/1978 No. 369, Yuliao Road, Qiaotou District, Kaohsiung
City		 NT$17,180,906 Galvanized,
coated steel coil
Worthing Honor Holdings Ltd. 07/24/1995 Tropic Isle Building P.O.BOX 438, Road Town,
Tortola B.V.I.		 US$ 100 Investment
business
Good Honor Holdings Ltd. 12/04/1995 Tropic Isle Building P.O.BOX 438, Road Town,
Tortola B.V.I.		 US$ 46 Investment
business
Shin Phui Steel Corporation 06/25/1990 1st Floor, No.25, Lane 175, Daren Road, Taishang
Village, Gangshan District, Kaohsiung City		 NT$309,677 Trading of steel
products
Yieh Phui (Hong Kong) Holdings Limited 06/10/2010 20th Floor, Tesbury Centre, 28 Queen's Road, Hong
Kong		 US$ 233,500 Investment
business
Yieh Phui (China) Technomaterial Co., Ltd. 01/28/2002 No.1, Yehui Road, Riverside Industrial Park,
Changshu City, Jiangsu Province, China		 RMB$ 1,689,322 Galvanized,
coated steel coil
Gen-Wan Technology Corp 05/01/2000 No. 366, Zhongcheng Street, Gangshan Village,
GangshangDistrict,KaohsiungCity		 NT$27,500 Telecommunicatio
n subcontract
EMMT Systems Corporation 10/04/1988 No. 16-1, South 2nd Road, Taichung Export
Processing Zone, Tanzi District, Taichung City		 NT$369,497 Manufacture of
military standard
printed circuit
boards and
module boards
Groupco Technology Inc. 09/05/2006 1st Floor, No. 100, Shengli 3rd Street, Ganzhe Village,
Tanzi Village, Taichung City		 NT$90,050 Wholesale of
telecommunicatio
ns equipment and
electronic
materials
Applied Wireless Identifications Group, Inc. 07/09/1997 Gorporation Trust Center, 1209 Orange Street,
Wilmington,Delaware,USA		 US$ 441 RFID technology
product

189

Name of Company Date of
Incorporation
Address		 Paid-up capital Main businesses
AWID Asia Co., Ltd. 07/15/2008 3rd Floor, No.9, Section 1, Xuecheng Road, Dashu
District, Kaohsiung City		 NT$30,300 Wholesale of
telecommunicatio
ns equipment and
electronic
materials
AWID China Co., Ltd. (Shanghai) 01/26/2011 Room 706, Rongke Building, No.443, Dapu Road,
Luwan District, Shanghai City		 RMB$ 4,472 Wholesale of
telecommunicatio
ns equipment and
electronic
materials
AWID China Co., Ltd. (Changshu) 06/28/2016 No.1, Yehui Road, Riverside Industrial Park,
Changshu City, Jiangsu Province, China		 US$ 300 Wholesale of
telecommunicatio
ns equipment and
electronic
materials
Yieh Hsing Enterprise Co., Ltd. 07/18/1978 No. 369, Baomi Road, Baimi Village, Gangshan
District, Kaohsiung City		 NT$6,306,516 Production and
sales of steel pipe,
steel coil
products,wire
Great Emperor Hotel CO., LTD. 11/24/2011 2nd Floor, No.111, Minghua 1st Road, Zuoying
District,KaohsiungCity		 NT$2,100,000 Hotel Industry,
etc.
Kingsgarden International Co., Ltd. 11/24/2011 2nd Floor, No.111, Minghua 1st Road, Zuoying
District, Kaohsiung City		 NT$2,150,000 Departmental
stores,
supermarkets,etc.
Shin Yang Steel Co., Ltd. 02/15/2011 No.297, Yuliao Road, Qiaotou District, Kaohsiung
City		 NT$870,000 Black steel pipe,
galvanized steel
pipe, EMT steel
pipe, rectangular
tube, API casing,
pipeline, etc.
Golden Developments Holdings Ltd. 05/02/2012 Kingston Chambers, P.O. Box 217, Road Town, RMB$ 629 Investment
business

190

Name of Company Date of
Incorporation
Address		 Paid-up capital Main businesses
Tortola, British Virgin Islands
Champion Logistic Inc. 02/08/2002 Offshore Chambers, P. O. Box 217, Apia, Samoa US$ 58,500 Investment
business
Tycoons Steel International Co., Ltd. 01/04/2006 Scotia Centre, 4th Floor, P.O. Box 2804,George Town,
Grand Cayman,Cayman Islands.		 US$ 52,000 Investment
business
Guang Lian Steel (Viet Nam) Co., Ltd 09/08/2006 Dung Quat Economic Zone, Quang Ngai, Vietnam US$ 43,900 Manufacture and
sale of iron and
steel products and
by-products
Hsing Jui Investment Limited 01/06/2003 Offshore Chambers, P.O. Box 217,Apia, Samoa. US$ 5 Investment
business
Tianjin Lianfa Precision Steel Co., Ltd 07/20/2006 No.125, Zhongnan 6th Street, West Zone, Tianjin
Economic-Technological Development Area,		 RMB$ 143,438 Steel
manufacturing,
processing, sale,
etc.
Changshu Changhui Trading Limited 08/15/2014 No.1, Yehui Road, Riverside Industrial Park, Changshu
City, Jiangsu Province, China		 RMB$ 10,000 Wholesale and
import and export,
etc. of various
fabricated metal
products
Sin Bang Investment & Development Co., Ltd. 05/10/2001 2nd Floor, No.9, Section 1, Xuecheng Road, Dashu
District,KaohsiungCity		 NT$223,125 Investment
business
Hong Yuh Assets Management Co.,Ltd. 01/10/2007 2nd Floor, No.9, Section 1, Xuecheng Road, Dashu
District, Kaohsiung City		 NT$550,000 Wholesale and
real estate related
management
consultancy
United Brightening Development Corp. 10/01/2002 2nd Floor, No.9, Section 1, Xuecheng Road, Dashu
District, Kaohsiung City		 NT$1,359,880 Consulting of iron
and steel
production
technology
Kuo Chang Enterprise Co., Ltd. 07/01/2003 1st Floor, No.62-1, Renai Road, Luzhu District,
KaohsiungCity		 NT$953,878 Wholesale of
Ironware

191

Name of Company Date of
Incorporation
Address		 Paid-up capital Main businesses
Chao Ying Investment Development Co.,, Ltd. 05/11/2001 2nd Floor, No.9, Section 1, Xuecheng Road, Dashu
District,KaohsiungCity		 NT$304,000 Investment
business
Da Yao Engineering & Consulting Co., Ltd. 01/23/2008 2nd Floor, No.9, Section 1, Xuecheng Road, Dashu
District,KaohsiungCity		 NT$20,000 Management
services
PT. E-United Ferro Indonesia 09/18/2014 Plaza Asia, 18th Floor, Unit C. JI Jenderal Sudirman
Kav.59 Jakarta Selatan 12190, Indonesia		 US$ 2,500 Metal
manufacturing
industry
PT. Yieh Ferro Indonesia 03/17/2016 Plaza Asia, 18th Floor, Unit C. Ji Jenderal Sudirman
Kav.59 Jakarta Selatan 12190,Indonesia		 US$ 50 Metal
manufacturing
Lian So (H.K) Co., Limited 01/16/2015 20th Floor, Tesbury Centre, 28 Queen's Road, Hong
Kong		 US$ 600 Investment
business
Yi Hua International Co., Ltd 10/05/2016 3rd Floor, No.5, Section 1, Xuecheng Road, Dashu
District, Kaohsiung City		 NT$6,000 Residence and
Buildings Lease
Construction and
Development

Note: 1. All affiliated companies, regardless of its scale, shall be disclosed.

Note: 2. If the affiliated company has plant, and the sales value of the plant's products exceeds 10% of the controlling company's operating revenue, the plant's name, date of incorporation, address and the main product items manufactured by the plant shall be stated.

Note: 3. If the affiliated company is a foreign company, the company name and address shall be stated in English, the date of incorporation indicated in Gregorian format, and paid-up capital indicated in foreign currency (the exchange rate on the date of report shall be stated).

(3) Companies presumed to have a relationship of control and subordination according to Article 369-3 of the Company Act: None.

192

(4) Operating businesses of all affiliated companies, and the business relationship among the affiliated companies:

(4) Operating businesses of all affiliated companies, and the business relationship among
the affiliated companies:		 (4) Operating businesses of all affiliated companies, and the business relationship among
the affiliated companies:		 (4) Operating businesses of all affiliated companies, and the business relationship among
the affiliated companies:
A. The main operating businesses of all affiliated companies are plated steel products
manufacturing, steel products trading, steel products cutting and slitting,
manufacture of black steel pipe, galvanized steel pipe, EMT steel pipe, rectangular
tube, API casing and pipeline, etc., investment, hotel industry and departmental
stores, supermarkets, nickel iron manufacturing, etc.
(Base date: December 31,2016)
Industry Name of affiliated company Business relationship with other
affiliated companies
Investment holding
companies		 Yieh Phui (Hong Kong) Holdings
Limited		 Holding company of Yieh Phui
(China)
Tycoons Steel International Co., Ltd. Holding company of Guang Lian
Sin Bang Investment & Development
Co., Ltd.
Invested enterprise of Yieh Phui
HsingJui Investment Limited Invested enterprise of Yieh Phui
Chao Ying Investment Development
Co.,,Ltd.		 Invested enterprise of United
BrighteningDevelopment Corp.
Hong Yuh Assets Management Co.,
Ltd.		 Invested enterprise of Yieh Phui
United Brightening Development
Corp.		 Holding company of Chao Ying
Lian So(H.K)Co.,Limited Invested enterprise of Yieh Phui
Overseas investment
companies		 WorthingHonor Holdings Ltd. Invested enterprise of Yieh Phui
Champion Logistic Inc. Invested enterprise of Yieh Phui
Golden Developments Holdings Ltd. Invested enterprise of Yieh Phui
Goodhonor Holdings Ltd. Invested enterprise of Yieh Phui
Iron and steel
industry		 Yieh Phui (China) Technomaterial
Co.,Ltd.		 Investment of Yieh Phui (Hong
Kong)
Shin Phui Steel Corporation Sale of someproducts of Yieh Phui
Yieh HsingEnterprise Co.,Ltd. Investment of Yieh Phui
Shin YangSteel Co.,Ltd. Investment of Yieh Phui
Guang Lian Steel (Viet Nam) Co.,
Ltd		 Investment of Tycoons
Tianjin Lianfa Precision Steel Co.,
Ltd		 Investment of Yieh Phui (China)
Electronics industry Gen-Wan TechnologyCorp Investment of Yieh Phui
EMMT Systems Corporation Investment of Gen-Wan Technology
Groupco Technology Inc. Investment of EMMT Systems
Corporation
Applied Wireless Identifications
Group,Inc.		 Investment of EMMT Systems
Corporation
AWID Asia Co., Ltd Investment of Applied Wireless
Identifications Group,Inc.
AWID China Co.,Ltd.(Shanghai) Investment of AWID
AWID China Co.,Ltd.(Changshu) Investment of AWID
Hotel Industry Great Emperor Hotel CO.,LTD. Investment of Yieh Hsing

193

Industry Name of affiliated company Business relationship with other
affiliated companies
Departmental
stores,
supermarkets,
etc.		 Kingsgarden International Co.,Ltd. Investment of Yieh Hsing
Yi Hua International Co., Ltd Investment of Kingsgarden
Management
consulting		 Da Yao Engineering & Consulting
Co., Ltd.		 Investment of United Brightening
Development Corp.
Trade industry Changshu Changhui Trading Co.,
Ltd.		 Investment of Yieh Phui (China)
Kuo ChangEnterprise Co.,Ltd. Invested enterprise of Yieh Phui
Nickel-iron
manufacturing
industry		 PT. E-United Ferro Indonesia Investment of HongYu
PT. Yieh Ferro Indonesia Investment of Lian So (H.K)

(5) The names of the directors, supervisors and presidents of each affiliated company, and the number of shares they hold or the amount of capital they contribute:

Information of affiliated company's directors, supervisors and presidents as of December 31, 2016

as of December 31, 2016 as of December 31, 2016
Unit: Shares;%
Company Name Title Name or representative Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Yieh Phui
Enterprise Co., Ltd.		 Director Kuo Chiao Investment &
Development Co., Ltd.
Representative: I. S. Lin		 55,557,334
3.23%
Director Kuo Chiao Investment &
Development Co., Ltd.
Representative: Ping-Yong
Liang		 55,557,334
3.23%

Director		 Kuo Chiao Investment &
Development Co., Ltd.
Representative: Lin-Maw
Wu		 55,557,334
3.23%
Director Kuo Chiao Investment &
Development Co., Ltd.
Representative:
Ching-Tsung Huang		 55,557,334
3.23%
Independent
Director		 Chin-Shu Sun ─ ─

194

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Independent
Director		 Ching-Hui Hsieh ─ ─
Independent
Director		 Te-Yuan Yang ─ ─
Manager Lin-Maw Wu ─ ─
Good Honor
Holdings Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Pi-Hsian Li
46,400
100.00%
Worthing Honor
Holdings Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Pi-Hsian Li
100,000
100.00%
Yieh Phui (Hong
Kong) Holdings
Limited		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Pi-Hsian Li
233,500,000
100.00%
Shin Phui Steel
Corporation		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 30,967,724
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 30,967,724
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 30,967,724
100.00%
Supervisor Yieh Phui Enterprise Co.,
Ltd.
Representative: He-Hsing
Lai		 30,967,724
100.00%
Shin Yang Steel
Co., Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 87,000,000
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 87,000,000
100.00%

195

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 87,000,000
100.00%
Supervisor Yieh Phui Enterprise Co.,
Ltd.
Representative:
Ching-TsungHuang		 87,000,000
100.00%
Manager Lin-Maw Wu ─ ─
Hong Yuh Assets
Management Co.,
Ltd.		 Chairman Yieh United Steel
Corporation
Representative:
Ching-TsungHuang		 12,300,000
22.36%
Director Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 12,300,000
22.36%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 37,000,000
67.28%
Supervisor Yieh Mau Corporation
Representative: Tien-Chi
Chang		 5,700,000
10.36%
Supervisor Yieh Mau Corporation
Representative: Hong-Chi
Chang		 ─ ─
PT. E-United Ferro
Indonesia		 Chairman Yung-Hsian Chen ─ ─
Director Ching-Tsung Huang ─ ─
Supervisor Tien-Chi Chang ─ ─
Supervisor Huang-Tsai Ye ─ ─

196

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Sin Bang
Investment &
Development Co.,
Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 22,312,500
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 22,312,500
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Ping-Yung
Liang		 22,312,500
100.00%
Supervisor Yieh Phui Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 22,312,500
100.00%
Golden
Developments
Holdings Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Pi-Hsian Li
100,000
100.00%
Yieh Phui (China)
Technomaterial
Co., Ltd.		 Chairman Yieh Phui (Hong Kong)
Holdings Limited
Representative: Lin-Maw
Wu		 ─ ─
Director Yieh Phui (Hong Kong)
Holdings Limited
Representative: Tien-Chi
Chang		 ─ ─
Director Yieh Phui (Hong Kong)
Holdings Limited
Representative: Yung-Fang
Chang		 ─ ─
Director Yieh Phui (Hong Kong)
Holdings Limited
Representative: Sen-Long
Chen		 ─ ─
Director Yieh Phui (Hong Kong)
Holdings Limited
Representative: Yung-Hsian
Chen		 ─ ─
Supervisor Yieh Phui (Hong Kong)
Holdings Limited
Representative:
Ching-TsungHuang		 ─ ─

197

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Manager Yung-Fang Chang ─ ─
Changshu
Changhui Trading
Co., Ltd.		 Chairman Yieh Phui (China)
Technomaterial Co., Ltd.
Representative: Yung-Fang
Chang		 ─ ─
Director Yieh Phui (China)
Technomaterial Co., Ltd.
Representative: Lin-Maw
Wu		 ─ ─
Director Yieh Phui (China)
Technomaterial Co., Ltd.
Representative: Yung-Hsian
Chen		 ─ ─
Hsing Jui
Investments
Limited		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 5,000
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 5,000
100.00%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 5,000
100.00%
Tianjin Lianfa
Precision Steel Co.,
Ltd		 Chairman Yieh Phui (China)
Technomaterial Co., Ltd.
Representative: Yung-Fang
Chang		 ─ ─

Director		 Yieh Phui (China)
Technomaterial Co., Ltd.
Representative: Lin-Maw
Wu		 ─ ─

Director		 Yieh Phui (China)
Technomaterial Co., Ltd.
representative: Yung-Hsian
Chen		 ─ ─
Supervisor Yieh Phui (China)
Technomaterial Co., Ltd.
Representative:
Ching-TsungHuang		 ─ ─
Gen-Wan
Technology Corp		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 2,392,192
86.99%

198

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu(		 2,392,192
86.99%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 2,392,192
86.99%
Supervisor Wei Chiao Investment &
Development
Representative: He-Hsing
Lai		 16,901
0.61%
EMMT Systems
Corporation		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 28,650,599
77.54%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative:
Ching-TsungHuang		 28,650,599
77.54%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 28,650,599
77.54%
Supervisor Gen-Wan Technology Corp
Representative: Tien-Chi
Chang		 2,737,769
7.41%
Groupco
Technology Inc.		 Chairman EMMT Systems
Corporation
Representative: Lin-Maw
Wu		 4,500,000
49.97%
Director EMMT Systems
Corporation
Representative:
Ching-TsungHuang		 4,500,000
49.97%
Director EMMT Systems
Corporation
Representative: Yung-Hsian
Chen		 4,500,000
49.97%
Director Chen Ke-Qin 530,000
5.89%
Director EMMT Systems
Corporation
Representative: Tien-Chi
Chang		 4,500,000
49.97%

199

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Supervisor Shin Phui Steel Corporation
Representative:
Ching-ShengYu		 3,830,000
42.53%
Supervisor Shin Phui Steel Corporation
Representative: He-Hsing
Lai		 3,830,000
42.53%
Applied Wireless
Identifications
Group, Inc.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 ─ ─
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 ─ ─
Director EMMT Systems
Corporation
Representative:
Ching-TsungHuang		 40,488,461
91.47%
Director EMMT Systems
Corporation
Representative: Shi-Yi Chou
─		 ─
Director Applied Wireless
Identifications Group, Inc.
Representative: You-Sheng
Huang		 ─ ─
AWID Asia Co.,
Ltd.		 Chairman Applied Wireless
Identifications Group, Inc.
Representative: Lin-Maw
Wu		 3,030,000
100.00%
Director Applied Wireless
Identifications Group, Inc.
Representative:
Ching-TsungHuang		 3,030,000
100.00%
Director Applied Wireless
Identifications Group, Inc.
Representative: Yung-Hsian
Chen		 3,030,000
100.00%
Supervisor Applied Wireless
Identifications Group, Inc.
Representative: Tien-Chi
Chang		 3,030,000
100.00%
AWID China Co.,
Ltd. (Shanghai)		 Chairman AWID Asia Co., Ltd.
Representative: Lin-Maw
Wu		 ─ ─

200

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Director AWID Asia Co., Ltd.
Representative:
Ching-TsungHuang		 ─ ─
Director AWID Asia Co., Ltd.
Representative: Yung-Hsian
Chen		 ─ ─
Supervisor AWID Asia Co., Ltd.
Representative: Tien-Chi
Chang		 ─ ─
Champion Logistic
Inc.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Pi-Hsian Li
─		 ─
Director I. S. Lin ─ ─
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 57,000,000 97.44%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 ─ ─
Yieh Hsing
Enterprise Co., Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 355,646,587
56.39%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Sen-Long
Chen		 355,646,587
56.39%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 355,646,587
56.39%

Director		 Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 355,646,587
56.39%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 355,646,587
56.39%
Independent
Director		 Chin-Shu Sun ─ ─
Independent
Director		 Ching-Hui Hsieh ─ ─

201

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Supervisor Hsing Loong Investment &
Development co., Ltd.
Representative:
Ching-TsungHuang		 3,313,850
0.53%
Supervisor Hsing Loong Investment &
Development co., Ltd.
Representative: He-Hsing
Lai		 3,313,850
0.53%
Manager Sen-Long Chen ─ ─
Great Emperor
Hotel CO., LTD.		 Chairman Yieh Hsing Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 210,000,000 100.00%
Vice Chairman Yieh Hsing Enterprise Co.,
Ltd.
Representative: Chun-Dian
Wang		 210,000,000 100.00%
Director Yieh Hsing Enterprise Co.,
Ltd.
Representative: I. S. Lin		 210,000,000 100.00%
Director Yieh Hsing Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 210,000,000 100.00%
Director Yieh Hsing Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 210,000,000 100.00%
Supervisor Yieh Hsing Enterprise Co.,
Ltd.
Representative: Hong-Chi
Chang		 210,000,000 100.00%
Kingsgarden
International Co.,
Ltd.		 Chairman Yieh Hsing Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 215,000,000 100.00%
Director Yieh Hsing Enterprise Co.,
Ltd.
Representative: I. S. Lin		 215,000,000 100.00%
Director Yieh Hsing Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 215,000,000 100.00%

202

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Supervisor Yieh Hsing Enterprise Co.,
Ltd.
Representative: Hong-Chi
Chang		 215,000,000 100.00%
Yi Hua
International Co.,
Ltd		 Chairman Kingsgarden International
Co., Ltd.
Representative: Chun-Sheng
Lin		 420,000
70.00%
Director Kingsgarden International
Co., Ltd.
Representative:
Ching-ShengYu		 420,000
70.00%
Director KIWA International
Commercial Asset
Management Limited
Representative: Chun-Wan
Wang		 180,000
30.00%
Supervisor Yung-Hsian Chen ─ ─
Tycoons Steel
International Co.,
Ltd.		 Chairman Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 14,000,000
26.92%
Director Yieh United Steel
Corporation
Representative: Pi-Hsian Li
14,000,000
26.92%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 14,700,000
28.27%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 14,700,000
28.27%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 14,700,000
28.27%
Director United Brightening
Development Corp.
Representative: Ping-Yung
Liang		 300,000
0.58%
Director United Brightening
Development Corp.
Representative: Tien-Chi
Chang		 300,000
0.58%

203

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Guang Lian Steel
(Vietnam)Co.,Ltd		 Chairman Pi-Hsian Li ─ ─
Kuo Chang
Enterprise Co., Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 51,547,567
54.04%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 51,547,567
54.04%

Director		 Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 42,924,510
45.00%
Supervisor Chia Yuan Investment &
Development Co., Ltd.
Representative: Hong-Chi
Chang		 915,723
0.96%
United Brightening
Development Corp.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Yung-Hsian
Chen		 108,110,740
79.50%
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: I. S. Lin		 108,110,740
79.50%

Director		 Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 21,842,608
16.06%
Supervisor Shin Yang Investment &
Development Co., Ltd.
Representative: Hong-Chi
Chang		 6,034,652
4.44%
Chao Ying
Investment
Development Co.,,
Ltd.		 Chairman United Brightening
Development Corp.
Representative: Huang-Tsai
Ye		 30,400,000
100.00%
Director United Brightening
Development Corp.
Representative: Tien-Chi
Chang		 30,400,000
100.00%
Director United Brightening
Development Corp.
Representative: I. S. Lin		 30,400,000
100.00%

204

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Supervisor United Brightening
Development Corp.
Representative:
Ching-TsungHuang		 30,400,000
100.00%
Da Yao
Engineering &
Consulting Co.,
Ltd.		 Chairman Yieh Phui Enterprise Co.,
Ltd.
Representative: Tien-Chi
Chang		 980,000
49.00%
Director Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 800,000
40.00%
Director United Brightening
Development Corp.
Representative:
Ching-TsungHuang		 19,900
1.00%
Supervisor Yung-Hsian Chen ─ ─
Lian So (H.K) Co.,
Limited		 Chairman Pi-Hsian Li ─ ─
Director Yieh Phui Enterprise Co.,
Ltd.
Representative: Lin-Maw
Wu		 480,000
80.00%
Director Yieh United Steel
Corporation
Representative: Huang-Tsai
Ye		 60,000
10.00%
Supervisor Yieh Mau Corporation
Representative: Tien-Chi
Chang		 60,000
10.00%
AWID China Co.,
Ltd. (Changshu)		 Chairman AWID Asia Co., Ltd.
Representative: Lin-Maw
Wu		 ─ ─
Director AWID Asia Co., Ltd.
Representative:
Ching-TsungHuang		 ─ ─
Director AWID Asia Co., Ltd.
Representative: Yung-Hsian
Chen		 ─ ─
Supervisor AWID Asia Co., Ltd.
Representative: Tien-Chi
Chang		 ─ ─
PT. Yieh Ferro
Indonesia		 Chairman Pi-Hsian Li ─ ─
Director I. S. Lin ─ ─
Director Lin-Maw Wu ─ ─

205

Company Name Title Name or representative Shareholding (Note 2)(Note
3)		 Shareholding (Note 2)(Note
3)
Note (1) Number of
Shares		 Shareholding
Percentage
Director Chong-Chi Kuo ─ ─
Director Ping-YongLiang ─ ─
Director Chia-ChengLin ─ ─
Director Yung-Hsian Chen ─ ─
Supervisor Tien-Chi Chang ─ ─
Supervisor Huang-Tsai Ye ─ ─
Supervisor Ching-TsungHuang ─ ─
Supervisor Achmad Kurniadi ─ ─

Note 1: If the affiliated company is a foreign company, list the personnel holding key positions. Note 2: If the invested company is a company limited by shares, fill in the number of shares and proportion of shareholding. For others, fill in the investment amount and indicate the proportion of contribution.

Note 3: If the director or supervisor is a legal person, the related information of the representatives shall be disclosed.

206

(6) Operational overview of related companies:

perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies: perational overview of related companies:
Data date: December 31,2016 Unit: NT$1,000
Company name
Capital
Total assets
Total
liabilities
Net value
Operating
revenue
Operating
income
Current
profit and
loss (after
tax)
Earnings per
share (NT$)
(after tax)
Yieh Phui Enterprise Co., Ltd.
17,180,906 48,233,073 20,695,421 27,537,652 23,867,665
2,064,727
2,502,005
1.46
Worthing Honor Holdings Ltd.
3,225
2,944
—
2,944
—
—
2
—
Goodhonor Holdings Ltd.
1,496
160,109
—
160,109
—
(1,487)
1,335
0.89
Shin Phui Steel Corporation
309,677
448,563
132,624
315,939
248,762
3,286
3,167
0.10
Gen-Wan Technology Corp
27,500
29,148
50
29,098
—
(100)
2,989
1.09
Yieh Phui (China) Technomaterial Co.,
Ltd.
7,853,660 25,767,341 15,964,557
9,802,784
18,112,235
1,860,157
1,137,945
—
Changshu Changhui Trading Co., Ltd.
46,490
47,526
80
47,446
—
(286)
369
—
EMMT Systems Corporation
369,497
529,744
159,304
370,440
533,129
37,353
39,681
1.10
Groupco Technology Inc.
90,050
10,684
482
10,202
3,219
(2,218)
(2,124)
(0.24)
Applied Wireless Identifications Group,
Inc.
14,234
152,253
25,928
126,325
234,563
21,515
20,983
—
AWID Asia Co., Ltd.
30,300
29,636
10,826
18,810
18,400
3,373
(1,146)
(0.55)
AWID China Co., Ltd. (Shanghai)
20,792
9,382
4,691
4,691
8,312
(2,741)
(3,335)
—
Company name Capital Total assets Total
liabilities		 Net value Operating
revenue		 Operating
income		 Current
profit and
loss (after
tax)		 Earnings per
share (NT$)
(after tax)
Yieh Phui Enterprise Co., Ltd. 17,180,906 48,233,073 20,695,421 27,537,652 23,867,665
2,064,727
2,502,005
1.46
Worthing Honor Holdings Ltd. 3,225
2,944
—		 2,944
—		 — 2
—
Goodhonor Holdings Ltd. 1,496
160,109
—		 160,109
—		 (1,487)
1,335
0.89
Shin Phui Steel Corporation 309,677
448,563
132,624
315,939
248,762
3,286
3,167
0.10
Gen-Wan Technology Corp 27,500
29,148
50
29,098
—		 (100)
2,989
1.09
Yieh Phui (China) Technomaterial Co.,
Ltd.
7,853,660		 25,767,341 15,964,557
9,802,784
18,112,235
1,860,157
1,137,945
—
Changshu Changhui Trading Co., Ltd. 46,490
47,526
80
47,446
—		 (286)
369
—
EMMT Systems Corporation 369,497
529,744
159,304
370,440
533,129
37,353
39,681
1.10
Groupco Technology Inc. 90,050
10,684
482
10,202
3,219
(2,218)
(2,124)
(0.24)
Applied Wireless Identifications Group,
Inc.
14,234
152,253
25,928
126,325
234,563
21,515
20,983
—
AWID Asia Co., Ltd. 30,300
29,636
10,826
18,810
18,400
3,373
(1,146)
(0.55)
AWID China Co., Ltd. (Shanghai) 20,792
9,382
4,691
4,691
8,312
(2,741)
(3,335)
—

207

Company name Capital Total assets Total
liabilities		 Net value Operating
revenue		 Operating
income		 Current
profit and
loss (after
tax)		 Earnings per
share (NT$)
(after tax)
AWID China Co., Ltd. (Changshu) 9,274
8,326
(53)
8,379
2,017
(936)
(936)
—
Yieh Hsing Enterprise Co., Ltd. 6,306,516
9,422,215
6,007,988
3,414,227
7,372,381
(12,565)
(256,004)
(0.41)
Great Emperor Hotel CO., LTD. 2,100,000
5,546,037
3,490,458
2,055,579
—		 (12,587)
(11,963)
(0.06)
Kingsgarden International Co., Ltd. 2,150,000
5,737,385
3,635,110
2,102,275
—		 (10,720)
(11,478)
(0.05)
Yi Hua International Co., Ltd 6,000
4,983
1,319
3,664
—		 (2,312)
(2,305)
—
Shin Yang Steel Co., Ltd. 870,000
2,171,619
1,407,987
763,631
1,936,406
61,180
5,304
0.06
Hong Yuh Assets Management Co., Ltd. 550,000
411,861
34,427
377,434
—		 (62,313)
(88,103)
(1.64)
Sin Bang Investment & Development Co.,
Ltd.
233,125
280,931
71
280,860
—		 (236)
12,691
0.57
Hsing Jui Investment Limited 161
2,074
—		 2,074
—		 (1)
1
—
Tianjin Lianfa Precision Iron and Steel
Co.,Ltd.
666,846
526,581
507,730
18,851
997,922
(96,960)
(113,460)
—
Yieh Phui (Hong Kong) Holdings Limited 7,530,375 14,167,372
4,349,087
9,818,285
1,622,308
4,514
1,129,223
—
Golden Development Holding Ltd. 2,926
292,186
285,140
7,046
—		 (310)
4,199
—
Champion Logistic Inc. 1,886,625
1,742,587
61
1,742,527
—		 (96)
(1,050)
—
United Brightening Development Corp. 1,359,880
1,907,892
421,311
1,486,581
—		 (740)
34,692
0.26

208

Company name Capital Total assets Total
liabilities		 Net value Operating
revenue		 Operating
income		 Current
profit and
loss (after
tax)		 Earnings per
share (NT$)
(after tax)
Chao Ying Investment Development Co.,,
Ltd.
304,000
307,969
66
307,903
—		 (225)
(1,229)
(0.05)
Da Yao Engineering & Consulting Co.,
Ltd.
20,000
22,511
425
22,086
4,681
327
160
0.01
Kuo Chang Enterprise Co., Ltd. 953,878
1,322,162
330,210
991,951
—		 (689)
33,696
0.35
Lian So (H.K) Co., Limited 19,350
18,140
—		 18,140
—		 (89)
(1,350)
—
PT. E-United Ferro Indonesia 68,424
64,209
1,654
62,556
—		 (13,056)
(27,453)
—
PT. Yieh Ferro Indonesia 15,803
15,043
109
14,933
—		 (1,158)
(1,411)
—
Tycoons Steel International Co., Ltd. 1,677,000
78,534
2,754
75,781
—		 (4,905)
(25,534)
—
Guang Lian Steel (Vietnam) Co., Ltd. 1,134,867
7,797
1,739
6,058
—		 (20,853)
(20,832)
—

(2) Consolidated financial statements of affiliated companies: please refer to page 211 for details.

(3) Affiliation report: none.

209

2. Private Placement of Securities: None

3. Holding or Disposal of the Company's Shares by Subsidiaries: None

4. Other Required Disclosures: None.

IX. Any Event which has a Material Impact on Shareholders' Rights and Interests or the Company’s Securities as Prescribed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act that have Occurred from Last Year to the Printing Date of This Report: None

210

Appendix I:

Last Fiscal Year's Consolidated Financial Statements of the Parent Company and Subsidiaries Audited and Attested by the CPA

Yieh Phui Enterprise Co., Ltd. STATEMENT

According to Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, the companies to be included in the Consolidated Financial Statement of Affiliated Enterprises are the same with those to be included in the Consolidated Financial Statement of the Parent Company and its Subsidiaries based on IFRS 10 recognized by Financial Supervisory Commission, R.O.C (Taiwan) in 2016 (from 1 January 2016 to 31 December 2016). In addition, as the information disclosed in the Consolidated Financial the Statements of Affiliated Enterprises has been revealed in the aforementioned Consolidated Financial Statement of the Parent Company and its Subsidiaries, there will not be a separate Consolidated Financial Statement for Affiliated Enterprises.

Declared by

Company Name: Yieh Phui Enterprise Co., Ltd.

Representative: I. S. Lin

21 March 2017

211

Member Crowe Horwath International

==> picture [173 x 30] intentionally omitted <==

Crowe Horwath (TW) CPAs

27F., No.6, Siwei 3[rd] Rd., Lingya Dist., Kaohsiung, Taiwan ROC Tel: (07) 3312133 Facsimile: (07) 3331710

AUDIT REPORT OF ACCOUNTANTS

To Yieh Phui Enterprise Co., Ltd.

AUDIT REPORT

The accountants have audited the Consolidated Balance Sheet of Yieh Phui Enterprise Co., Ltd. and its subsidiaries (hereinafter referred to as the Yieh Phui Group) as of 31 December 2016 and 2015, the Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements (including Summary of Significant Accounting Policies) for the period of 1 January to 31 December 2016 and 2015.

Based on our review, the above Consolidated Financial Statements have been compiled in accordance with Regulations Governing the Preparation of Financial Reports, IFRSs and IAS with relevant interpretations and announcement approved and published by the Financial Supervisory Commission. These financial statements are sufficient to present the Consolidated Financial Position of the Yieh Phui Group as of 31 December 2016 and 2015 and the Consolidated Financial Performance and the Consolidated Cash Flow for the period of 1 January to 31 December 2016 and 2015.

Basis of the Audit

We conducted our audit in accordance with the Regulations Governing Auditing and the Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards (GAAS). Our responsibility under the above mentioned regulations will be further explained in the section titled "Accountant's Responsibility in Auditing the Consolidated Financial Statements." We have complied with the ethical requirements for accountants, fulfilled the relevant responsibilities under such requirements

212

and we have maintained our independence from the Yieh Phui Group. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit.

Key Audit Matters

Key Audit Matters refer to the most vital matters in the process of auditing the 2016 Consolidated Financial Statement of the Yieh Phui Group based on the accountant‟s professional judgment. Such matters have been handled during the process of auditing and compiling the Consolidated Financial Statements and in the preparation of our audit opinion. As such, we do not respond to each key matter individually. Herewith we list the following key matters regarding the Consolidated Financial Statements of the Yieh Phui Group as of 2016:

I. Timing of Sales Revenue Recognition

Please see note 4(29) of the Consolidated Financial Statement for accountant policies regarding revenue recognition; please see note 5(2)1. of the Consolidated Financial Statement for critical accounting estimates and assumptions regarding revenue recognition; please see note 6(31) of the Consolidated Financial Statement for details regarding revenue recognition.

Description of key audit matters:

The timing of sales revenue recognition pertains to confirming the timing for the transfer of ownership and risk to the customer. Since the sales conditions for each major customer may differ, the Yieh Phui Group determines whether to transfer the ownership and

risk of goods sold to the customer according to the trading conditions of each order. As the timing for recognizing the sales revenue may have a major impact on the Yieh Phui Group's financial performance, we have included this issue as one of the key audit matters. Audit Process Adopted:

Our audit process included investigating the effectiveness of the design and the execution of internal controls at the time of trial sales for revenue recognition; conducting surveys to sample trading conditions with major customers, and establishing trial deadlines to determine the appropriateness of the timing of sales for revenue recognition.

213

II. Inventory Valuation

Please refer to note 4(13) of the Consolidated Financial Statements for accounting policies regarding inventory valuation; please refer to note 5(2)5. of the Consolidated Financial Statements for critical accounting estimates and assumptions regarding inventory valuation and note 6(7) of the Consolidated Financial Statements for details of inventory valuation.

Description of key audit matters:

The Yieh Phui Group's inventory amounted to NTD 8,249,118,000 (Total cost of inventory NTD 8,672,726,000 net of allowance for inventory valuation losses NTD 423,608,000) as of 31 December 2016, which accounted for 10.06% of total assets. The inventory valuation is based on the lesser of the value of cost and net realizable value. Given the valuation of the net realizable value of inventory has a significant impact on critical evaluations and estimates and since inventory valuation is dependent on the influence of frequent volatile fluctuations of international metal prices, we have thus included this item in the key audit matters.

Audit Process Adopted:

Our major audit process included obtaining valuation information of the cost and net realizable value of inventory, conducting surveys to sample the estimated selling price and the most recent sales records, and assessing the appropriateness of management's basis for estimating the net realizable value.

Other Matters

Part of the Consolidated Financial Statements for 2015 and 2016 relating to the investee(s) recognized under the equity method were audited by other accountants separately. Those reports were used as input for assessing values of the companies in the above mentioned Consolidated Financial Statements of our audit report. The value of investments in affiliated companies recognized under the equity method as of 31 December 2016 and 2015 were NTD 5,358,441,000 and NTD 4,956,947,000 respectively, each

214

accounting for 6.53% and 6.49% of the total assets. The share of the profit from affiliated company using the equity method in 2016 and 2015 was NTD 146,399,000 and (NTD 243,151,000) respectively, each accounting for 4.34% and 15.23% of income before tax.

Yieh Phui Enterprise Co., Ltd. has prepared the Consolidated Financial Statements for 2016 and 2015. We have issued audit reports of unqualified opinion and unqualified opinion subsequent to revision for consideration.

The responsibility of the management and governing body for the Consolidated Financial Statements

It is the management‟s responsibility to prepare the Consolidated Financial Statements with appropriate information in accordance with the Regulations Governing the Preparation of Financial Reports, IFRSs and IAS with relevant interpretations and announcements approved and published by the Financial Supervisory Commission. The company‟s management is also responsible for the necessary internal controls when preparing the Consolidated Financial Statements to avoid material misstatements due to fraud or errors contained therein.

In preparing the Consolidated Financial Statements, the responsibility of management included the assessment of the sustainability of the Yieh Phui Group, disclosure of related matters, as well as adoption of consistent accounting methods, unless the management intends to liquidate the Yieh Phui Group or terminate the business, or no measure other than liquidation or termination of the business may be taken.

The governing bodies of the Yieh Phui Group (including the Audit Committee) have the responsibility to oversee the financial reporting process.

The Responsibility of Accountants in Auditing the Consolidated Financial Statements

The purpose of our audit is to provide reasonable certainty the Consolidated Financial Statements as a whole contain no material misstatements due to fraud or errors. "Reasonable Certainty" refers to a high level of credibility. Nevertheless, our audit, which was conducted according to GAAS, does not guarantee that a material misstatement(s) will be detected in

215

the Financial Statements. Material misstatements may be due to fraud or error. If it could have been reasonably anticipated that amounts were misstated, individually or in aggregate, this could have influenced the economic decisions made by the users of the Consolidated Financial Statements; if this situation could occur, it will be deemed to be material.

We have exercised professional judgment and maintained professional skepticism while abiding by GAAS in our audit. The following tasks have also been performed:

  1. Identified and evaluated the risk of a material misstatement(s) due to fraud or errors in the Consolidated Financial Statements; designed and executed appropriate countermeasures for the assessed risks; and obtained sufficient and appropriate evidence as the basis for the audit report. As fraud may involve collusion, forgery, deliberate omissions, false statements or violations of internal controls, the risks of material misstatements due to fraud is greater than that due to errors.

  2. Acquired the necessary understanding of internal controls pertaining to the audit so as to provide appropriate audit procedures under such circumstances. Nevertheless, the purpose of such an understanding is not to provide any opinion on the effectiveness of the internal controls of the Yieh Phui Group.

  3. Evaluated the appropriateness of the accounting policies adopted by management and the rationality of the accounting estimates and relevant disclosures.

  4. Assessed the appropriateness of the going-concern principle adopted by management, and any factors that may cause material risks to the company‟s existence. If we believe there may be factors causing significant uncertainties, we will remind the user of the Consolidated Financial Statements in our audit report of the relevant disclosure therein, or amend our report if inappropriate disclosures were made. Our conclusion is based on the evidence obtained as of the date of the audit report. However, there may be future factors subsequent to the audit report that cause the Yieh Phui Group's operations to be unstainable.

  5. Evaluated the information, structure and content of the Consolidated Financial

216

Statements (including the related notes) as a whole, as well as whether such statements convey relevant transactions and events appropriately.

  1. Obtained adequate and appropriate audit evidence regarding financial information of members of the Group so as to express opinions for the Consolidated Financial Statements. We are responsible for the supervision and execution of auditing the Group and the preparation of the audit opinion.

The communications between us and the governing body take into account the scope and timing of the planned audit and the significant audit findings (including any significant deficiencies in the internal controls discovered during the audit process).

We have also provided the governing body with our statement of independence in accordance with the professional ethics of accountants and communicated with the governing body regarding any facts and issues that may be deemed to have an influence on our independence as accountants and other matters (including related protective measures).

Through communications with the governing body, we determined the key audit matters for the 2016 Consolidated Financial Statements. Such matters have been explicitly highlighted in the audit report, but do not include information that is not disclosable by law or when, in extremely rare cases and with reasonable anticipation, where we decided not to communicate specific items in the audit report as the negative effects of such disclosure would exceed the benefits gained for public interest.

Crowe Horwath (TW) CPAs Accountant: Huang, Ling-Wen

Accountant: Hsieh, Ren-Yao

No. of the official approval: FSC No. 10200032833 21 March 2017

217

Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries

Consolidated Balance Sheet
For the Years Ended December 31, 2016 and 2015
Unit: In Thousands of New Taiwan Dollars
31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15
Code Assets Notes Amount ％ Amount ％ Code Liabilities and equity Notes Amount ％ Amount ％
Current assets
Current liabilities
1100 Cash and Cash Equivalents 6 (I) $8,133,181 10 $9,588,066 13 2100 Short-term loan 6 (XVII) $10,514,507 13 $12,183,919 17
1110
Financial assets at fair value		 6 (II) 119,868 - 125,778 - 2110 Short-term notes and bills p a6 (XVIII) 679,013 1 763,696 1
through profit or loss- current 2150
Notes payable		 2,094,250 3 749,098 1
1150
Notes receivable- net		 6 (III) 730,552 1 478,561 1 2170
Accounts payable		 1,193,816 1 959,960 1
1170 Accounts receivable-net 6 (IV) 2,171,582 3 1,512,992 2 2190
Construction contract payabl		 e6 (V) 29,402 - 30,932 -
1180 Accounts receivable--related p 7 922,244 1 767,624 1 2200
Other payables
6 (XIX)		 1,700,788 2 1,070,757 1
1190
Construction contracts receiva		 6 (V) 301,108 - 264,088 - 2230
Current income tax liabilities		 381,176 - 38,622 -
1195 Construction contract receivab 6 (V) 7 344,415 - 167,866 - 2250 Provision- current 6 (XX) 70,347 - 104,520 -
1200 Other receivables 6 (VI) 256,374 - 148,637 - 2310 Advanced Receipts 2,132,926 3 590,278 1
1220 Current income tax assets 1,611 - 18,471 - 2320
Long-term liabilities-		 6 (XXI) 5,115,562 6 1,122,293 1
130X Inventory 6 (VII) 8,249,118 11 5,788,170 8 current portion
1410 Prepayment 6 (VIII) 2,172,408 3 1,809,265 2 ---------------- ---- ---------------- ----
1476 Other financial assets- curre 6 (IX) 1,011,781 1 624,487 1 21XX Total current liabilities 23,911,787 29 17,614,075 23
---------------- ---- ---------------- ---- ---------------- ---- ---------------- ----
11XX Total current assets 24,414,242 30 21,294,005 28 Non-current liabilities
---------------- ---- ---------------- ---- 2530 Bonds payable 6 (XXII) - - 1,509,312 2
Non-current Assets 2540
Long-term loans		 6 (XXIII) 26,632,474 33 27,028,674 36
1510 Financial assets at fair value 6 (II) 9,999 - 9,999 - 2570 Deferred income tax liabilit i6 (XXXVI) 115,349 - 103,213 -
Assets- noncurrent 2630 Long-term deferred revenue 6 (XXV) 38,396 - 44,068 -
1523 Available- for-sale financial 6 (XI) 46,575 - 52,425 - 2640 Net defined benefit liabilit y6 (XXIV) 1,075,766 1 1,047,081 1
1543 Financial assets carried at co 6 (XII) 484,126 1 462,213 1 2645
Deposits Received		 18,739 - 9,728 -
1546 Investments in debt instrument 6 (XIII) 206,305 - - - ---------------- ---- ---------------- ----
- noncurrent 25XX Total noncurrent liabilities 27,880,724 34 29,742,076 39
1550 Investment using equity method 6 (X) 17,060,270 21 16,551,393 22 ---------------- ---- ---------------- ----
1600
Property, plant and equipment
6 (XIV)		 37,867,059 46 36,094,705 47 2XXX Total liabilities 51,792,511 63 47,356,151 62
1760
Investment property, net		 6 (XV) 944,835 1 901,616 1 ---------------- ---- ---------------- ----
1780
Intangible assets		 9,533 - 2,702 - Equity attributable to owners of the parent company
1840
Deferred income tax assets		 6 (XXXVI) 569,580 1 563,591 1
Capital
1920 Refundable Deposit 64,492 - 65,616 - 3110 Capital of Common Stock 六(XXVI) 17,180,905 21 17,180,905 23
1980
Other financial assets- non-c		 8 95,928 - 89,392 - 3200
Capital surplus		 6 (XXVII) 4,737,131 6 4,673,787 6
1985 Long-term prepaid rent 6 (XVI) 263,546 - 272,339 -
Retained earnings
-------------- ---- ---------------- ---- 3310
Legal reserve		 6 (XXVIII) 2,448,261 3 2,448,261 3
15XX Total Non-Current Assets 57,622,248 70 55,065,991 72 3320
Special reserve		 6 (XXVIII) 327,757 - 327,757 -
3350
Undistributed Earnings		 6 (XXVIII) 3,010,948 4 608,642 1
3400
Other equity		 6 (XXIX) -167,351 - 645,189 1
---------------- ---- ---------------- ----
31XX Total equity attributable to shareholde
27,537,651		 34 25,884,541 34
36XX
Non-controlling equity
6 (XXX)
2,706,328		 3 3,119,304 4
---------------- ---- ---------------- ----
3XXX Total Equity 30,243,979 37 29,003,845 38
------------ ---- ---------------- ---- ---------------- ---- ---------------- ----
1XXX Total assets $82,036,490 100 $76,359,996 100 1XXX Total liabilities and equity $82,036,490 100 $76,359,996 100
============ ==== ================ ==== ================ ==== ================ ====
(Please refer to the notes to the consolidated financial statements)
Chairperson: Lin, I-Shou Manager: Wu, Lin-Maw Accounting Manager: Lin,Jian-Ho

218

Yieh Phui Enterprise Co., Ltd. and Subsidiaries Yieh Phui Enterprise Co., Ltd. and Subsidiaries Yieh Phui Enterprise Co., Ltd. and Subsidiaries Yieh Phui Enterprise Co., Ltd. and Subsidiaries Yieh Phui Enterprise Co., Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2016 and 2015
Unit: In Thousands of New Taiwan Dollars
2016 2015
Code Item Notes Amount ％ Amount ％
4000 Operating Revenue 6 (XXXI) $52,847,410 100 $49,784,834 100
5000 Operating cost 6 (VII) 45,641,051 86 46,080,342 93
------------ ----- -------------- ----
5900 Grossprofit(loss) 7,206,359 14 3,704,492 7
Operating expenses
6100 Selling expenses 2,284,023 4 1,866,832 3
6200 Administrative Expense 976,487 2 890,841 2
6300 R&D Expenses 101,812 - 85,142 -
------------ ----- -------------- ----
6000 Total Operational Expenses 3,362,322 6 2,842,815 5
------------ ----- -------------- ----
6900 Operating income(loss) 3,844,037 8 861,677 2
------------ ----- -------------- ----
Non-operating income and expenses
7010 Other income 6(XXXII) 265,050 - 394,702 1
7020 Othergains and losses 6(XXXIII) -177,374 - -336,830 -1
7050 Financing Cost 6(XXXIV) -789,831 -1 -850,919 -2
7060 Share of the loss(profit) of associates andjoint ven t
230,190		 - -1,665,345 -3
------------ ----- -------------- ----
7000 Total Non-operating Income and Expenses -471,965 -1 -2,458,392 -5
------------ ----- -------------- ----
7900 Net income (loss) before tax 3,372,072 7 -1,596,715 -3
7950 Income tax expense (gain) 6 (XXXVI) 993,527 2 18,122 -
------------ ----- -------------- ----
8200 Net income (loss) 2,378,545 5 -1,614,837 -3
------------ ----- -------------- ----
Other comprehensive income (loss), net:
Items not reclassified subsequently to profit or loss:
8311 Remeasurement of defined benefit plans -71,478 - -66,341 -
8320 Share of the loss (profit) of associates and joint
ventures		 -26,336 - -23,220 -
recognized under equity method
8349 Income tax relating to items that will not be
reclassified to profit or loss		 -11,383 - -8,801 -
Items that may be reclassified subsequently to profit or loss:
8361 Exchange differences on translation of foreign
financial statements		 -849,812 -2 -108,159 -
8362 Unrealized gain (loss) on available-for-sell
financial assets		 -5,850 - 223,374 -
8370 Share of other consolidated loss (profit) of
subsidiaries, associates and joint ventures
recognized under equity method		 -104,959 - 126,291 -
8399 Income tax expense (or benefit) relating to items
that may be reclassified to profit or loss		 -142,336 - -29,365 -
------------ ----- -------------- ----
8300 Other comprehensive income 6 (XXXVII) -904,716 -2 190,111 -
------------ ----- -------------- ----
8500 Total comprehensive income (loss) $1,473,829 3 -$1,424,726 -3
============ ===== ============== ====
Net income (loss) attributable to:
8610 Owners of the parent company 2,502,005 5 -953,786 -2
8620 Non-controlling interest -123,460 - -661,051 -1
------------ ----- -------------- ----
8600 Total $2,378,545 5 -$1,614,837 -3
============ ===== ============== ====
Total comprehensive income (loss) attributable to:
8710 Owners of the parent company 1,612,620 3 -761,465 -2
8720 Non-controlling interest -138,791 - -663,261 -1
------------ ----- -------------- ----
8700 Total $1,473,829 3 -$1,424,726 -3
============ ===== ============== ====
Basic earnings per share(NTD)
9750 Basic earnings per share 6(XXXVIII) $1.46 -$0.56
================= =================
(Please refer to the notes to the consolidated financial statements)
Chairperson:Lin, I-Shou Manager: Wu, Lin-Maw Accounting Manager: Lin,Jian-Hong

219

Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries

Consolidated Statement of Changes in Equity

For the Years Ended December 31, 2016 and
2015 Unit: In Thousands of New Taiwan Dollars
Equity Attributable to Shareholders of the Parent Company
Other Equity
Exchange
differences		 Unrealized
gain (loss)
 Profit (loss)
on
Capital Retained earnings translation
of foreign		 on available-
for-sale		 hedge
instrument
Item Capital of
Common
 Capital
surplus		 Legal
reserve		 Special
reserve		 Undistribut
ed Earnings		 financial
statements		 financial
assets		 effective
hedge		 Non-controlling
interest		 Total
equity
Balance as of January 1, 2015 ~~Sh~~
$16,680,490		 $4,627,688 $2,324,376 $327,757 $2,649,026 $625,476 $-235,257 $-9,217 $2,257,832 $29,248,171

Earnings allocation and distribution:
Legal reserves - - 123,885 - -123,885 - - - - -
Cash dividends for common stock - - - - -333,610 - - - - -333,610
Stock dividends for common stock 500,415 - - - -500,415 - - - - -
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Total 500,415 - 123,885 - -957,910 - - - - -333,610
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Net profit (loss) - - - - -953,786 - - - -661,051 -1,614,837
Other comprehensive income (loss) - - - - -71,866 -42,009 289,899 16,297 -2,210 190,111
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Total comprehensive income (loss) - - - - -1,025,652 -42,009 289,899 16,297 -663,261 -1,424,726
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Changes in associated companies and joint ventures - 9,924 - - -45,340 - - - -2,244 -37,660

accounted for using equity method
Difference between the price received from - 36,175 - - - - - - -36,175 -

or disposal of interest in subsidiaries and book
Change in ownership interests in subsidiaries - - - - -11,482 - - - 11,482 -
Non-controlling interest - - - - - - - - 1,551,670 1,551,670
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Balance as of December 31, 2015 17,180,905 4,673,787 2,448,261 327,757 608,642 583,467 54,642 7,080 3,119,304 29,003,845
Net profit (loss) - - - - 2,502,005 - - - -123,460 2,378,545
Other comprehensive income (loss) - - - - -76,845 -809,765 -7,080 4,305 -15,331 -904,716
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Total comprehensive income (loss) - - - - 2,425,160 -809,765 -7,080 4,305 -138,791 1,473,829
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Changes in associated companies and joint ventures - 9,543 - - -11,648 - - - -566 -2,671

accounted for using equity method
Difference between the price received from - 45,136 - - - - - - -45,136 -

or disposal of interest in subsidiaries and book
Change in ownership interests in subsidiaries - 8,665 - - -11,206 - - - 2,541 -
Non-controlling interest - - - - - - - - -231,024 -231,024
------------ ----------- ----------- ----------- ----------- ----------- -------------- ------------- ---------------- -----------
Balance as of December 31, 2016 $17,180,905 $4,737,131 $2,448,261 $327,757 $3,010,948 $-226,298 $47,562 $11,385 $2,706,328 $30,243,979
============ =========== =========== =========== =========== =========== ============== ============= ================ ===========
(Please refer to the notes to the consolidated financial statements)
Chairperson :Lin, I-Shou
Manager: Wu, Lin-Maw
Accounting Manager: Lin,Jian-Hong

220

Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2016 and 2015
Unit: In Thousands of New Taiwan Dollars
Item 2016 2015
Cash flow from operating activities
Net income (loss) before tax $3,372,072 $-1,596,715
Adjustments:
Income and expense items
Depreciation 1,474,184 1,503,750
Amortization 1,377 1,781
Bad debt provided (restated as income) - 105
Net loss (gain) from financial assets and liabilities at fair value
through profit or loss		 -12,682 -13,055
Interest expense 789,831 850,919
Interest Income -49,136 -72,292
Dividend income -8,250 -12,323
Share of the loss (profit) of associates and joint ventures
recognized under equity method		 -230,190 1,665,345
Loss (gain) on disposal of property, plant and equipment 25,766 38,373
Property, plant and equipment restated as expenses 17,355 49,627
Gain (loss) on disposal of investment property -200 -10,910
Financial asset impairment loss - 2,668
Impairment loss on non-financial assets 52,796 886,644
Gain from bargain purchase - -527,995
Others -217 -217
----------------- -----------------
Total income and expense items 2,060,634 4,362,420
----------------- -----------------
Changes in operating assets and liabilities:
Net change in assets relating to operating activities
(Increase) decrease in held-for-trading financial assets 17,814 123,250
(Increase) decrease in notes receivable -251,768 -193,222
(Increase) decrease in accounts receivable -660,075 628,784
(Increase) decrease in accounts receivable- related parties -153,344 353,355
(Increase) decrease in construction contract receivables -213,569 -78,102
(Increase) decrease in other receivables -90,234 203,154
(Increase) decrease in inventories -2,468,253 1,709,375
(Increase) decrease in prepayments -362,043 131,314
(Increase) decrease in other financial assets 2,204 426,863
----------------- -----------------
Total net changes in operating assets -4,179,268 3,304,771
----------------- -----------------
Net changes in operating liabilities
Increase (decrease) in notes payable 1,345,152 -906,718
Increase (decrease) in accounts payable 233,856 -653,353
Increase (decrease) in accounts payable -1,530 -5,068
Increase (decrease) in other payables 280,274 -1,083
Increase (decrease) in provision -34,173 -9,039
Increase (decrease) in advance receipts 1,542,648 162,942
Increase (decrease) in defined benefit liability, net -42,793 -26,494
----------------- -----------------
Total net changes in operating liabilities 3,323,434 -1,438,813
----------------- -----------------
Total net changes in operating assets and liabilities -855,834 1,865,958
----------------- -----------------
Total adjustments 1,204,800 6,228,378
----------------- -----------------
Cash inflow (outflow) from operations 4,576,872 4,631,663
Interest income received 49,113 86,463
Dividends received 25,950 23,423
Interest paid -801,322 -874,830
Income tax refunded (paid) -475,574 -318,879
----------------- -----------------
Net cash inflow (outflow) from operating activities 3,375,039 3,547,840
----------------- -----------------
Cash flows from investing activities 
(continued on next page)

221

Increase in other financial assets -396,034 -
Decrease in other financial assets - 9,549
Decrease in other non-current assets 8,793 13,080
----------------- -----------------
Net cash provided by (used in) investing activities -5,246,961 -7,845,924
----------------- -----------------
Cash flows from financing activities
Decreases in short-term loan -1,669,412 -630,629
Increases in short-term notes and bills payable - 55,000
Decreases in short-term notes and bills payable -85,539 -
Repayment of corporate bonds -1,237,560 -
Issuance of long-term debts 4,284,850 14,740,591
Repayment of long-term debts -979,287 -8,741,797
Increases in guarantee deposits 9,011 79
Decrease in other financial liabilities - -7,254
Decrease in other non-current liabilities -5,672 -3,501
Distribution of cash dividends - -333,610
Changes in non-controlling equity -231,024 -193,136
----------------- -----------------
Net cash inflow (outflow) from financing activities 85,367 4,885,743
----------------- -----------------
Impacts on cash and cash equivalents from changes in exchange rates 331,670 133,602
----------------- -----------------
Net increase (decrease) in cash and cash equivalents for the year -1,454,885 721,261
Balance of Cash and Cash Equivalents, Beginning of Year 9,588,066 8,866,805
----------------- -----------------
Balance of Cash and Cash Equivalents, End of Year $8,133,181 $9,588,066
================= =================
(Please refer to the notes to the consolidated financial statements)
Chairperson: Lin, I-Shou Manager: Wu, Lin-Maw Accounting Manager:
Lin,Jian-Hong

222

Yieh Phui Enterprise Co., Ltd. and Its Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

(Amount in Thousand NTD, Unless Otherwise Stated)

I. Company Profile

  1. Yieh Phui Enterprise Co., Ltd. (hereinafter referred to as the Company) was established in April 1978, and is currently a listed company on the Taiwan Stock Exchange (hereafter referred to as the TWSE). The Company engages mainly in the processing, manufacturing, marketing and import/export trading of rolled steel coils, refined steel, molded steel, steel / iron wires, and galvanized / pre-painted / surface-treated metals.

  2. The Company's Board of Directors resolved on May 23, 2005 to merge (simplified merger) with Lien Kang Heavy Industrial Co., Ltd, with the Company as the surviving company. The record date of the merger was set as August 30, 2005. Every 2.5 common shares of Lien Kang Heavy Industrial Co., Ltd. stock were converted into 1 common share of the Company. The Company issued an additional 4,859 thousand common shares for this merger. Rights and obligations of the holders of the newly issued shares were the same as those of the Company‟s original shareholders.

  3. Lien Kang Heavy Industrial Co., Ltd., incorporated on November 23, 1989, mainly engages in manufacturing, processing and trading of various mechanical spare parts, as well as pipe installation and engineering design / manufacture / installation.

  4. The Company's steel pipe department, due to its business expansion, was separated from the Company, and was named Shin Yang Steel Co. Relevant investment was approved by the Board of Directors on January 18, 2011, and a total of 191 employees were transferred to Shin Yang Steel Co., Ltd.

  5. For main operational activities of the Company and its subsidiaries (hereinafter referred to as “the Group”), please refer to Note 4 (III)2.

  6. The consolidated financial statements are presented in New Taiwan dollars, which is the Company‟s functional currency.

II. Approval date and procedures of the financial statements

The consolidated financial statements were released on March 21, 2017, after being approved by the Board of Directors.

III. Application of New and Amended International Financial Reporting Standards and Interpretations

(I) Effects of the adoption of new and amended IFRSs endorsed by the Financial Supervisory Commission (“FSC”) : None

(II) Effects of non-adoption of the new and amended IFRSs endorsed by the FSC or the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers:

Pursuant to Jin Guan Zheng Shen Zi Letter No. 1050050021 and No. 1050026834 issued by the FSC, starting from 2017, the Group should adopt the IASB issued and FSC endorsed scope of IFRSs [consisting of International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of International Financial Reporting Standards (IFRIC), and Interpretations of IASs (SIC)], as well as the relevant amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

223

New, Amended and Revised Standards and Interpretations

Effective Date issued by IASB (Note 1)

"Annual Improvements to IFRSs 2010-2012 Cycle" July 1, 2014 (Note 2)
"Annual Improvements to IFRSs 2011-2013 Cycle" July 1, 2014
"Annual Improvements to IFRSs 2012-2014 Cycle" January 1, 2016 (Note 3)
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying the January 1, 2016
Consolidation Exception”
Amendments to IFRS 11 in "Accounting for Acquisitions of Interests in Joint Operations" January 1, 2016
IFRS 14 "Regulatory Deferral Accounts" January 1, 2016
Amendments to IAS 1 in "Disclosure Initiative" January 1, 2016
Amendments to IAS 16 and IAS 38 in "Clarification of Acceptable Methods of Depreciation January 1, 2016
Amendments to IAS 16 and IAS 41 in "Agriculture: Bearer Plants" January 1, 2016
Amendments to IAS 19 in "Defined Benefit Plans: Employee Contributions" July 1, 2014
Amendments to IAS 36 in "Recoverable Amount Disclosures for Non-Financial Assets" January 1, 2014
Amendments to IAS 39 in "Novation of Derivatives and Continuation of Hedge Accounting" January 1, 2014
IFRIC 21 "Levies" January 1, 2014

Note 1: Unless stated otherwise, the above new, amended and revised standards and interpretations are effective for annual periods beginning on or after their respective effective dates.

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

Note 3: The amendment to IFRS 5 is applied prospectively for annual periods beginning on or after January 1, 2016; the remaining amendments are retrospectively applied to annual periods beginning on or after January 1, 2016.

Except for the following clarification, initial applications of the aforementioned newly issued, amended, and revised standards and interpretations should not incur critical changes to the Group's accounting policies.

  1. Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 "Fair Value Measurement," the IASB at the same time made an amendment to the disclosure requirements in IAS 36 "Impairment of Assets;" as a result, the Group must disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendments to IAS 36 clarify the Group is required to disclose the recoverable amount only upon an impairment accrual or reversal. Furthermore, the Group is required to disclose the level of the fair value and key valuation assumption (Level 2 or Level 3) if the recoverable amount of the impaired assets are measured on the basis of fair value less cost of disposal.

224

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

In accordance with the 2017 version of IFRSs, the amendment adds disclosure requirements on various accounting items, impairment of non-financial assets, related party transactions, goodwill, as well as emphasizing certain requirements on recognition and measurement.

According to the amendment, where the board chairman or president of another company or institution is the same person as the board chairman or president of the issuer, or is the spouse or a relative within the second degree or closer of the board chairman or president of the issuer, a party, unless it can be established that no control or significant influence exists, shall be deemed to have a substantive related party relationship.

Furthermore, where the transaction amount or balance of any single related party reaches 10% of the Group's transaction amount or balance of that type of transaction, the Group shall present individually the names of each such related party.

Where the acquired company has significant differences between the expected benefits and the actual benefits after the acquisition, the information shall be disclosed.

When applying the aforementioned amendment retrospectively in 2017, disclosure is required for related party transactions and goodwill impairment.

Aside from the aforementioned effects, as of the publication date of this consolidated financial statement, the Group continuously assesses the effects of the amendments to other standards and interpretations. The result shall be disclosed when the assessment is completed.

(III) Effects of IFRSs issued by IASB but not yet endorsed by the FSC:

The Group is not applicable to IFRSs issued by IASB but not yet endorsed by the FSC. As of the publication date of this consolidated financial statement, no other effective dates of any standards are announced by the FSC, except for IFRS 15 and IFRS 9 being effective in and after 2018.

New, revised, amended standards and interpretations Effective Date Announced by IASB
Amendments to IFRS 2 in "Classification and Measurement of Share-based Payment TransactJanuary 1, 2018
Amendments to IFRS 4 "Applying IFRS 9 'Financial Instruments' With IFRS 4 Insurance January 1, 2018
Contracts"
IFRS 9 "Financial instruments" January 1, 2018
Amendments to IFRS 9 AND IFRS 7 in "Mandatory Effective Date and Transition DisclosureJanuary 1, 2018
Amendments to IFRS 10 and IAS 28 "Sales or Contributions of Assets between Its Undecided
Associate/joint ventures"
IFRS 15 "Revenue from Contracts with Customers" January 1, 2018
Amendments to IFRS 15 in "Clarifications of IFRS 15" January 1, 2018
IFRS 16 "Leases" January 1, 2019
Amendments to IAS 7 "Disclosure Initiative" January 1, 2017
Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Losses" January 1, 2017
Amendments to IAS 40 "Transfers of Investment Property" January 1, 2018
IFRIC 22 "Foreign Currency Transactions and Advanced Consideration" January 1, 2018

225

New, revised, amended standards and interpretations

Effective Date Announced by IASB

January 1, 2018

Annual Improvements to 2014-2016 Cycle: IFRS 1 "First-time Adoption of IFRSs"

Annual Improvements to 2014-2016 Cycle: IFRS 12 "Disclosure of Interests in Other EntitiesJanuary 1, 2017

Annual Improvements to 2014-2016 Cycle: IAS 28 "Investments in Associates and joint ventuJanuary 1, 2018

Note: Unless otherwise stated, the aforementioned new, amended, revised standards or interpretations are effective for annual periods beginning on or after their respective effective dates.

Except for the following, the initial application of the above new, amended and revised standards and interpretations would not have caused significant changes in the Group‟s accounting policies:

1. IFRS 9 "Financial Instruments"

(1) Recognition and measurement of financial assets

Financial assets, originally were within the scope of IAS 39 "Financial Instruments: Recognition and Measurement," are subsequently measured at amortized cost or at fair value.

IFRS 9 requirements for the classification of financial assets are stated below:

The Group's debt instruments, of which the contractual cash flows are derived solely as payments on principle and as interest on the principle amount outstanding, are classified and measured as follow:

A. Debt instruments, of which the objective of holding is to collect contractual cash flows, are measured at amortized cost. Such financial assets are assessed for impairment continuously with impairment loss recognized as profit or loss, if any. Interest revenue is recognized as profit or loss by using the effective interest method.

B. Debt instruments, of which the objective of holding is to collect contractual cash flows and to dispose of financial assets, are measured at fair value through other comprehensive income (FVTOCI). Interest revenue of such financial assets is recognized as profit or loss by using the effective rate method. Impairment of such financial assets is continuously assessed, and the gains or losses of impairment, or gains or losses of exchange, shall be recognized as profit or loss, while changes in fair value are recognized in other comprehensive income. Upon derecognition or reclassification of this kind of financial assets, the accumulated fair value gains and losses originally recognized in other comprehensive income shall be reclassified from equity to profit or loss.

The Group's financial assets not belonging to the above classifications are measured at fair value through profit or loss, and the gain or loss is to be recognized as profit or loss. However, the Group may, upon initial recognition, recognize equity investment not held for trading at fair value through other comprehensive income. Gains or losses of such financial assets, except for dividend income, are recognized in other comprehensive income. No subsequent assessment for impairment is required, and the cumulative gain or loss in fair value previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

226

(2) Impairments of financial assets

IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit Losses Model.” The credit loss allowance is required for financial assets measured at amortized cost, and financial assets are mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 "Revenue from Contracts with Customer," written loan commitments and financial guarantee contracts. A credit loss allowance for the abovementioned financial assets is measured based on the expected credit loss for the next 12 months, provided its credit risk has not increased significantly since initial recognition. A loss allowance measured at full lifetime expected credit losses is required for a financial asset, provided its credit risk has increased significantly since initial recognition. However, a credit loss allowance for full lifetime expected credit losses is required for accounts receivable consisting of no material financial

In addition, for original credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. The subsequent credit loss allowance is measured on the cumulative expected credit loss.

2. IFRS 15 “Revenue from Contracts with Customers”

IFRS 15, which sets up principles for recognizing revenue that apply to all contracts with customers, will supersede IAS 18 "Revenue" and IAS 11 "Construction Contracts" and other interpretations.

The Group, when applying IFRS 15, shall recognize revenue in accordance with the following steps:

(1) Identify the contract with the customer;

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

(3) Determine the transaction price;

  • (4) Allocate the transaction price to the performance obligations in the contract; and

(5) Recognize revenue on satisfaction of performance obligations.

Upon the effectiveness of IFRS 15 and other relevant amendments, the Group may elect to apply the Standard either retrospectively to each prior reporting period presented or retrospectively recognize the cumulative effect of the initial application to this Standard at the date of "initial application."

3. IFRS 16 "Leases"

IFRS 16, which governs the accounting standards for leases, will supersede IAS 17 "Leases" and other relevant interpretations. When IFRS 16 is applicable and the Group is a lessee, the Group shall recognize in the consolidated balance sheets the right-of -use assets and lease liabilities for all leases, except for low-value and short-term leases which shall be subject to accounting standards similar to "operating leases" in IAS 17. The consolidated statements of comprehensive income shall state clearly and respectively the depreciation expense of the right-of-use assets, the interest expense accrued on the lease liability. The interest should be calculated using the effective rate method. On the consolidated statements of cash flows, cash payments for principle of lease liabilities shall be classified in financing activities, whereas cash payments for interest of lease liabilities shall be classified in operating activities. IFRS 16 is not

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

Except for the aforementioned impacts, as of the date when the consolidated financial statement is issued, the Group continuously assesses the impacts on its financial position and financial performance as a result of the initial application of the amendments to other standards and interpretations. The assessment will be disclosed upon completion.

227

IV. Summary of Significant Accounting Policies

Accounting policies applied in editing this consolidated financial statement are listed below. Unless otherwise stated, the policies shall be applicable to all reporting periods presented.

(I) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs { consisting of International Financial Reporting Standards endorsed by the FSC, International Accounting Standards (IAS), Interpretations of IASs (SIC)}.

(II) Basis of Preparation

  1. Except for the following significant items, these consolidated financial statements have been prepared under the historical cost convention:

(1) Financial assets and financial liabilities (including derivative instruments) measured at FVTPL.

(2) Available-for-sale financial assets measured at fair value.

(3) Cash-settled share-based payment arrangement measured at fair value.

(4) Recognized defined employee benefits liabilities on the basis of the pension fund assets net of the net amount of defined employee benefit obligations.

  1. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimate

Judgement from the management is also required in applying the Group‟s accounting policies.

Accounting items involving a higher degree of judgment or complexity, or accounting items with significant assumptions and estimates to the consolidated financial statements, are disclosed in Note 5.

(III) Basis of consolidation

  1. Basis for preparation of consolidated financial statements:

(1) All subsidiaries are included as entities in the Group‟s consolidated financial statements. Subsidiaries refer to entities (including special purpose entities) that are controlled by the Group. Control of an entity is defined when the Group is exposed to, or has rights of, the variable returns from its involvement with the subsidiaries and has ability to affect those returns through its power over the subsidiaries. Subsidiaries are included in the consolidated financial statement upon the date on which control is acquired by the Group. Subsidiaries are excluded from the consolidated financial statement upon the date on which control from the Group ceases.

(2) Inter-company transactions, balances and unrealized gains or losses within the Group have been eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

(3) Each component of profit and other comprehensive income is attributed to the owner of the parent company and noncontrolling interests; total amount of comprehensive income is also attributed to the owner of parent company and noncontrolling interests, even if deficit balance in non-controlling interests is caused thereby.

(4) 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, e.g., 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 recognized directly in equity.

(5) When the Group loses control of a subsidiary, the Group re-measures any investment retained in the former subsidiary at its fair value. Any difference between fair value and the carrying amount is recognized as profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified as profit or loss, on the same basis as would be required if the related assets or liabilities were disposed of by the Group. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized 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.

228

  1. Subsidiaries included in consolidated financial statements are as follows:

Percentage of ownership or investment

Investor/subsidiary
Main businesses
1. Yieh Phui Enterprise Co., Ltd. (The Company)
Good Honor
Investment enterprise
Holdings Ltd.
Shing Yang Steel Co., Ltd.
Business related to iron
and steel
Excellent Rewards
Investment enterprise
International
Co., Ltd.
Golden
Investment enterprise
Developments
Holdings Ltd.
Investment enterprise
Yieh Hsing Enterprise Co., LtdWires industry
Shin Phui Steel Corporation
Trading of steel goods
Worthing Honor Holdings Ltd.Investment enterprise
Investment enterprise
Hsing Jui
Investment enterprise
Investments
Limited
Gen-Wan Technology Corp.
Telecommunication
subcontract
Champion Logistic Inc.
Investment enterprise
EMMT Systems Corporation
Tycoons Steel
Investment enterprise
International
Co., Ltd.
Wholesale of hardware
Kuo Chang Enterprise Co.,
Ltd.
United Brightening
Development Corp.
Consultation of
manufacturing technology
of iron and steel
Yieh Phui (Hong Kong)
Holdings Limited
Sin Bang Investment &
Development Co., Ltd.
Production and sale of
military specification
electronic plate module
board		 229
December 31, 2016
December 31, 2015
100.00%
100.00%
100.00%
100.00%
-
-
Liquidated and dissolved in December 2015
100.00%
100.00%
100.00%
100.00%
56.39%
55.84%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
86.99%
86.99%
97.44%
97.44%
77.54%
85.29%
28.27%
28.27%
54.04%
54.04%
(Acquired control in March, 2015)
79.50%
61.38%
(Acquired control in March, 2015)
Consulting Co., Ltd. service (Acquired control in March, 2015)
Hong Yuh Assets Business management and 67.27% (Note) 15.00%
Management Co., Ltd. service As detailed in Note 4(III)2(1)
Lian So (H.K.) 80.00% 80.00%
Co., Ltd. (Acquired control in December 2015)
2. Shin Yang Steel Co., Ltd.
Hong Yuh Assets Business management and
service		 -(Note) 40.00%
Management Co., Ltd. As detailed in Note 4(III)2(1)
3. Hong Yuh Assets Management Co., Ltd.
PT.E-United Ferro Metal manufacturing industry 100.00% 100.00%
Indonesia As detailed in Note 4(III)2(1)
PT.Yieh Ferro Metal manufacturing industry 10.00% -
Indonesia As detailed in Note 4(III)2(1)
4. Gen-Wan Technology Corp.
EMMT Systems Production and sale of 7.41% 8.57%
Corporation military specification
electronic plate module
board

(Note) The Company failed to subscribe the shares of the capital increase of Hong Yuh Assets Management Co., Ltd., in January 2016 in accordance with its percentage of ownership, resulted in the increase on shareholding from 15% to 38.18%. In December, 2016, Due to reorganization, the Company subscribed 29.09% shares of Hong Yuh Assets Management Co., Ltd. from Shin Yang Steel Co., Ltd., resulted in an increase of shareholding rate up to 67.27%.

230

Percentage of ownership or investment Percentage of ownership or investment Percentage of ownership or investment
Investor/subsidiary Main businesses December 31, 2016 December 31, 2015
5. Yieh Phui (Hong Kong) Holdings Limited
Yieh Phui (China)
Technomaterial Co.,Ltd.		 Production and sale of
pickling, rolled, galvanized
and pre-painted steel coils		 100.00% 100.00%
6. Yieh Phui (China) Technomaterial Co., Ltd.
Tianjin Lianfa Precision Steel Production and sale of steel
coil plates of high class and
special alloyed steels.		 100.00% 100.00%
Corporation
Changshou ChangHuei
Trading Co.		 Trading of steel goods 100.00% 100.00%
7. EMMT Systems Corporation
Applied Wireless RFID 91.47% 91.47%
Identifications
Group Inc.
Groupco Technology RADIO 49.97% 49.97%
8.Applied Identifications
GroupInc.		 Wholesale of
telecommunication
equipment
AWID Asia Co., Ltd. 100.00% 100.00%
9. AWID Asia Co., Ltd.
AWID Wholesale of
telecommunication
equipment		 100.00% 100.00%
Shanghai Co., Ltd.
AWID Wholesale of
telecommunication
equipment		 100.00% -
Changshou Co., Ltd. {As detailed in Note 4(III)2(1)}
10. Shin Phui Steel Corporation
Groupco Technology RADIO 42.53% 42.53%
11. Yieh Hsing Enterprise Co., Ltd.
Great Emperor Hotel Co., Ltd.
(the former E-Da Royal
Skylark Hotel Co.,
Ltd)		 Hotel industry 100.00% 100.00%
Kingsgarden International
CO., LTD.		 Development, lease and sale
of housing and building and
department store industry
100.00% 100.00%
(the former E-Da Metropolis
Enterprise Co.,
Ltd.)
12. Kingsgarden International CO., LTD.
I-Hwa International Co., Ltd. Development, lease and sale
of housing and building and
70.00%		 70.00%
~~23~~ ~~1~~ (Acquired control in September 2015)
Percentage of ownership or investment
Investor/subsidiary Main businesses December 31, 2016 December 31, 2015
13. Champion Logistic Inc.
Tycoons Steel Investment enterprise 38.46% 38.46%
International
Co., Ltd.
14.Tycoons Steel International Co., Ltd.
Guang Lian Steel Steel related business 100.00% 100.00%
(Vietnam) Co.,
Ltd.
15. United Brightening
Development Corp.		 (acquired control in March, 2015)
Chao Ying Investment Investment enterprise 100.00% 100.00%
Development Co., Ltd.
Tycoons Steel Investment enterprise 0.58% 0.58%
International
Co., Ltd.
Da Yao Engineering & Business management and 1.00% 1.00%
Consulting Co., Ltd. service
Champion Logistic Inc. Investment enterprise 2.56% 2.56%
16.Lian So (H.K.) Co., Limited
PT.Yieh Ferro Metal manufacturing industry 90% -
Indonesia {As detailed in Note 4(III)2(1)}

(1) Increase and decrease in consolidated subsidiaries:

The Group founded PT.Yieh Ferro Indonesia in June, 2016, which was a co-investment by Hong Yuh Assets Management Co., Ltd. and Lian So (H.K.) Co., Limited, with their shareholding rates respectively at 10% and 90%.

The Group established AWID Changshou Co., Ltd, which was an investment by AWID Asia Co., Ltd. with 100% shareholding rates.

232

In March 2015, due to increase in investment, the Group acquired control over United Brightening Development Corp., Kuo Chang Enterprise Co., Ltd. and Da Yao Engineering Consulting Co., Ltd. and Chao Ying Investment Development Co., Ltd. Hong Yuh Assets Management Co., Ltd. was formerly 100% held by the subsidiary Shin Yang Steel Co., Ltd., which failed to subscribe the shares of the capital increase of Yuh Assets Management Co., Ltd. in January 2015, resulting in a decrease in shareholding rate from 100% to 40%, and thus lost control of such company. However, in September 2015, the Company subscribed the shares of the capital increase of such company, and acquired 15% of the additional shares; as a result, the consolidated shareholding rate reached 55%, and therefore acquired control on such company and its subsidiary PT.E-United Ferro Indonesia.

In September and December 2015, the Group increased the newly established Yi Hua International Co., Ltd. and Lian So (H.K.) Co., Limited, with shareholding rate of 70% and 80%, respectively. Excellent Rewards International Co., Ltd. was liquidated and dissolved in December 2015.

(2) The abovementioned AWID Shanghai Co., Ltd, AWID Changshou Co., Ltd, Yi Hua International Co., Lian So (H.K.) Co., Ltd., Hsing Jui Investments Limited, PT. Yieh Ferro Indonesia, and Worthing Honor Holdings Ltd. are not reviewed by an independent accountant. However, the management of the Company believed those subsidiaries that are not reviewed by an independent accountant should not have a material impact on the consolidated financial statements.

  1. Subsidiaries not included in the consolidated financial statements: None.

  2. Adjustment for subsidiaries with different balance sheet date: None

  3. Significant restrictions:

Cash and bank deposits amounting to NT$ 3.770842 thousand deposited in China were subject to foreign exchange control, which restricts the outward remittance to places outside of the territory of China (except through normal dividends).

  1. Contents of subsidiaries‟ holding of securities issued by the parent company: None

  2. Information on subsidiaries that have significant non-controlling interests:

December 31, 2016

Subsidiary name
Yieh Hsing Enterprise Co., Ltd.
United Brightening Development Corp.
Kuo Chang Enterprise Co., Ltd.
Others
Total		 Shareholding Ratio
43.61%
20.50%
45.96%		 Non-controlling equity
$1,488,824
395,137
587,217
235,150
$2,706,328

233

December 31, 2015

Subsidiary name
Yieh Hsing Enterprise Co., Ltd.
United Brightening Development Corp.
Kuo Chang Enterprise Co., Ltd.
Others
Total		 Shareholding Ratio
44.16%
38.62%
45.96%		 Non-controlling equity
$1,628,012
704,103
563,718
223,471
$3,119,304

(1) For information on the main operating places and registration countries of the aforementioned subsidiaries, please refer to Note 13, tables 9 and 10.

(2) Summarized financial information as follows:

A. Balance sheets:

Yeh Hsing Enterprise Co., Ltd. and Subsidiaries

Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity		 December 31, 2016
December 31, 2015
$2,109,591
$2,154,192
13,488,475
11,957,577
2,608,034
1,796,562
9,574,703
8,626,954
$3,415,329
$3,688,253

United Brightening Development Corp.

United Brightening Development Corp. Development Corp.
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity		 December 31, 2016
December 31, 2015
$7,595
$14,932
2,328,582
2,235,836
333,811
334,088
87,500
93,500
$1,914,866
$1,823,180
Kuo Chang Enterprise Co., Ltd.		 December 31, 2015
$14,932
2,235,836
334,088
93,500
$1,823,180
December 31, 2016
December 31, 2015
$2,238
$3,071
1,618,293
1,616,285
330,210
380,316
-
12,500
$1,290,321
$1,226,540

234

Yeh Hsing Enterprise Co., Ltd. and Subsidiaries Yeh Hsing Enterprise Co., Ltd. and Subsidiaries Yeh Hsing Enterprise Co., Ltd. and Subsidiaries
2016 2015
Operating Revenue $7,272,512 $7,504,158
Current period net profit ($256,695) ($496,929)
Other comprehensive profit/loss(net after tax) (14,917) (9,050)
Total amount of Comprehensive profit/loss in the year ($271,612) ($505,979)
Comprehensive income (loss) attributable to non-controlling
interests		 ($118,914) ($228,592)
Dividends paid to noncontrolling interests -
$		 -
$
United Brightening Development Corp.
2016 2015
Operating Revenue -
$		 -
$
Current period net profit $34,692 ($183,754)
Other comprehensive profit/loss(net after tax) (12,032) (21,513)
Total amount of Comprehensive profit/loss in the year $22,660 ($205,267)
Comprehensive income (loss) attributable to non-controlling
interests		 $8,614 ($86,564)
Dividends paid to noncontrolling interests -
$		 -
$
Kuo Chang Enterprise Co., Ltd.
2016 2015
Operating Revenue -
$		 -
$
Current period net profit $33,696 ($232,873)
Other comprehensive profit/loss (net after tax) (9,797) 89,102
Total amount of Comprehensive profit/loss in the year $23,899 ($143,771)
Comprehensive income (loss) attributable to non-controlling
interests		 $5,170 ($80,707)
Dividends paid to noncontrolling interests -
$		 -
$
C. Statement of Cash Flows:
Yeh Hsing Enterprise Co., Ltd. and Subsidiaries
2016 2015
Net cash inflow (outflow) from operating activities $66,170 $18,101
Net cash inflow (outflow) from investment activities (1,773,785) (927,120)
Net cash inflow (outflow) from financing activities 1,693,864 838,027
Net increase (decrease) in cash and cash equivalents for the
year		 ($13,751) ($70,992)
Balance of Cash and Cash Equivalents, Beginning of Year
 506,376 577,368
Balance of Cash and Cash Equivalents, End of Year $492,625 $506,376
235
Yeh Hsing Enterprise Co., Ltd. and Subsidiaries Yeh Hsing Enterprise Co., Ltd. and Subsidiaries Yeh Hsing Enterprise Co., Ltd. and Subsidiaries
2016 2015
Operating Revenue $7,272,512 $7,504,158
Current period net profit ($256,695) ($496,929)
Other comprehensive profit/loss(net after tax) (14,917) (9,050)
Total amount of Comprehensive profit/loss in the year ($271,612) ($505,979)
Comprehensive income (loss) attributable to non-controlling
interests		 ($118,914) ($228,592)
Dividends paid to noncontrolling interests -
$		 -
$
United Brightening Development Corp.
2016 2015
Operating Revenue -
$		 -
$
Current period net profit $34,692 ($183,754)
Other comprehensive profit/loss(net after tax) (12,032) (21,513)
Total amount of Comprehensive profit/loss in the year $22,660 ($205,267)
Comprehensive income (loss) attributable to non-controlling
interests		 $8,614 ($86,564)
Dividends paid to noncontrolling interests -
$		 -
$
Kuo Chang Enterprise Co., Ltd.
2016 2015
Operating Revenue -
$		 -
$
Current period net profit $33,696 ($232,873)
Other comprehensive profit/loss (net after tax) (9,797) 89,102
Total amount of Comprehensive profit/loss in the year $23,899 ($143,771)
Comprehensive income (loss) attributable to non-controlling
interests		 $5,170 ($80,707)
Dividends paid to noncontrolling interests -
$		 -
$
C. Statement of Cash Flows:
Yeh Hsing Enterprise Co., Ltd. and Subsidiaries
2016 2015
Net cash inflow (outflow) from operating activities $66,170 $18,101
Net cash inflow (outflow) from investment activities (1,773,785) (927,120)
Net cash inflow (outflow) from financing activities 1,693,864 838,027
Net increase (decrease) in cash and cash equivalents for the
year		 ($13,751) ($70,992)
Balance of Cash and Cash Equivalents, Beginning of Year
 506,376 577,368
Balance of Cash and Cash Equivalents, End of Year $492,625 $506,376
235

United Brightening Development Corp.

2016 2015
Net cash inflow (outflow) from operating activities ($12,314) ($8,527)
Net cash inflow (outflow) from investment activities (57,339) 20,652
Net cash inflow (outflow) from financing activities 63,000 951
Net increase (decrease) in cash and cash equivalents for the ye ($6,653) $13,076
Balance of Cash and Cash Equivalents, Beginning of Year 13,870 794
Balance of Cash and Cash Equivalents, End of Year $7,217 $13,870

Kuo Chang Enterprise Co., Ltd.

2016 2015
Net cash inflow (outflow) from operating activities ($9,462) ($3,994)
Net cash inflow (outflow) from investment activities 32,874 (28,370)
Net cash inflow (outflow) from financing activities (23,500) 33,170
Net increase (decrease) in cash and cash equivalents for the ye ($88) $806
Balance of Cash and Cash Equivalents, Beginning of Year 1,416 610
Balance of Cash and Cash Equivalents, End of Year $1,328 $1,416

(IV). Foreign Currency Translation

  1. Each financial statement of each entity in the Group is presented in the currency of the primary economic environment, in which the entity operates (i.e. Functional currency). The consolidated financial statements are presented in New Taiwan dollars, which is the Company‟s functional currency.

  2. When preparing the individual financial statement of the consolidated entities, any transaction occurred in foreign currency, other than the functional currency, shall be recognized after being translated by using the exchange rate of the transaction date. At the end of the reporting period, the foreign currency monetary items are to be translated at the closing rate of the date.

Exchange differences shall be recognized from equity as profit or loss. Foreign currency non-monetary items that are measured at fair value in foreign currency shall be translated using the exchange rates at the date when the fair value was measured, and its exchange differences occurred shall be recognized as profit or loss of the year.

When the changes in fair value are recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of transaction, without any re-translation.

  1. In preparing this consolidated financial statement, assets and liabilities of a foreign operation are to be translated into NTD using the closing rate of the reporting period. Income and expense item is translated using the average exchange rates, of which the exchange differences are to be recognized in other comprehensive income, and to be cumulated in translating financial statements of foreign operations under equity (and distributed properly to non-controlling interests).

236

  • (V). Criteria for classifying assets and liabilities into current and non-current

  • Steel department and other non-heavy industry departments:

  • (1) Assets meet the following criteria are classified into current assets:

  • A. Assets that are expected to be realized, intended to sell, consumed in the normal operating cycle.

  • B. Assets to be held primarily for the purpose of trading.

  • C. Assets that are expected to be realized within 12 months after the balance sheet date.

D. Cash and cash equivalents, excluding those cash and cash equivalents used to exchange, or to settle a liability, or otherwise remained restricted at more than 12 months after the balance sheet date.

The Group classifies assets that do not meet the aforementioned criteria into non-current assets.

  • (2) Liabilities that meet the following criteria are classified into current liabilities.

  • A. Liabilities with the total amount expected to be settled within the normal operating cycle.

  • B. Assets to be hold primarily for the purpose of trading.

  • C. Liabilities with the total amount required to be settled within 12 months after the balance sheet date.

D. Liabilities which the Group does not have an unconditional right to defer the settlement of liabilities for at least 12 months after the balance sheet date. However, terms of liabilities that could, at the option of the counterparty, result in its settlement by the issuance of equity instruments do not affect its classification.

The Group classifies liabilities that do not meet the aforementioned criteria into non-current liabilities.

  1. Heavy Industry Department

The operating cycle of contracting construction normally lasts longer than a year. As a result, assets and liabilities related to construction businesses are classified into current and non-current liabilities in accordance with the operating cycle.

(VI) Cash and Cash Equivalents

Cash and Cash Equivalents include cash on hand, bank deposits, short-term high-liquefied investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including time deposits with due dates within three months).

(VII) Financial Instruments

Financial assets and financial liabilities are recognized only when and after the Group becomes a party to the contractual provision of the financial instrument.

Initially, financial assets and liabilities should be recognized at fair value. Financial assets and financial liabilities are recognized initially at fair value plus or minus (except for financial assets and financial liabilities at fair value through profit or loss) transaction costs that are directly attributable to the acquisition or issuance of the financial assets or financial liabilities. Transaction costs that are directly attributable to financial assets and financial liabilities at fair value through profit or loss should be recognized immediately as profit or loss.

237

(VIII) Financial Assets and Liabilities Measured at Fair Value Through Profit or Loss (FVTPL)

  1. Assets and liabilities measured at FVTPL refer to financial assets held for trading, or financial assets measured at FVTPL at initial recognition. Financial assets that are acquired principally for the purpose of trading in the near term are classified as financial assets held for trading. Derivatives, except for those designated as hedged items under hedge accounting requirements, are classified as financial assets held for trading. Upon initial recognition, the Group shall designate financial assets meeting one of the following criteria as financial assets measured at FVTPL.

  2. (1) Being a hybrid (combined) contract; or

(2) Capable of eliminating or significantly reducing inconsistency on measurement or recognition.

(3) Investments, of which the performance is assessed and managed on a fair value basis in accordance with a written risk management or an investment strategy.

  1. The group adopts trade date accounting for financial assets measured at FVTPL, and for financial assets purchased or sold in a regular way.

  2. Financial assets measured at FVTPL are financial assets measured at fair value upon initial recognition, of which the relevant transaction costs shall be recognized as profit or loss for the period. Subsequently, those financial assets should be measured at fair value, of which the changes shall be recognized as profit or loss for the period. For an investment in equity instruments that do not have a quoted price in an active market, or a derivative instrument that is linked to such equity instruments that do not have a quoted price in an active market and that shall settled by delivery of such equity instruments, the Group designate it as "financial assets carried at costs - noncurrent" when there is no reliable measurement of its fair value

(IX) Loans and Receivables

1. Accounts receivable

Accounts receivables are customer's trade receivables collected for goods or services under normal operations. Accounts receivables, except for short-term receivables on which the effect of discounting is immaterial, shall be measured at fair value initially, and shall subsequently measured at amortized cost using the effective interest method, less any impairment.

2. Bond investments with no active market

(1) Bond investments with no active market refer to bonds that do not have a quoted price in an active market and with fixed or determinable payments, and that meet all of the following conditions:

A. Not classified as at fair value through profit or loss.

B. Not designated as available-for-sale.

C. There are no other reasons except for credit deteriorate that are likely to cause the holder to not be able to recover almost all of the original investments.

(2) The Group adopts trade date accounting to bond investments with no active markets purchased or sold in a regular way

(3) Bond investments with no active market shall be measured initially at fair value, plus transaction costs, and subsequently at amortized cost using the effective interest rate method, less any impairment. Amortization of discounts or premium under the effective interest method is recognized as profit or loss.

238

(X) Available-for-sale financial assets

  1. Available-for-sale financial assets refer to non-derivative financial assets that are designated as available-for-sale, or that are not classified into other groups.

  2. The Group adopts trade date accounting to available-for-sale financial assets that are purchased or sold in a regular way

  3. Available-for-sale financial assets shall initially be measured at fair value plus transaction costs, and subsequently be measured at fair value, of which the changes shall be recognized in other comprehensive income. For an investment in equity instruments that do not have a quoted price in an active market, or a derivative instrument that is linked to such equity instruments that do not have a quoted price in an active market and that shall be settled by delivery of such equity instruments, the Group designates it as "Financial assets measured at cost" when there is no reliable measurement on the fair value.

(XI) Impairment of Financial Assets

  1. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets are impaired as a result of one or more events that occurred after the initial recognition of the asset and the loss event or events (collectively, impairment event) have an impact on the estimated future cash flows of the financial asset or a group of financial assets that can be reliably estimated.

  2. The criteria the Group uses to determine whether there is objective evidence of impairment loss is as follows:

(1) Significant financial difficulty of the issuer or debtor.

(2) A breach of contract, e.g., default or delinquency in interest or principle payments.

(3) The Group, for economic or legal reasons relating to the financial difficulties of a debtor, grants the debtor a concessio

(4) Significant increase in the probability the debtor may soon enter bankruptcy or other reorganization.

(5) The disappearance of an active market due to financial fiascoes.

(6) Observable data indicates there is a measurable decrease of the expected future cash flow of a group of financial assets after the initial recognition of the assets, although the decrease cannot yet be identified with any individual financial asset in the group, including adverse changes in the payment status of a debtor in the group or national or local economic conditions that correlate with defaults on the assets in the group.

(7) Information about significant changes with an adverse effect that have transpired in the technology, market, economic or legal environment in which the issuer operates, and indicates the cost of investment in the equity instrument may not be recovered.

(8) A significant or substantive decline in the fair value of an investment in an equity instrument below its cost.

239

  1. After the Group has identified objective evidence of impairment and an impairment loss has occurred, accounting for impairment shall take place in accordance with the classification of the financial assets:

(1) Loans and Receivables

The amount of 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 as profit or loss. If, in a subsequent period, the amount of impairment loss decreases, and the decrease can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent 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.

(2) Financial assets measured at cost

The amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at current market rate of return of similar financial assets, and is recognized as profit or loss. Impairment loss for this category shall not be subsequently reversed.

(3) Available-for-sale financial assets

The amount of impairment loss is measured as the difference between the asset's acquisition cost (less any principle payment and amortization) and current fair value, less any impairment loss on the financial asset previously recognized as 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 is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized as profit or loss shall not be reversed through profit or loss.

(XII) Derecognition of financial assets

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

  1. The expiration of a contractual right to receive the cash flow from the financial asset.

  2. The contractual right to receive cash flows from a financial asset has been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

  3. The Group neither transfers or retains substantially all risks and rewards of a financial asset. However, the Group has not retained control of the financial asset.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received or receivable and the cumulative gain or loss that had been recognized in “other equity – unrealized gain/loss of available-for-sale financial assets” under other comprehensive income is recognized as profit or loss.

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(XIII) Inventory

Inventories are valued at lower of cost and net realizable value. The perpetual inventory system is adopted. Cost is computed using the weighted-average method. Cost of finished goods or goods in process comprises raw material, direct labor, other direct costs, other relevant manufacturing costs (based on normal operating capacity). However, the cost of borrowing is not included. The item by item approach is used in applying lower of cost and net realizable value. Net realizable value refers to the estimated selling price in the ordinary course of operation, less the estimated cost of completion and applicable variable selling expenses.

(XIV) Construction Contract

  1. According to IAS 11, a construction contract is a contract specifically negotiated for the construction of an asset or a group of interrelated assets. If the result of a construction contract can be measured reliably, and if it is profitable, it should be recognize in contract revenue during the effective period of the contract by using the percentage of completion method. Contract cost is recognized as expenses during the effective period of the contract. The stage of completion of a contract shall be determined by the ratio of contract costs incurred up to the end date of the reporting period, to the estimated total contract costs. When it is probable the total contract costs exceed total contract revenues, the expected loss shall be immediately recognized as an expense. Where the outcome of a construction contract cannot be measured reliably, contract revenues are recognized only to the extent of recoverable contract costs incurred.

  2. Revenue from alternations in the original contract work, claims and incentive payments shall be recognized in contract revenue only when the customer has agreed and it is measurable. The gross amount collected from the customer for the Group's contract work is the sum of incurred costs and recognized profits (less recognized loss). If the gross amount collected from the customer exceeds the progress billings, the exceeding amount shall be shown as asset, and shall be recognized as construction contract receivables. If the progress billings exceed the sum of incurred costs and recognized profits (less recognized loss), it is shown as liability and is recognized as construction contract payable.

(XV) Investments / Associates accounted for using the equity method

  1. An associate is an entity over which the Group has significant influence but has no control, and upon which the Group holds more than 20% voting shares directly or indirectly. Under the equity method, the investment in the associate is initially recognized at cost.

  2. The Group's post-acquisition share of its associates' profits or losses is recognized as profit or loss, and its postacquisition share of movements in other comprehensive income is recognized in other comprehensive income. When the Group's share of loss of an associate equals or exceeds its share of interests (including any unsecured receivables) of such associate, the Group shall not recognize any loss, except the Group has incurred legal, or constructive obligations, or made payments on behalf of such associate.

  3. Unrealized gains resulting from transactions between the Group and the associate are eliminated in accordance with the Group‟s proportionate interest in the associate. Unless evidence indicates the transacted asset has been impaired, the unrealized loss is eliminated. Accounting policies of associates have been adjusted where necessary to maintain consistency with the Group.

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  1. When the associate issues new stock, and the Group‟s interest in an associate is reduced or increased as the Group fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is to be adjusted in „Additional Paid in Capital and Investment‟ and „Investments Accounted for using the equity method. ‟ If the investment ratio decreases, aside from the aforementioned adjustments, gains or losses previously recognized in other comprehensive income due to the decrease of proprietary rights, and such gains or losses are to be reclassified as profit or loss upon disposal of an associate, shall be reclassified to profit or loss proportionally to decrease the ratio.

  2. Upon losing significant influence over an associate, the remaining investment in such associate shall be remeasured at fair value, with the difference between fair value and the carrying amount recognized as profit or loss.

  3. Upon disposal of an associate, if the Group has lost significant influence over such associate, the accounting basis of the cumulative amount, which is related to such associate and which is previously recognized in other comprehensive income, shall be in line with that of the Group, if the Group is to directly dispose of relevant assets or liabilities. That is, gains or losses previously recognized in other comprehensive income are to be reclassified as profit or loss upon disposal of an associate. When the Group has lost significant influence over an associate, the gains or losses are to be reclassified from equity to profit or loss. If the Group retains significant influence over such associate, the amount previously recognized in other comprehensive income shall be transferred on a pro-rata basis by applying the aforementioned approaches.

  4. If the Group loses significant influence over an associate upon disposal of such associate, the capital surplus related to such associate shall be transferred to profit or loss. If the Group retains significant influence over such associate, the capital surplus in relation to such associate shall be transferred to profit or loss on a pro-rata basis.

(XVI) Property, plant and equipment

  1. Property, plant and equipment are initially recorded at cost. The borrowing interests of which during the construction period are capitalized.

  2. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when the 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 maintenance and repairs are charged to profit or loss during the financial period in which they are incurred.

  3. Land is not depreciated. Other property, plant, equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The asset's residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations of residual values, useful lives differ from previous estimates or the pattern of consumption of the asset's 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.

242

The estimated useful lives of property, plant and equipment are as below:

Buildings and Structures
The Main Plant Buildings 15 ~ 56 years
The Office Main Buildings 40 ~ 55 years
Other Accessory Equipment 5 ~ 35 years
Machinery 2 ~ 36 years
Other Equipment 2 ~ 20 years
  1. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized as profit or loss.

(XVII) Revenue from government grants

Government grants are recognized at their fair value only when there is reasonable assurance the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognized as profit or loss on a systematic basis over the periods in which the Group recognizes expenses for the related costs for which the grants are intended to compensate. Government grants related to property, plant and equipment are recognized as non-current liabilities and are amortized to profit or loss over the estimated useful lives of the related assets using the straight-line method.

(XVIII) Leased assets / leases (lessee)

  1. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset.

(1) A lease is recognized as an asset and a liability at the lease's commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.

(2) The minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(3) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.

243

  1. All other leases other than finance leases are classified as operating leases. Payments made under an operating lease (net of any incentives received from the lessor) are recognized as profit or loss on a straight-line basis over the lease term.

(XIX) Investment property

Investment property is a property held with the intention to obtain long-term rental profit or capital increase or both (including properties under construction for such intention), including the land currently held without determining its future application.

Investment property is measured at cost (including transaction costs) on initial recognition.

Subsequent to initial recognition, investment property is measured at initial acquisition cost less accumulated depreciation and accumulated impairment losses. The depreciation of an investment property is on a straight-line basis.

Investment property under construction shall be recognized at cost less cumulative impairment losses, and the cost shall include professional service expenses and the cost of loans eligible for capitalization. Depreciation shall be recognized when an asset reaches its estimated useful life.

Any gain or loss arising from the derecognition of an investment property is determined as the difference between the carrying amount of an asset and the net sales proceeds and is recognized as profit or loss.

(XX) Intangible Assets

Any separately acquired intangible assets with finite useful lives are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized using the straight-line method over the following estimated useful lives: software and system design costs - 2 to 5 years; patent and others - the economic life or contract period; the estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimation being accounted for on a prospective basis. An intangible asset is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from the derecognition of an intangible asset is determined as the difference between the net sales proceeds and the carrying amount of the asset and is recognized as profit or loss.

(XXI) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication they are impaired. When the recoverable amount is lower than the carrying amount, the asset is recognized as impairment loss. The recoverable amount is the higher of an asset's fair value less costs for sale or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exists or diminishes, the impairment loss is reversed.

244

(XXII) Financial liabilities at fair value through profit or loss

  1. Financial liabilities at fair value through profit or loss are financial liabilities held for transaction, or financial liabilities initially recognized at fair value. Those classified into financial liabilities held for trading are derivatives acquired principally for the purpose of repurchasing in the near term, or are derivatives other than those designated as hedged items under hedge accounting requirements. According to the Group, financial liabilities are measured at FVTPL upon initial recognition when such financial liabilities meet one of the following criteria:

(1) Hybrid (combined) contract; or

(2) Eliminating or significantly reducing inconsistency on measurement or recognition.

(3) Instruments that are managed on a fair value basis, and are assessed with its performance, in accordance with written risk management policy.

  1. Financial liabilities measured at FVTPL are financial liabilities recognized at fair value, with the relevant transaction costs recognized as profit or loss. Subsequently, the costs of such financial liabilities are measured at fair value, and any changes in fair value are recognized as profit or loss.

  2. For those designated as financial liabilities measured at FVTPL, the changes in fair value due to credit risk variations are recognized in other comprehensive income, without subsequently being reclassified as profit or loss. The remaining change in fair value of such liabilities are recognized as profit or loss. However, if the aforementioned accounting treatment would incur or accelerate an accounting mismatch, the gains or losses of such liabilities are recognized as profit or loss for its entirely.

(XXIII) Provision

Provisions (including warranty contracts, Onerous contracts, short-term employee benefits, sales returns and allowances) are recognized when the Group bears a present legal or constructive obligation due to a past event, and probable economic sources are required to settle such obligation, and a reliable measurement of the amount of the obligation exists. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used is a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the liability. The discounted amortization amount is recognized as interest expense. Provisions are not recognized for future operating losses.

(XXIV) Employee benefits

1. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the expected payments, and are recognized as expenses when services are rendered.

2. Pensions

(1) Defined contribution plans

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

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(2) Defined benefit plans

A. Net obligation under a defined benefit plan is defined as the present value of pension benefits that employees will receive on retirement for their services with the Group in the current period or prior periods. The amount recognized is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The discount rate used is determined by using interest rates of government bonds (at the balance sheet date) that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

B. The remeasurement amount of defined benefit plans is recognized in other comprehensive income as it arises and is presented in retained earnings.

C. Expenses associated with past service costs are recognized immediately as profit or loss.

  1. Compensation to employees and remuneration to directors and supervisors

Compensation to employees and remuneration to directors and supervisors are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligations and those amounts can be reliably estimated. If the accrued amounts are different from the actual distributed amounts resolved by the subsequent shareholders, the differences should be accounted for as changes in accounting estimates.

4. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group's decision to terminate an employee's employment before the normal retirement date, or an employee's decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expenses at the earlier of when it can no longer withdraw the termination contracts or when it recognizes relevant restructuring costs. Benefits due more than 12 months after balance sheet date are discounted to their present value.

  • (XXV) Financial liabilities and equity instruments

  • Classification of financial liabilities and equity instruments

The Group classifies debt and equity instruments issued in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.

2. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group is recognized as the net of proceeds less direct issuance costs.

3. Financial liabilities

Financial liabilities that are not held for trading and are not designated as at fair value through profit or loss are accounted for at amortized costs at the end of subsequent accounting periods.

4. Derecognition of financial liabilities

The Group will derecognize a financial liability only when the obligation under the obligation is discharged, cancelled or expired. When a financial liability is derecognized, the difference between the carrying value of the financial liability derecognized and the consideration paid or payable (including any non-cash asset transferred or liability assumed) should be recorded as profits or losses of the current period.

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5. Corporate bonds payable

Secured corporate bonds issued by the Group are initially recognized at fair value less transaction costs. The difference between the carrying amount and the maturity value is recognized as premium or discount on bonds payable and they are additions or deductions to bonds payable. Subsequently, the amortized cost is recognized as profit or loss using the effective interest method for the duration of the bonds as an adjustment to finance cost, except for immaterial amounts.

(XXVI) Capital

Common shares are classified as equity. Incremental costs that can be attributed directly to the issuance of new shares or warrants is recognized as a deduction to proceeds under equity.

(XXVII) Share-based payment

  1. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation costs over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

  2. For the cash-settled share-based payment arrangements, the fair value of liabilities assumed are recognized as compensation cost and liabilities over the vesting period and measured as the fair value of equity instruments granted on each balance sheet and settlement dates; changes of which are recognized as profit or loss.

(XXVIII) Income tax

  1. Income tax expense comprises current and deferred tax. Tax is recognized as 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.

  2. 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 countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns 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 shareholders resolve to retain the earnings.

  3. Deferred income tax adopts the balance sheet approach. It is recognized as the temporary difference between the tax bases of assets and liabilities and their carrying amounts in consolidated balance sheet at the reporting date. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or from 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 for temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable 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.

247

  1. 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, and unused taxable loss and unused income tax credits can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

  2. Current income tax assets and liabilities are offset when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset 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.

  3. Tax incentives from acquisitions of equipment or technology, research and development expenditures, employees' training costs and equity investments are recognized in the form of tax credits.

(XXIX) Revenue recognition

1. Sales of goods

(1) The Group engages in the manufacture and selling of rolled steel coils, refined steel, steel pipes, electronic materials, etc. Revenue is measured at the fair value of the consideration received or receivable, taking into account sales returns and 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 should be recognized when the following conditions are met:

(A) the significant risks and rewards of the ownership of the goods have passed to the customer;

(B)neither continuing managerial involvement nor effective control over the goods sold have been retained;

(C) the amount of revenue can be measured reliably;

(D) it is probable the economic benefits associated with the transaction will flow to the Group;

(E) the costs incurred in respect of the transaction can be measured reliably. When supplying material for processing, the significant risks and rewards of ownership of the processed goods have not passed. Thus, it is not treated as sales of goods.

(2) The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Provisions for such liabilities are recorded when the sales are recognized.

2. Revenue from services, technical services, leases, dividends and interests

(1) The sales of services occur from services rendered in accordance with contracts and is recognized as revenue by reference to the stage of completion of the contract activity. If a specific task is far more important than the rest, the recognition of revenue should be delayed until that specific task is completed.

(2) Revenue of technical service rendered is recognized in accordance with contracts when it is probable the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be reliably measured.

(3) Income from leases are recognized as revenue on straight-line basis during the duration of leases.

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

(5) Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable.

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3. Construction contracts

Please refer to Note 4(XIV) for details on the recognition of revenue from construction contracts.

(XXX) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset -- are capitalized as part of the cost of the respective assets until the asset is ready for its intended use or sale.

Income earned on the temporary investment of the borrowing specifically for the capital expenditure of a qualifying asset is deducted from the borrowing cost that meets the capitalization condition.

Except for the above, other borrowing costs are recognized as profit or loss.

  • V. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

Major accounting judgments, estimates, and assumptions adopted in applying the Group's accounting policies for the preparation of this consolidated financial statement are as follows:

(I) Major judgments

1. 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 Group 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 flows.

2. Financial assets measured at costs

Equity instruments held by the Group have no public quotes from the active market. As recently accessible information is not sufficient to determine their fair value thus their value cannot be reliably measured, those investments are classified as "financial assets measured at cost."

3. Revenue recognition

Based on transaction type and if the Group's economic substance is exposed to significant risks and rewards associated with sale of products or provision of services, the Group judges whether it is acting as a principal or as an agent in the transaction. When the Group is exposed to significant risks and rewards associated with sale of products or provision of services, it is acting as a principal. Revenue is recognized as the gross amount of economic benefit receivable or received. If the Group is acting as an agent, revenue recognized equals to the net amount of the transaction.

The Group manufactures and sells rolled steel coils, refined steel, steel pipes and electronic materials. As it meets the following criteria, gross amounts are recognized as revenue.

  • (1) The Group is primarily responsible for providing of goods or services

  • (2) The Group has inventory risk

  • (3) The Group has customer credit risk

  • (II) Critical accounting estimates and assumptions

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1. Revenue recognition

Revenue from sales of goods is principally recognized when the goods are delivered and titles have been transferred. Provisions for relevant returns and allowances are estimated based on historical experience and other known factors and recognized as a deduction item to revenue in the period when goods are sold. The Group regularly reviews the reasonability of such estimates. As of December 31, 2016, provisions for sales returns and allowances of the Group were NT$ 2,806 thousand.

2. Impairment assessment of tangible and intangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilized and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future. For the year ending December 31, 2016, the Company recognized impairment loss of NT$ 52,796 thousand.

3. Impairment assessment of investments accounted for using the equity method

When there is an indication that an investment accounted for using the equity method may be impaired and its carrying amount cannot be recovered, the Group should immediately conduct an impairment assessment on the asset. The Group evaluates the recoverable amount based on the discounted expected future cash flows or cash dividends from the investees and the discounted future cash flows from disposal of the investment. It also analyzes the reasonability of relevant assumptions. For the year ending December 31, 2016, the Group recognized impairment loss of NT$ 0 thousand.

4. Realizability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences can be utilized. Assessment of the realizability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any changes in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets. As of December 31, 2016, the Group recognized deferred income tax assets of NT$ 569,580 thousand.

5. Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on the 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 balance sheet date, and writes down the cost of inventories to the net realizable value. As of December 31, 2016, the carrying amount of inventories was NT$ 8,249,118 thousand (less the provision for obsolete inventory and inventory valuation losses of NT$ 423,608 thousand).

6. Calculation of net defined benefit liabilities

To calculate the present value of defined benefit obligations, the Group must apply judgements and estimates in determining relevant actuarial assumptions, including the discount rate and future growth rate for salary, on the balance sheet date. Changes in the actuarial assumptions may have significant impacts on the Group's defined benefit obligations. As of December 31, 2016, the carrying amount of the Group's net defined benefit liabilities was NT$ 1,075,766 thousand.

7. Financial assets – fair value assessment on unlisted stocks with no active markets

Unlisted stocks with no active markets held by the Group are carried at cost net of impairment losses as of the balance sheet date. As the range of reasonable estimates on fair value is significant and various probabilities cannot be reasonably assessed, management of the Group deems the fair value cannot be measured reliably.

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VI. Description for important accounting subjects

(I) Cash and cash equivalents

Cash
Checking account
Demand deposits
Cash equivalents
Time deposits within three months
Short-term commercial paper within three months
Total
Item		 December 31, 2016
December 31, 2015
$4,094
$4,168
694,268
519,496
5,589,597
7,239,253
1,845,222
1,759,765
-
65,384
$8,133,181
$9,588,066

No cash or its equivalent was pledged as collateral by the Company.

(II) Financial assets and liabilities at fair value through profit

(II) Financial assets and liabilities at fair value through profit
Non-derivative financial assets - current
Listed stocks
Bond funds
Derivative financial assets – current
Interest and currency swap contracts
Foreign exchange options
Total
Non-derivative financial assets – non-current
Financial bonds
Item		 December 31, 2016
$1,424
102,371
7,687
8,386
$119,868
$9,999		 December 31, 2015
$2,961
122,668
149
-
$125,778
$9,999

  1. Net income (loss) recognized for 2016 and 2015 are NT$12,433 thousand and NT$12,293 thousand, respectively.

  2. No financial asset at fair value through profit or loss was pledged by the Company as collateral.

  3. The Group enters exchange rate swap contracts with banks to hedge exchange rate risk of liabilities denominated in foreign currencies. However, as the Group does not plan on adopting hedge accounting, those contracts are accounted for as financial instruments at fair value through profit or loss upon initial recognition.

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Outstanding contracts are as follows:

(A) Currency swap contracts:

December 31, 2016

December 31, 2015

Nominal Principal (In thousands)
USD 3,000
USD 2,000
Nominal Principal (In thousands)
USD 20,000		 Due Date
Exchange Rate
2017. 3.21
USD/RMB 6.5
2017. 5. 8
USD/RMB 6.497
Due Date
Exchange Rate
January 28, 2016
USD/NTD 32.837

(B) Interest and Currency Swap

Contract Amount (thousands)
USD 10,000
USD 5,000		 Due Date
2017.10.18
2017.10.18		 Collection from Floating Rate /
Exchange Rate
Payment on fixed rate
USD/RMB 6.77 (Note 1)
(Note 3) /5.25%
USD/RMB 6.891(Note 2)
(Note 3) /5.15%

December 31, 2015: None.

Note 1: If on fixing date, the fixing rate of USD/RMB<7.20, on maturity date, the Company collects USD 10,000 thousands, and banks collect RMB67,700 thousands.

If on fixing date, the fixing rate of USD/RMB >7.20, on maturity date, the Company collects USD 10,000 thousands, banks collect RMB [10,000 thousands * (fixing rate - 0.43)]

Balance is settled by both parties.

Note 2: If on fixing date, the fixing rate of USD/RMB< 7.20, on maturity date, the Company collects USD 5,000 thousands, banks collect RMB 34,455 thousands.

If on fixing date, the fixing rate of USD/RMB> 7.20, on maturity date, the Company collects USD 5,000, banks collect RMB(5,000 thousands*(fixing rate-0.309)).

Balance is settled by both parties.

Note 3: 3-month term (USD-LIBOR-BBA)+3.20%

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(IV) Accounts receivable- Net

Accounts receivable
Less: Bad debt provision
Accounts receivable-net
Item		 December 31, 2016
December 31, 2015
$2,177,865
$1,517,854
(6,283)
(4,862)
$2,171,582
$1,512,992

  1. The Group's accounts receivables that are not overdue nor impaired all meet the credit standards stipulated based on the counterparties' industrial characteristics, operational scale and profitability. The average collection period for Carbon Steel Department and Stainless Steel Department is 30 to 60 days and 7 to 26 days, respectively. The collection period for Engineering Department is based on contracts. The average collection period for other departments are 60 to 90 days.

  2. The Group does not have significant overdue accounts receivables that are not impaired.

  3. Changes in allowance for doubtful account: (Include notes receivables, accounts receivables and accounts receivables - related parties)

2016
Item Impairment loss by
individual assessment		 Impairment loss by
Beginning balancegroup		 Total
assessment
Beginning balance $ - $6,963 $6,963
Provision of impairment
loss - -
 -
Reversal of impairment
loss - -
 -
Write-off of uncollectible
accounts		 - (64) (64)
Impact of foreign exchange
differences		 - (14) (14)
Ending balance $ - $6,885 $6,885

253

2015

2015
Item Impairment loss by
individual assessment		 Impairment loss by
Beginning balancegroup		 Total
assessment
Beginning balance $ - $8,188 $8,188
Provision of impairment
loss
Reversal of impairment		 - 105 105
loss - -
 -
Write-off of uncollectible
accounts		 - (1,351) (1,351)
Impact of foreign exchange
differences		 - 21 21
Ending balance $ - $6,963 $6,963

No impairment was recognized through assessment of allowance for accounts receivable as of December 31, 2016 and 2015.

  1. No account receivables were pledged as collateral as of December 31, 2016 and 2015.

(V) Construction contract amount receivable (payable)

(V) Construction contract amount receivable (payable)
Total costs incurred and profits recognized
Less: Allowance for price decline
Less: Construction progress payment
Net assets and liabilities of undergoing contracts
Assets listed as:
Construction contract receivables – non-related parties
Construction contract receivables –related parties
Construction contract payables – non-related parties
Construction contract payables – related parties
Item		 December 31, 2016
$2,566,305
(3,752)
(1,946,432)
$616,121
$301,108
344,415
(29,402)
-
$616,121		 December 31, 2015
$2,435,345
(15,063)
(2,019,260)
$401,022
$264,088
167,866
(29,495)
(1,437)
$401,022

254

(VI) Other receivables

Item December 31, 2016 December 31, 2015
Business tax refundable $96,602 $75,408
Proceeds from sale of land
receivable		 46,072 46,072
Purchase allowance receivable 97,612 34,729
Interest receivable 224 201
Insurance claim receivable 17,480 -
Others 17,783 11,626
Total $275,773 $168,036
Less: Deferred gain on sale
of land		 (19,399) (19,399)
Allowance for bad debts - -
Net $256,374 $148,637

  1. Proceeds from sale of land receivable is the sale of 67 pieces of land in Da Kang Section, Sanmin Dist., Kaohsiung City to related parties in June 2013. 30% of the sale proceeds have been collected. Land transfer registration has been completed in July 2013 and resulted in a disposal gain of NT$19,399 thousand. Since the rest of the sale proceeds has not been collected yet, the gain is listed as deferred gain on sale of land (a deduction from other receivables).

  2. Insurance receivable is the amount claimable from the insurance company due to wind (water) disaster losses. Please refer to Note 12 (VII)

  3. Please refer to Note 7(II)3 for related-party transactions.

(VII) Inventory and cost of sales

Raw materials
Supplies
Work in process
Finished products
Other inventories
Subtotal
Less: Allowance for
inventory valuation and
obsolescence loss
Net
Item
Rolled Steel (Product) Department and other non-heavy
industry departments:		 December 31, 2016
December 31, 2015
$3,655,361
$2,903,062
344,868
350,270
1,252,021
859,004
3,090,894
1,848,166
168,126
168,264
$8,511,270
$6,128,766
(422,286)
(503,359)
$8,088,984
$5,625,407

255

Heavy Industry Department:

Heavy Industry Department:
Raw materials $158,000 $172,138
Supplies 3,456 5,337
Subtotal $161,456 $177,475
Less: Allowance for inventory valuation and obsolescence loss (1,322) (14,712)
Net $160,134 $162,763
Total $8,249,118 $5,788,170

(1) Inventory gains (losses) recognized as cost of sales are as follows:

Cost of inventories sold
Engineering costs
Cost of processing
Unabsorbed manufacturing overheads
Loss on physical inventory
Insurance claims
Loss (recover gain) on irrevocable purchasing contracts
Impact of foreign exchange differences
Total operating costs
Item
Inventory valuation losses and obsolescence (Gain from
price recovery of inventory)		 2016
2015
$44,417,860
$44,547,399
819,113
894,302
403,638
404,301
87,682
160,204
-
1,568
(105,774)
84,342
(6,181)
-
(822)
(16,455)
25,535
4,681
$45,641,051
$46,080,342

(2) A recovery of the net realizable value of inventory occurred, partly due to write down of the cost of inventory to the net realizable value, or due to a price increase of certain products as a result of market stabilization. As a result, the Group recognized inventory valuation loss (recovery gain) of NT$ (105,774) thousand and NT$ 84,342 thousand for the years ending December 31, 2016 and 2015, respectively.

(3) No inventory was pledged by the Company as collateral.

(VIII) Prepayments

Item December 31, 2016 December 31, 2015
Prepaid material purchases $1,792,300 $1,522,275
Prepaid (overpaid) tax 182,482 124,212
Sea freight prepaid 81,524 10,944
Prepaid insurance premium 56,781 64,326
Prepaid land usage rights 6,576 6,600
Prepaid rental 2,409 4,532
Other prepayments 50,336 76,376
Total $2,172,408 $1,809,265

256

(IX) Other financial assets - current

Time deposits with maturities over three months
Pledged demand deposits
Pledged time deposits
Total
Item		 December 31, 2016
December 31, 2015
$27,425
$29,629
274,593
530,986
709,763
63,872
$1,011,781
$624,487
  • (X) Investments under equity method
Associates:
Associates with significance:
Eliter International Corp
E-da development Co., Ltd.
Tangeng Iron Works Co., Ltd.
Yieh United Steel Corporation
Associates without significance
Total
Investee		 December 31, 2016
December 31, 2015
$3,748,343
$3,570,283
1,454,739
1,541,377
4,468,732
4,319,514
4,769,070
4,740,198
2,619,386
2,380,021
$17,060,270
$16,551,393

1. Associates:

  • (1) Information of major associates of the Group is as follows:
iates of the Group is as follows:
Shareholding Percentage
Company name 105.12.31 104.12.31
Eliter International Corporation 43.56% 43.85%
E-da development Co., Ltd. 34.38% 34.38%
Tangeng Iron Works Co., Ltd. 31.16% 31.16%
Yieh United Steel Corporation 29.31% 28.78%

Please refer to Table 9 and Table 10 in Note 13 for the nature of business, main operation location and countries of registration of the associates listed above.

257

(2) The summarized financial information in respect of the Group's major associates is set out below.

A. Balance sheet:

A. Balance sheet:
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Unrealized gain/loss from transactions with associates
Carrying amount of associate
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Unrealized gain/loss from transactions with associates
Carrying amount of associate
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Unrealized gain/loss from transactions with associates
Carrying amount of associate		 Eliter International Corporation
December 31, 2016
December 31, 2015
$7,081,451
$7,115,282
4,445,457
4,618,368
1,337,910
2,412,809
1,439,078
1,036,704
$8,749,920
$8,284,137
$3,811,142
$3,633,513
(62,799)
(63,230)
$3,748,343
$3,570,283
E-da development Co., Ltd.		 December 31, 2015
$7,115,282
4,618,368
2,412,809
1,036,704
$8,284,137
$3,633,513
(63,230)
$3,570,283
December 31, 2016
December 31, 2015
$315,078
$317,309
9,076,611
9,463,500
1,641,262
1,765,084
3,495,049
3,507,811
$4,255,378
$4,507,914
$1,463,174
$1,550,006
(8,435)
(8,629)
$1,454,739
$1,541,377
Tangeng Iron Works Co., Ltd.		 December 31, 2015
$317,309
9,463,500
1,765,084
3,507,811
$4,507,914
$1,550,006
(8,629)
$1,541,377
December 31, 2016
$4,408,426
24,133,403
4,188,691
10,010,973
$14,342,165
$4,468,732
-
$4,468,732		 December 31, 2015
$3,855,712
24,202,732
3,780,842
10,414,346
$13,863,256
$4,319,514
-
$4,319,514

258

Yieh United Steel Corporation (Note)

Yieh United Steel Corporation (Note) orporation (Note)
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Unrealized gain/loss from transactions with associates
Carrying amount of associate
B. Statement of comprehensive income:
Operating Revenue
Net income (loss)
Other comprehensive income (net)
Total amount of Comprehensive profit/loss in the year
Dividends received from associates
Operating Revenue
Net income (loss)
Other comprehensive income (net)
Total amount of Comprehensive profit/loss in the year
Dividends received from associates
Operating Revenue
Net income (loss)
Other comprehensive income (net)
Total amount of Comprehensive profit/loss in the year
Dividends received from associates		 December 31, 2016
December 31, 2015
$7,877,307
$7,511,121
38,915,187
37,523,851
20,599,883
18,058,762
9,917,563
10,504,278
$16,275,048
$16,471,932
$4,769,070
$4,740,198
-
-
$4,769,070
$4,740,198
Eliter International Corp		 December 31, 2015
$7,511,121
37,523,851
18,058,762
10,504,278
$16,471,932
$4,740,198
-
$4,740,198
2016
2015
$310,954
$635,651
($126,830)
$81,685
-
-
($126,830)
$81,685
-
$ -
$ E-da development Co., Ltd.		 2015
$635,651
$81,685
-
$81,685
-
$
2016
2015
$1,005,719
$1,155,773
($249,488)
($244,310)
(3,048)
(8,635)
($252,536)
($252,945)
-
$ -
$ Tangeng Iron Works Co., Ltd.		 2015
$1,155,773
($244,310)
(8,635)
($252,945)
-
$
2016
$13,021,328
$503,350
(24,441)
$478,909
-		 2015
$12,847,332
($930,463)
13,452
($917,011)
-

259

Operating Revenue
Net income (loss)
Other comprehensive income (net)
Total amount of Comprehensive profit/loss in the year
Dividends received from associates		 Yieh United Steel Corporation (Note) Yieh United Steel Corporation (Note)
2016
$41,713,114
$163,352
(361,465)
($198,113)
-
$		 2015
$39,734,120
($5,913,932)
(249,331)
($6,163,263)
-
$

(3) Shares of individually insignificant associates of the Group are summarized as follows:

Share of:
Net income (loss)
Other comprehensive income (net):
Total comprehensive income		 2016
2015
$171,960
($35,418)
(21,494)
14,889
$150,466
($20,529)

(4) Associates of the Group with quoted prices in active market (Level 1 fair value inputs) are as follow:

December 31, 2016 December 31, 2015
Yieh United Steel Corporation (N $3,832,736 $3,913,990
Tangeng Iron Works Co., Ltd. 5,109,133 4,896,480
Total $8,941,869 $8,810,470

(Note): The fair value information above does not include shares acquired in private placement during the period and are not allowed to be transferred freely in open markets.

(5) Since the Group is one of the directors in Skylark Hot Spring & Resort Corp., E-Da Cultural Creative Industries Co., Ltd., E -Da Tour Bus Corporation, E-Da Bus Transportation Co., Ltd. and E-Da Entertainment Co., thus, it is deemed to have significant influence. Consequently, those entities are accounted for using the equity method.

(6) The Group recognized its investment in Yieh United Steel Corporation as an available-for-sale financial asset as of December 31, 2014. Since the Group has significant influence over Yieh United Steel Corporation when combining the shares acquired in 2015 and shares held by the new consolidated subsidiaries, Yieh United Steel Corporation was accounted for by using the equity method starting March 2015. The bargain purchase gain from the acquisition of Yieh United Steel Corporation amounted to NT$ 493,567 thousand for the year ending December 31, 2015. Please refer to Note 6(XXXIII) for details.

260

companies has exceeded 50%. Thus, they were included in the consolidated financial statement in the first quarter of 2015.

(10) Except for E United Japan Co., Ltd., investments accounted for using the equity method and the Group's share of profit or loss and other comprehensive income are calculated based on audited financial statements of those investees. However, management of the Group believes that unaudited financial statements of above investees would not have a significant impact on the Group.

(11) Please refer to Note 8 for details on investments using the equity method used by the Group as collateral for loans as of December 31, 2016 and 2015.

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

Item
Stocks listed in TWSE or TPEX		 December 31, 2016
December 31, 2015
$46,575
$52,425

As of December 31, 2016 and 2015, no available-for-sale financial asset was pledged as collateral.

(XII) Financial assets at cost - non-current

Item
Total
Domestic stocks not traded in TWSE or TPEX
Foreign stocks not trade in stock markets		 December 31, 2016
December 31, 2015
$482,124
$460,211
2,002
2,002
$484,126
$462,213
  1. The investments above were classified as financial assets held at cost because no reasonable and reliable assessments were available to determine their fair values for lacking of quoted price from active market and insufficient information about other similar industries and the investee‟s financial information. These investments are measured at cost less accumulated impairment loss as of the balance sheet date.

261

  1. Upon evaluation, the impairment loss recognized by the Group amounted to NT$ 0 thousand and NT$ 2,668 thousand for the years ending December 31, 2016 and 2015, respectively.

  2. As of December 31, 2016 and 2015, no financial asset held at cost was pledged as collateral.

(XIII) Bond investment with no active market: noncurrent

o active market: noncurrent
Item
Preferred shares
Less: cumulative impairment
Net		 December 31, 2016
$206,305
-
$206,305

December 31, 2015: None.

  1. The Group acquired preferred shares on E-Da Development Corp. (with annual rates of 2.5%, three years of issuance period, cumulative amount not concluded, cash settled at one time upon maturity). E-Da Development Corp. engages in the business of department stores and amusement parks.

  2. Impairment loss recognized by the Group as of December 31, 2016 is NT$ 0 thousand.

  3. No bond investments with no active market are pledged by the Group as collateral as of December 31, 2016.

(XIV) Property, plant and equipment

pment
Item December 31, 2016 December 31, 2015
Land $6,018,653 $6,018,653
Building and construction 8,772,193 7,625,395
Machinery equipment 35,345,447 31,043,470
Other equipment 3,310,380 3,086,543
Equipment to be inspected
and construction in 7,894,997 10,876,205
progress
Total costs $61,341,670 $58,650,266
Less: accumulated depreciation (22,225,398) (21,342,305)
Accumulated impairment (1,249,213) (1,213,256)
Total $37,867,059 $36,094,705

262

Equipment-to-be-
inspected and
Land Building and
construction		 Machinery
equipment		 Other
equipment		 Construction in
process		 Total
Cost
~~Balance as of Jan 1,~~
~~2016~~		 $6,018,653 $7,625,395 $31,043,470 $3,086,543 $10,876,205 $58,650,266
Additions - 89,577 38,334 216,763 4,182,050 4,526,724
Amount transferred in
(out)		 - - (185) (148) (17,022) (17,355)
Disposal - (8,270) (73,156) (133,388) - (214,814)
Reclassification - 1,199,313 5,066,340 231,267 (6,496,920) -
Impacts from foreign
exchange difference		 - (133,822) (729,356) (90,657) (649,316) (1,603,151)
Balance as of December
31, 2016		 $6,018,653 $8,772,193 $35,345,447 $3,310,380 $7,894,997 $61,341,670
Accumulated depreciation
and impairment
~~Balance as of Jan 1,~~
~~2016~~		 -
$		 $3,136,776 $16,273,515 $2,132,340 $1,012,930 $22,555,561
Depreciation expenses - 214,083 1,020,546 238,707 - 1,473,336
Amount transferred in
(out)		 - - - - - -
Disposal - (6,134) (54,920) (127,157) - (188,211)
Impairment loss - 15,308 48,787 - - 64,095
Repair expense less - (2,640) (216) - - (2,856)
accumulated impairment
Impacts from foreign
exchange difference		 - (47,312) (288,383) (70,921) (20,698) (427,314)
Balance as of December
31, 2016		 -
$		 $3,310,081 $16,999,329 $2,172,969 $992,232 $23,474,611
Equipment-to-be-inspected and
Land Building and
construction		 Machinery
equipment		 Other
equipment		 Unfinished
construction		 Total
Cost
Balance as of January 1,
2015		 $5,803,062 $7,644,063 $31,130,356 $3,414,225 $6,279,163 $54,270,869
Additions 142,563 27,010 48,463 204,776 4,939,725 5,362,537
Amount transferred - - - (16,474) (38,449) (54,923)
Disposal - (6,247) (94,247) (565,850) - (666,344)
Transferred in from
investmentproperty		 73,028 - - - - 73,028
Acquired from merger - - - - 40,352 40,352
Reclassification - - 169,695 72,030 (241,725) -
Impacts from foreign
exchange difference		 - (39,431) (210,797) (22,164) (102,861) (375,253)
Balance as of December
31, 2015		 $6,018,653 $7,625,395 $31,043,470 $3,086,543 $10,876,205 $58,650,266
Accumulated depreciation
and impairment
Balance as of January 1,
2015		 -
$		 $2,812,855 $15,333,669 $2,466,318 $283,749 $20,896,591
Depreciation expenses - 224,260 1,032,626 246,017 - 1,502,903
Amount transferred - - - (5,296) - (5,296)
Disposal - (4,433) (64,235) (557,590) - (626,258)
Impairment loss -
114,474
42,173		 816 729,181 886,644
Impacts from foreign
exchange difference		 -
(10,380)		 ~~26~~ ~~3~~
(70,718)		 (17,925) - (99,023)
  1. Acquisitions during the period and adjustments for cash flows related to acquisitions of property, plant and equipment:
Item 2016 2015
Increase in property, plant and equipment $4,526,724 $5,362,537
Transferred in (out) from inventory (1,124) 15,668
Increase/decrease in payables for purchase of equipment (354,153) (48,763)
Repair payment on wind disasters 2,856 -
Property, plant and equipment purchases paid in cash $4,174,303 $5,329,442

  1. Please refer to Note 6(XXXIV) for details on the amount of capitalized borrowing costs.

  2. Impairment of property, plant and equipment recognized by the Group in 2016 and 2015 were NT$ 64,095 thousand and NT$ 886,644 thousand, respectively, while the recoverable amount belonged to fair value Level 3 based on the appraisal report provided by an independent appraiser. One of the reasons for the aforementioned impairment loss is impairment loss of NT$ 19,625 thousand recognized in July and September, 2016 due to a wind disaster event, among which NT$ 11,299 thousand were claimed from the insurance company. Please refer to Note 12 (VII) for more details.

  3. For the information about property, plant and equipment pledged as collateral, please see Note 8 for details.

  4. The Group‟s land amounting to $89,582 thousand as of December 31 2016 and 2015 is unable to be registered under the name of company due to regulation restrictions. Accordingly, the ownership was registered under the name of an individual with a mortgage registration as a safeguard measure.

(XV) Investment property net

Cost
Balance as of Jan 1, 2016
Additions
Disposal
Balance as of December
31, 2016		 Item
December 31, 2016
Land
$950,636
Building and construction
70,671
Total cost
$1,021,307
Less: accumulated depreciation
(8,463)
Accumulated impairment
(68,009)
Net
$944,835
Land
Building and construction
$950,636
$26,604
-
44,067
-
-
$950,636
$70,671		 December 31, 2015
$950,636
26,604
$977,240
(7,615)
(68,009)
$901,616
Total
$977,240
44,067
-
$1,021,307

264

Land
Accumulated depreciation
and impairment
Balance as of Jan 1, 2016
$68,009
Depreciation expenses
-
Recognition (Reversal)
Impairment loss
-
Balance as of December
31, 2016
$68,009
Land
Cost
Balance as of January 1,
2015
$1,023,664
Additions
-
Disposal
-
Transferred to property,
plant and equipment
(73,028)
Balance as of December
31, 2015
$950,636
Accumulated depreciation
and impairment
~~Balance as of January 1,~~
2015
$68,009
Depreciation expenses
-
Recognition (Reversal)
Impairment loss
-
Balance as of December
31, 2015
$68,009
1.Rental revenue and direct
operating expenses of
investment property:
Rental revenue from
investment property
Incurred by investment
property generating rental
revenue in current period
Direct operating expenses
Direct operating expenses
incurred by investment
property not generating
rental revenue in current
period
Item		 Building and construction
$7,615
848
-
$8,463
Building and construction
$26,604
-
-
-
$26,604
$6,768
847
-
$7,615
2016
$ -
$ -
$18,330		 Total
$75,624
848
-
$76,472
Total
$1,050,268
-
-
(73,028)
$977,240
$74,777
847
-
$75,624
2015
$ -
$ -
$12,080
  1. Investment property held by the Group was appraised by an independent appraiser, of which the fair values were NT$ 2,022,629 thousand and NT$ 1,978,562 thousand for 2016 and 2015, respectively. The fair value appraisal in 2015 was computed based on the 2014 appraisal adding new inputs. The appraisal adopted the comparison method, with reference to the market evidences in real estate markets. Such fair values were classified into Level 3 fair value. Please refer to 265 Note 12 (VI). A significant fluctuation on the fair value of such investment property, believed by the Group, after being appraised in December 31, 2015, would not happen.​ Therefore, an appraisal on such investment property will take place every two years.

3. For details about investment property pledged as collateral, please see Note 8.

  1. The Group‟s land amounting to $8,987 thousand as of December 31 2016 and 2015, is unable to be registered under the name of company due to regulation restrictions. Accordingly, the ownership was registered under the name of an individual with a mortgage registration as a safeguarding measure.

(XVI) Long-term prepaid rental

l
Item December 31, 2016 December 31, 2015
Land use rights $260,507 $278,939
Other long-term prepaid rental 9,615 -
Subtotal $270,122 $278,939
Less: Transfer within 12 month (6,576) (6,600)
Total $263,546 $272,339

The prepaid rents above are mainly from the 50-year land-use right contract entered by the Group in China.

The amount was fully paid when contract was signed.

RMB 1,306 thousand was recognized as rent expenses for each of the years ending December 31, 2016 and 2015.

The Group has the right to use the land, to acquire benefits and to transfer or lease the land and is responsible for all taxes and dues arising from the land-use during the contract duration.

(XVII) Short-term loan

Type of Loan
Credit loans
Credit for material purchases
Mortgage loans
Total
Type of Loan
Credit loans
Credit for material purchases
Mortgage loans
Total		 42,735
Amount
Interest Rate
$4,056,157
1.17%-4.79%
5,439,850
1.50%-2.88%
1,018,500
2.10%-2.96%
$10,514,507
December 31, 2015
Amount
Interest Rate
$3,435,083
1.62%-5.14%
8,021,836
1.31%-2.74%
727,000
2.55%-3.09%
$12,183,919

The Group pledged some of its property, plant and equipment as collateral for short-term loans. Please refer to Note 8.

266

(XVIII) Short-term bills payable

Item
Commercial paper payable
Less: Unamortized discount
Net
Interest Rate Range		 December 31, 2016
$679,461
(448)
$679,013
1.63%-2.74%		 December 31, 2015
$765,000
(1,304)
$763,696
1.67%-2.78%

The Group pledged some of its property, plant and equipment as collateral for short-term bill payable. Please refer to Note 8.

(XIX) Other payables

Item
Others
Total
Export and transportation expenses payable
Investment payables
Business tax payable
Cash dividends payable – from last period
Repair charges payable
ts payables and remuneration payable to directors and supervisors
Compensations payable
Equipment payment
Interest payable
Utility expenses payable
Consumables payable		 December 31, 2016
December 31, 2015
$583,703
$369,892
445,564
91,411
58,007
89,008
57,018
60,125
50,903
35,203
39,658
42,906
26,605
-
24,460
10,901
22,781
22,634
21,656
20,198
9,066
-
361,367
328,479
$1,700,788
$1,070,757

Please refer to Note 7(II)4 for details of related-party transactions

(XX) Provision - current

Item
Employee benefits
Sales return & discount
Warranty
Onerous contract
Total		 December 31, 2016
December 31, 2015
$62,232
$59,296
2,806
42,875
5,309
1,527
-
822
$70,347
$104,520

267

Item Employee benefits Sales return & discount Warranty Onerous contract Total
January 1, 2016 $59,296 $42,875 $1,527 $822 $104,520
Recognized in
current period		 2,936 - 3,782 - 6,718
Written down in
current period		 - (40,069) - (822) (40,891)
December 31, 2016 $62,232 $2,806 $5,309 -
$		 $70,347
Item Employee benefits Sales return & discount Warranty Onerous contract Total
January 1, 2015 $56,616 $39,024 $420 $17,277 $113,337
Recognized in
current period		 2,680 3,851 1,107 - 7,638
Written down in
currentperiod		 - - - (16,455) (16,455)
December 31, 2015 $59,296 $42,875 $1,527 $822 $104,520
(1) Provision for employee benefits is an estimate of the short-term service leave vested to employees.
(2) Provision for sales return & discount is estimated based on historical experience and other known reasons for possible
return or discount on steel coils and steel tubes, to be deducted from the sale revenue stated in the current period when the
goods are sold.
(3) Provision for warranty is to provide warrant for sold electronic products. It is estimated based on historical records.
(4) Provision for onerous contract is the difference between the expected costs of performing the contract in excess of the
expected profit obtained from the contract for the signed irrevocable material purchase contract.
(XXI) Long-term liabilities due within one ye ar or one operating cycle
Item December 31,2016 December 31, 2015
Long-term loans due within one year or one
operating cycle		 $4,837,093 $1,122,293
Bonds payable within one year or one
operating cycle		 278,469 -
Total $5,115,562 $1,122,293
(XXII) Corporate
~~Bondspayable~~

Item		 December 31,2016 December 31, 2015
GOLDEN, the subsidiary, issued 3-year overseas secured bonds with a
secure of RMB 3000,000 thousand from the Company.		 $278,940 $1,516,500
Such bonds are to be matured in July, 2017 and are to be fully-paid in
one time.
However, a pre-redemption of RMB 240,000 thousand was paid in June
2016, with 5% p.a. paid every half-year.
Less: unamortized issuing cost (471) (7,188)
Mature within one year (278,469) -
Net corporate bonds payables $ - $1,509,312
The contacts for corporate bonds payables stipulate that the Company shall maintain a certain level of debt ratio, interest
coverage ratio and net worth calculated based on the annual and semi-annual consolidated financial statement audited by
independent auditors.
All financial ratios of the Company met the standards in 2016.

268

(XXIII) Long-term Loans

Item
Bank syndicated loan:
The Company
Subsidiary
Subtotal
Secured loans from banks
Unsecured loans from banks
Other financial institutions
Total
Less: Unamortized discounts
Less: Due within 12 months
Long-term loans
Interest rate range		 December 31, 2016
$6,880,000
21,099,930
$27,979,930
3,296,800
220,000
77,600
$31,574,330
(104,763)
(4,837,093)
$26,632,474
1.72%-9.39%		 December 31, 2015
$6,880,000
19,401,267
$26,281,267
1,767,500
220,000
-
$28,268,767
(117,800)
(1,122,293)
$27,028,674
2.00%-7.73%

1. Please refer to Note 8 for the collaterals of the above bank loans.

  1. According to syndicated loan agreements with the banks, the Group needs to maintain several financial ratios, including the current ratio, liability ratio and interest coverage ratio, at a certain level, calculated based on the audited annual consolidated financial statements and reviewed in the semi-annual consolidated financial statements or the audited annual financial statements of subsidiaries for the duration of the contracts. All subsidiaries in the Group, except for the liability ratio of Yieh Hsing Enterprise Co., Ltd., meet the above requirements. Provided that Yieh Hsing Enterprise Co., Ltd. pays a penalty at 0.125% of the loan balance within time agreed to the managing bank, it will not be deemed to be a breach of contract.

(XXIV)Pension

1. Defined contribution plans

(1) The pension system based on the Labor Pension Act which is applicable to the Group's domestic entities is a defined contribution plan managed by THE R.O.C. government. Companies would make monthly contributions equal to 6% of each employee's monthly salary to the employees' individual pension accounts at the Bureau of Labor Insurance. Contribution plans of subsidiaries outside the R.O.C. territory are made in accordance with the local regulation, and companies made contributions to local government on a monthly basis.

(2) Pension expenses recognized by the Group were NT$ 101,637 thousand and NT$ 93,075 thousand for 2016 and 2015, respectively.

269

2. Defined benefit plans

(1) The pension plan under the Labor Standards Law, which is applicable to the Group's domestic entities, is a defined benefit pension plan managed by the government. Pension benefits are based on the average monthly salaries and wages of the last six months prior to retirement and the duration of employment. Those companies contribute monthly an amount equal to 4.2% to 6% of the employees' monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, under the name of the independent retirement fund committee. Before the end of year, if the balance at the retirement fund is not sufficient to cover all employees retiring next year, a lump-sum deposit should be made before the end of March of the following year to cover the difference.​ The retirement fund is managed by the Bureau of Labor Funds, Ministry of Labor. The Group does not have rights to influence its investment management strategy.

(2) The amounts recognized in the consolidated balance sheet for obligations from defined benefit plans are as follows:

Item
Present value of defined benefit obligations
Fair value of planned assets
Net defined benefit liabilities (assets)		 December 31, 2016
December 31, 2015
$1,799,950
$1,765,166
(724,184)
(718,085)
$1,075,766
$1,047,081

(3) Changes in net defined benefit liabilities are as follows:

Item
Balance as of January 1
Cost of service
Current service cost
Interest expense (income)
Past service cost
Loss (gain) on settlement
Recognized in profit and loss		 2016
Present value of defined
benefit obligations
$1,765,166
14,060
21,913
-
-
$35,973		 Fair value of planned
assets
Net defined benefit
liabilities
($718,085)
$1,047,081
-
14,060
(9,044)
12,869
-
-
-
-
($9,044)
$26,929

270

Changes in financial
assumptions
Experience adjustment
Recognized in other
comprehensive income
Contribution from
employer
Benefits paid
Balance as of December 31
Item
Balance as of January 1
Cost of service
Current service cost
Interest expense (income)
Past service cost
Loss (gain) on settlement
Recognized in profit and
loss
Remeasurement
Return on planned assets
(excluding amount
Actuarial (gain) loss
Changes in the
demographic assumptions
Changes in financial
assumptions
Experience adjustment
Recognized in other
comprehensive income
Contributions from
employer
Benefits paid
Balance as of December 31		 (79,043)
141,933
$67,468
-
(68,657)
$1,799,950
2015		 -
-
$4,010
(67,523)
66,458
($724,184)		 (79,043)
141,933
$71,478
(67,523)
(2,199)
($107,766)
Present value of defined
benefit obligations
$1,721,240
14,880
29,791
-
(5,126)
$39,545
$ -
5,309
93,906
(26,542)
$72,673
-
(68,292)
$1,765,166		 Fair value of planned
assets
($714,006)
-
(12,526)
-
-
($12,526)
($6,198)
-
-
(134)
($6,332)
(44,260)
59,039
($718,085)		 Net defined benefit
liabilities
$1,007,234
14,880
17,265
-
(5,126)
$27,019
($6,198)
5,309
93,906
(26,676)
$66,341
(44,260)
(9,253)
$1,047,081

271

(4) Through the pension plan under the Labor Standards Law, the Group is exposed to the following risks:

A. Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc., either by the Bureau of Labor Funds, or by an outsourcing management team. However, the rate of return on the Group‟s planned assets shall not be less than the average interest rate on a two-year time deposit rate published by the local banks.

B. Interest rate risk

Decrease in the government bond interest rate will increase the present value of the defined benefit obligation, however, the return on the debt investments of the plan assets will also increase. Those two will partially offset each other.

C. Salary risk

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

(5) The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions adopted on the measurement date were as follows:

Item
Future salary increase rate
Average duration of defined benefit obligation
Discount rate		 Measurement Date Measurement Date
December 31, 2016
1.25%-1.30%
1.50%-2.00%
9-11 years		 December 31, 2015
1.25%-1.50%
1.50%-2.50%
10-12 years

A. Future mortality rate is estimated based on the 2012 Taiwan Standard Ordinary Experience Mortality Table.

B. If a reasonable change in one of the principal assumptions for actuarial valuation occurred and all other assumptions were held constant, the increase (decrease) in the present value of defined benefit obligation would be as follows:

Item
December 31, 2016
Discount rate
Increase of 0.25%
(47,085)
Decrease of 0.25%
48,936
Expected growth rate of salaries
Increase of 0.25%
50,605
Decrease of 0.25%
(48,761)		 December 31, 2015
(48,657)
50,648
52,963
(49,559)

272

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

(6) The Group expects to make contributions of NT$ 91,097 thousand to the pension plans in the year ending December 31, 2017.

(XXV) Long-term deferred revenue

The subsidiary, Tianjin Lianfa Precision Steel Corporation Beneficiary, acquired in December 2014 had received a subsidy for engineering construction from the Tianjin Economic Technological Development Area of RMB 11,470 thousand in 2006. As it is a government grant associated with assets, donation income would be recognized based on percentage used for the recognition of depreciation expense. Details are set out below:

Item
Deferred revenue from government grants:
Subsidy for engineering construction
Less: Accumulated revenue recognized
Ending balance		 December 31, 2016
December 31, 2015
$59,331
$59,331
(20,935)
(15,263)
$38,396
$44,068

(XXVI) Common shares

  1. Quantities and values of the Company‟s outstanding common shares at the beginning and ending of periods were as follows:
Item
Item
January 1
December 31
January 1
Capital injection
Recapitalization of Retained Earnings
December 31
Capital injection
Recapitalization of Retained Earnings		 2016 2016
Shares (thousand shares)
Amount
1,718,090
$17,180,905
-
-
-
-
1,718,090
$17,180,905
2015		 Amount
$17,180,905
-
-
$17,180,905
shares (thousand shares)
Amount
1,668,049
$16,680,490
-
-
50,041
500,415
1,718,090
$17,180,905
  1. As of December 31, 2015 and 2014, the Company had an authorized capital of NT$20,000,000 thousand with 2,000,000 thousand shares.

273

  1. The Company's shareholders' meeting held on June 18, 2015 had resolved to capitalize earnings of NT$ 500,415 thousand. The plan was approved by FSC on July 22, 2015 and 50,041 thousand shares of common share at the par value of NT$ 10 were expected to be issued. The base date for share capital increase is set on September 1, 2015.

(XXVII) Capital surplus

Total
Changes of recognition from investments in associates and
joint ventures using the equity method.
Item
Stock issuance premium
Treasury stock transaction
Difference between the share price in the acquisition or
disposal of a subsidiary and its carrying amount
Recognized value of changes in equity of ownership of
subsidiaries		 December 31, 2016
December 31, 2015
$4,060,366
$4,060,366
557,739
557,739
81,311
36,175
8,665
-
29,050
19,507
$4,737,131
$4,673,787

Under the Company Act, capital surplus arising from shares issued at premium or from donation may be used for offsetting deficits. Furthermore, if the Company has no accumulated loss, capital surplus may be used for issuing new shares or distributing cash in proportion to shareholders' original holdings. In accordance with regulations in the Securities and Exchange Act, when the above-mentioned capital surplus is used for capitalization, the total amount every year shall not exceed 10% of the paid-in capital. The Company may use capital surplus to offset loss only when the amount of earnings and reserves are insufficient to offset the loss. The capital surplus generated from investment under equity method shall not be used for any purposes.

(XXVIII) Appropriation of Earnings

  1. According to the amendment of the Company Act, dividends and bonus are distributed only to shareholders, excluding employees. An amended dividend policy was approved in the shareholders' meeting on June 22, 2016. Employee benefits were also included in the amended Article of the Company. For actual amount distributed for employee benefits and enumeration for directors and supervisors, please refer to Note 6 (XXXV). Pursuant to the amendment to the Article of Incorporation and considering the Company is at its growth phase, a residual dividend policy will be carried out corresponding to future profitability and expansion plans. If there is any net income after the annual final account, taxes and duties and past deficits shall be primarily paid off. Then, any remaining net income shall be arranged to pay in the following orders: (1) 10% as legal reserve; (2) set aside or reverse a certain amount as or of special reserve according to relevant laws and regulations and to actual operation circumstances; (3) the remained net income, adding unappropriated earnings from prior years, shall be distributed as dividends and bonus after the Board of Directors has offered a dividend distribution proposal and such proposal has been resolved by the shareholders meeting. In principle, earnings shall be distributed in the form of stock dividends in accordance with the Company‟s capital requirement for business expansion and profitability. Cash dividends are distributed at between 20% to 100% of total dividends distributed while stock dividends are distributed at between 0% to 80% of the total dividends distributed.

274

  1. Legal reserves may only be used for offsetting deficits and issuing new shares or distributing cash in proportion to shareholders‟ original holdings. However, when new shares are issued or cash is distributed, the amount shall be limited to 25% of the reserves in excess of the paid-in capital.

  2. Special reserve

Provision for debit balance of other equity
Provision upon initial application of IAS
Total
Item		 December 31, 2016
December 31, 2015
-
$ -
$ 327,757
327,757
$327,757
$327,757

(1) The Company may allocate earnings only after providing a special reserve for debt balance in other equity on the date of balance sheet, and the reversal of debit balance in other equity, if any, may be stated in allocated earnings.

(2) Upon initial application to IFRSs, the special reserve provided pursuant to the official letter under Jin-Guan-JhengFa-Zih No. 1010012865 dated April 6, 2012 may be reversed to allocated retained earnings in proportion to the special reserve as provided originally, if the Company uses, disposes of or reclassifies the relevant assets in the future.

  1. A resolution to offset the 2015 deficits was approved in the shareholders' meeting on June 22, 2016.

No bonus was distributed due to a deficiency caused in 2015.

The shareholders' meetings held in June 2015 passed the earnings distribution and dividends per share for 2014 as follows

2014
Earnings appropriation proposal Dividend per share (NTD)
Legal Reserve $123,885
Cash dividends for common shares 333,610 0.2
Stock dividends for common shares 500,415 0.3
Total $957,910 
5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been passed by
the Board of Directors.

6. For details of the earning distribution, either proposed by the Board of Directors, or resolved by
shareholders' meeting, please check at TWSE MOPS (Market Observation Post System).

275

(XXIX) Other equity items

Item
Balance as of January
1, 2016
Balance as of December
31, 2016
Item
Balance as of January
1, 2015
Balance as of December
31, 2015
Exchange differences
on translation of
foreign financial
statements
Unrealized valuation
gain (loss) from
available-for-sale
financial assets
Shares of associates
and joint ventures
accounted for using
equity method
Exchange differences
on translation of
foreign financial
statements
Unrealized valuation
gain (loss) from
available-for-sale
financial assets
Shares of associates
and joint ventures
accounted for using
equity method		 Exchange differences
on translation of
foreign operations'
financial statements
$583,467
(707,931)
-
(101,834)
($226,298)
Exchange differences
on translation of
foreign operations'
financial statements
$625,476
(73,782)
-
31,773
$583,467		 Unrealized gain or
loss for
available-for-sell
financial assets		 Gain or loss
from the effective
portion of
financial
instruments that
designated as cash
flow hedges
$7,080
-
-
4,305
$11,385
Gain or loss
from the effective
portion of
financial
instruments that
designated as cash
flow hedges
($9,217)
-
-
16,297
$7,080		 Total
$54,642
-
(5,850)
(1,230)		 $645,189
(707,931)
(5,850)
(98,759)
$47,562 ($167,351)
Unrealized gain or
loss for
available-for-sell
financial assets		 Total
($235,257)
-
223,374
66,525		 $381,002
(73,782)
223,374
114,595
$54,642 $645,189

276

(XXX)Non-controlling interest

Beginning balance
Share attributable to non-controlling interest:
Net income (loss) for the current year
Other comprehensive income of the year
Remeasurements of defined benefit plans
Exchange differences on translation of foreign
financial statements
shares in associates and joint ventures
accounted for using the equity method
Exchange differences on translation of foreign
financial statements
Unrealized valuation gain (loss) from
available-for-sale financial assets
Remeasurements of defined benefit plans
Effective portion of financial instruments that
are designated as cash flow hedges
Changes in associates and joint ventures
accounted for using the equity method
Increase in non-controlling interest -
acquisition from mergers
Increase in non-controlling interest - cash
offering
Decrease in non-controlling interests - sale
Decrease in non-controlling interest by
acquisition of subsidiaries
Increase (decrease) in non-controlling
interests
Balance at the End of the Period
Item		 2016
2015
$3,119,304
$2,257,832
(123,460)
(661,051)
(7,030)
(8,071)
(1,370)
(3,307)
(6,638)
4,069
1,062
1,666
(2,556)
(822)
1,201
4,255
(566)
(2,244)
-
1,789,714
64,630
20,137
(295,654)
(213,273)
-
(44,908)
(42,595)
(24,693)
$2,706,328
$3,119,304

(XXXI)Operating Revenue

Item
Sales revenue
Construction revenue
Processing revenue
Realized profits from sales
Total sales revenues
Less: Sales return
Sales discount
Net Revenue		 2016
2015
$52,001,923
$49,079,655
835,237
889,081
375,150
361,645
217
217
$53,212,527
$50,330,598
(16,657)
(33,113)
(348,460)
(512,651)
$52,847,410
$49,784,834

277

(XXXII) Other revenues

Interest income
Interest from bank deposits
Other interest income
Subtotal
Rent revenue
Dividend income
Other revenue
Claims on fire insurance (Note )
Income from sales of scrap material
Subsidy income
Others
Subtotal
Total
Item		 2016
2015
$44,830
$69,106
4,306
3,186
$49,136
$72,292
1,989
1,843
8,250
12,323
-
157,425
46,783
15,983
136,620
76,428
22,272
58,408
$205,675
$308,244
$265,050
$394,702

(Note) A fire occurred to the Group's rolling mill No. 1 and its equipment in September, 2012.

The insurance company paid the Group NT$ 157,425 thousand for such claim, totaling claimed amount to NT$ 417,583 thousand.

(XXXIII)Other gains and losses

(XXXIII)Other gains and losses
Item 2016 2015
Bargain purchase gain - associates $ -
 $493,567
Bargain purchase gain - subsidiaries - 34,428
Subtotal $ -
 $527,995
Net foreign currency exchange gain (loss) ($81,260) $112,855
Gain (loss) on disposal of investments 200 10,910
Reversal of gain from (impairment loss on) property, plant
and equipment		 (44,470) (886,644)
Disaster loss of property, plant and equipment (8,326) -
Impairment loss of financial assets at cost - (2,668)
Gain (loss) on disposal of property, plant and equipment (25,766) (38,373)
Gain or loss from disposal of financial assets/liabilities at (1,922) 18,272
fair value through profit or loss
financial assets (liabilities) at fair value through profit or
Additional land value tax levied loss		 14,604 (5,217)
Gain or loss from evaluation
Additional land value tax levied - (35,502)
Other expenses (30,434) (38,458)
Total ($177,374) ($336,830)

278

  1. As stated in Note 6(XXXI), with regard to the Group's investment in Guang Lian Steel (Vietnam) Co., due to the termination of MOU with JFE Steel Corporation and the expiration of investment license issued by the Vietnamese government (upon evaluation, it is difficult to obtain an extension permit), the Group recognized an impairment loss on relevant assets of NT$ 784,371 thousand in 2015.

  2. Please refer to Note 6(X) and note 6(XXXIX) for details on bargain purchase gains from investments in associates and subsidiaries.

  3. The Group's land for Pingnan plant was originally taxed as industrial land. Since it has been idled for a certain period of time, it is now taxed as general land. An additional land value tax of NT$ 35,502 thousand was levied in 2015.

(XXXIV)Financial costs

Interest expense
Less: Amount qualified for capitalization
Financing Cost
Item		 2016
2015
$1,424,118
$1,400,316
(634,287)
(549,397)
$789,831
$850,919

(XXXV)Personnel, depreciation, depletion and amortization expenses

2016
Operating Cost
$1,367,116
120,802
93,719
295,477
1,367,967
-
$3,245,081		 Operating Expense
$718,767
59,169
32,641
92,819
104,331
1,377
$1,009,104
2015		 Total
$2,085,883
179,971
126,360
388,296
1,472,298
1,377
$4,254,185
Total
$1,865,890
173,537
116,906
332,522
1,503,317
1,781

279

(Note 1): (Note 2): excluding pension of NT$ 2,206 thousand and depreciation of NT$ �1,886 thousand on prepaid equipment.

(Note 2): excluding pension of NT$ 3,188 thousand and depreciation of NT$ 433 thousand on prepaid equipment.

  1. According to the amended Company Act in May, 2015, and the Article of Incorporation amended on June 22, 2016, employee bonus and remuneration to directors and supervisors shall be capped at 1% and 0.2% of pre-tax earning, respectively. In 2016, employee compensation was estimated at 0.2% of pre-tax earning, and enumeration for directors and supervisors was estimated at 0.1% of pre-tax earning. As the Company incurred losses in 2015, NT$ 0 thousand was accrued for compensation to employees and remuneration to directors and supervisors Any changes in the amounts after the issue date of the annual financial report shall be treated as changes in accounting estimates, and such changes in the amounts will be adjusted and recognized in the next year.

  2. There is no difference between the Board of Directors' resolution on May 10, 2016 not to distribute employee compensation and remuneration for directors and supervisors for the year of 2015, and the amount of NT$ 0 thousand paid as employee compensation and remuneration for directors and supervisors recognized in the year 2015. On March 21, 2017, the Board of Directors agreed on the amount of employee compensation and remuneration for directors and supervisors, and the recognized amounts in the financial reports are as below:

Amount of difference
Resolved distributed amounts
Recognized amount in the annual financial statement		 2016
Employee compensation
Directors/supervisors
remuneration
$6,044
$3,022
6,044
3,022
-
$ -
$

(1) The aforementioned employee compensation was paid in cash.

(2) The 2015 employee compensation and directors/supervisors remuneration had been proposed in the regular shareholders' meeting in June, 2016, where the Article of Incorporation was amended and reported in the shareholders' meeting.

  1. On June 18, 2015, the Company passed the resolution on employee bonus and directors/supervisors remuneration for the year 2014.

Amounts recognized in the financial statement are as below:

nts recognized in the financial statement are as below:
Amounts of difference
Resolved distributed amount
Recognized amount in the annual financial statement		 2014
Employee bonus
Directors/supervisors
remuneration
$3,377
$675
1,688
338
$1,689
$337

The major difference between the aforementioned resolution and the recognized amount in 2014 financial statement is the estimate difference, which has been adjusted in the profit or loss in 2015.280 

4. For information about employee compensation (bonus) and remuneration for directors and supervisors either
passed by the Board of Directors, or resolved by the shareholders' meeting, please visit TWSE Market
Observation Post System.

(XXXVI) Income Taxes

  • 1.Income Tax

  • (1)Components of income tax:

Current income tax expense
10% tax on retained earnings
Adjustment to prior income taxes
Income tax expense recognized in profit and loss
Item
Deferred taxes related to temporary difference and loss
deduction		 2016
2015
$782,853
$202,284
158,539
(174,556)
33
36
52,102
(9,642)
$993,527
$18,122
  • (2) Income tax expense (gain) related to other comprehensive income:
Item 2016 2015
Exchange differences on translation of foreign operations' ($142,336) ($29,365)
Remeasurement of defined benefit plan (11,853) (11,002)
Share of other comprehensive income of subsidiaries,
associates and joint ventures accounted for using equity 470 2,201
method
Total ($153,719) ($38,166)

2. A reconciliation of income before income tax and income tax expense recognized in profit or loss is as fol

2016
Income before income tax
$3,372,072
Income tax expense at the statutory rate
$869,709
Tax effect of adjusting items:
Effect of items not included in the calculation of taxable income
Loss carryforwards
65,451
(184,575)
Bargain purchase gain
-
Timing difference of revenue recognition
15,879
Other adjustment
16,389
Adjustment to prior income taxes
52,102
10% tax on retained earnings
33
Net changes of deferred income tax
Loss carryforwards
(2,906)
153,912
Other temporary difference
7,533
Income tax expenses recognized in profit and loss
$993,527
Loss (gain) on investments accounted for using equity
method
Loss (gain) on investments accounted for using equity
method
Item		 2015
($1,596,715)
($259,314)
126,625
461,313
(107,888)
7,480
(25,932)
(9,642)
36
(21,455)
(95,378)
(57,723)
$18,122

281 

3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment cr
Beginning
balance
Deferred income tax assets:
Temporary differences
$59,934
-
Provision for
inventory valuation
100,770
Loss of investments
under cost method
1,283
Book-tax difference
for depreciation
11,500
Net defined benefit
liabilities
172,491
Remeasurement of
defined benefit plans
1,693
Loss carryforwards
50,907
Others
165,013
Subtotal
$563,591
Deferred income tax liabilities
Temporary differences
Unrealized exchange
gains
($2,045)
Exchange differences
on translation of
foreign operations'
financial statements
(96,418)
(2,721)
Timing difference of
revenue recognition
(2,029)
Subtotal
($103,213)
Total
$460,378
Gain or loss from
investment accounted
for using equity
method
Exchange differences
on translation of
foreign operations'
financial statements
Gain on overseas
investments using
equity method		 2016
Recognized in other
recognized in
profit or loss
Comprehensive
(loss) benefit
Effect of
Exchange
Ending Balance
($53,682)
-
$
-
$
$6,252
-
48,883
-
48,883
(35,570)
-
(4,515)
60,685
(510)
-
-
773
1,891
-
-
13,391
(1,464)
11,853
-
182,880
-
(470)
3,188
4,411
2,906
-
-
53,813
33,479
-
-
198,492
($52,950)
$60,266
($1,327)
$569,580
($1,763)
-
$
-
$
($3,808)
-
93,453
-
(2,965)
(100,230)
-
-
(102,951)
(3,596)
-
-
(5,625)
($105,589)
$93,453
-
$
($115,349)
($158,539)
$153,719
($1,327)
$454,231

282 

2015
Deferred income tax
assets:
Temporary differences
Provision for
inventory valuation
loss
Loss of investments
under cost method
Book-tax difference
for depreciation
Net defined benefit
liabilities
Remeasurement of
defined benefit plans
Loss carryforwards
Others
Subtotal
Deferred income tax
liabilities
Temporary differences
Unrealized exchange
gains
Timing difference of
revenue recognition
Subtotal
Total
Gain or loss from
investment accounted
for using equity
method
Exchange differences
on translation of
foreign operations'
financial statements
Gain on overseas
investments using
equity method		 Beginning
balance
($37,260)
54,428
1,283
71,505
169,187
3,894
29,452
81,138
$373,627
($579)
(125,783)
(905)
-
($127,267)
$246,360		 Recognized in other
recognized in
profit or loss
Comprehensive
(loss) benefit
Effect of
Exchange
Ending Balance
$97,194
-
$
-
$
$59,934
45,046
-
1,296
100,770
-
-
-
1,283
(60,005)
-
-
11,500
(7,698)
11,002
-
172,491
-
(2,201)
-
1,693
21,455
-
-
50,907
83,875
-
-
165,013
$179,867
$8,801
$1,296
$563,591
($1,466)
-
$
-
$
($2,045)
-
29,365
-
(96,418)
(1,816)
-
-
(2,721)
(2,029)
-
-
(2,029)
($5,311)
$29,365
-
$
($103,213)
$174,556
$38,166
$1,296
$460,378

283

4. Items not recognized as deferred income tax assets:

Loss from investment accounted for using the equity method
Loss of investments under cost method
Loss carryforwards
Others
Item		 December 31, 2016
December 31, 2015
$569,338
$515,792
40,451
40,451
739,296
663,093
59,076
14,619

5. Information regarding integrated income tax is as follows:

Balance of shareholders' imputation credit accounts
Unappropriated earnings generated before 1997
Unappropriated earnings generated after 1998
Tax creditable ratio for distribution of earnings
Item
Item		 December 31, 2016
December 31, 2015
$534,140
$462,588
-
50,733
3,010,948
557,909
2016
2015
25.16%
-
(Estimated)
(Actual)

The Income Tax Act states that when distribution earnings of the year 1998 or each ensuing year thereafter, except for shareholders not residing in the territory of the Republic of China, shareholders can calculate the imputation tax based on the creditable ratio as of the date of the dividend distribution. However, pursuant to Article 66-6 of the revised Income Tax Act, the creditable ratio for individual shareholders residing in the territory of the Republic of China is reduced by half. The amendment is effective beginning January 1, 2015.

The tax credits allocated to shareholders is based on the balance of the imputation credit account as of the date of the dividend distribution. The estimated creditable ratio in 2015 may change because the actual tax credits may differ from the tax credit projected by the Company in accordance with the Income Tax Act.

  1. The tax authorities have examined income tax returns of the Company through 2014.

284 

2016

(XXXVII) Other comprehensive income
Before tax
Items not reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans
($71,478)
(26,336)
Sub-total
($97,814)
Items that may be reclassified subsequently to profit or loss:
($5,850)
(849,812)
(110,297)
(168)
5,506
Sub-total
($960,621)
Recognized in other comprehensive income
($1,058,435)
Before tax
Items not reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans
($66,341)
(23,220)
Sub-total
($89,561)
Items that may be reclassified subsequently to profit or loss:
$223,374
(108,159)
37,547
68,191
20,553
Sub-total
$241,506
Recognized in other comprehensive income
$151,945
Unrealized valuation gain (loss) of available-
for-sale financial assets
Share of other comprehensive income of
associates and joint venture
Exchange difference on translation of foreign
operations' financial statements
Unrealized valuation gain (loss) of available-
for-sale financial assets
Unrealized valuation gain (loss) of available-
for-sale financial assets
Exchange difference on translation of foreign
operations' financial statements
Share of other comprehensive income of
associates and joint venture
Exchange difference on translation of foreign
operations' financial statements
Share of other comprehensive income of
associates and joint venture
Gain of loss arising from the effective portion
of financial instruments that are designated as
cash flow hedges
Gain of loss arising from the effective portion
of financial instruments that are designated as
cash flow hedges
Item
Item
Unrealized valuation gain (loss) of available-
for-sale financial assets
Exchange difference on translation of foreign
operations' financial statements
Share of other comprehensive income of
associates and joint venture		 Income tax expense (gain)
$11,853
(470)
$11,383
$ -
140,511
1,825
-
-
$142,336
$153,719
2015		 Net after tax
($59,625)
(26,806)
($86,431)
($5,850)
(709,301)
(108,472)
(168)
5,506
($818,285)
($904,716)
Income tax expense (gain)
$11,002
(2,201)
$8,801
$ -
31,070
(1,705)
-
-
$29,365
$38,166		 Net after tax
($55,339)
(25,421)
($80,760)
$223,374
(77,089)
35,842
68,191
20,553
$270,871
$190,111

285

(XXXVIII) Earning per common share

Item
Net profit of the period attributable to the parent company
Less: Dividends for preferred shares
Net profit attributable to shareholders of the parent company(A)
Weighted average number of outstanding shares (thousand shares) (B)
Basic earnings per share (after tax) (NT$)(A)/(B)		 2016
2015
$2,502,005
($953,786)
-
-
$2,502,005
($953,786)
1,718,090
1,718,090
$1.46
($0.56)

(XXXIX) Business combination

2016: None 2015:

1. Acquisition of subsidiaries
Name
United Brightening Development
Corp.
Kuo Chang Enterprise Co., Ltd.
Da Yao Engineering & Consulting
Co., Ltd.
Hong Yuh Assets Management Co.,
Ltd.		 Date of Acquisition
March 18, 2015
March 18, 2015
March 18, 2015
September 2, 2015		 Ownership with voting rights
Equity/Acquisition (%)
51.00%/6.44%
54.04%/9.04%
50.00%/1.00%
55.00%/15.00%		 Transferred Price
$104,835
116,078
-
50,874
$271,787

The purposes and methods of the Group in acquiring the subsidiaries stated above are as follows:

(1) United Brightening Development Corp.: The Group increased its investment in the subsidiary for long-term operation development, investment strategy of diversification and a definite leadership. The Group's ownership of United Brightening Development Corp. increased from 44.56% to 51%.

(2) Kuo Chang Enterprise Co., Ltd.: The Group increased its investment in the subsidiary for long-term operation development, investment strategy of diversification and a definite leadership. The Group's ownership on Kuo Chang Enterprise Co., Ltd. increased from 45% to 54.04%.

(3) Da Yao Engineering & Consulting Co., Ltd.: The combined holding of the Company over Da Yao Engineering & Consulting Co. after the acquisition of subsidiary, United Brightening Development Corp., gave it control over the company.

(4) Hong Yuh Assets Management Co., Ltd.: The Group increased its investment in the subsidiary through cash offering for long-term operation development, investment strategy of diversification and a definite leadership. The Group's ownership on Hong Yuh Assets Management Co., Ltd. increased from 40% to 55%. Please refer to Note 4(III)2(1) for details.

286

2. Assets acquired and liabilities assumed upon acquisition date 2. Assets acquired and liabilities assumed upon acquisition date 2. Assets acquired and liabilities assumed upon acquisition date 2. Assets acquired and liabilities assumed upon acquisition date 2. Assets acquired and liabilities assumed upon acquisition date
United Brightening
Development Corp.		 Kuo Chang
Enterprise Co.,
Ltd.		 Da Yao Engineering
& Consulting Co.,
Ltd.		 Hong Yuh Assets
Management Co.,
Ltd.		 Total
Current assets
Cash and Cash Equivalents $67,713 $209,405 $20,222 $73,189 370,529
Accounts receivable 3,020 - 2,110 5,430 10,560
Current income tax assets 826 1,441 - 1 2,268
Prepayments 400 2,791 50 1,081 4,322
Non-current Assets
Financial assets measured at
cost		 2,668 - - - 2,668
Long-term investment
accounted for using equity
method		 2,369,313 1,569,869 - 222,038 4,161,220
Property, plant and equipment 12 - - 40,340 40,352
Refundable Deposit - - - 1,515 1,515
Current liabilities
Short-term loans (427,000) (395,000) - - (822,000)
Accounts payable - (203) (621) (4,434) (5,258)
Non-current liabilities
Provision - non-current (45) - (177) - (222)
Long-term deferred income - - (104) - (104)
Identifiable Net Assets $2,016,907 $1,388,303 $21,480 $339,160 3,765,850
3. Bargain purchase gains
from acquisition
United Brightening
Development Corp.		 Kuo Chang
Enterprise Co.,
Ltd.		 Da Yao Engineering
& Consulting Co.,
Ltd.		 Hong Yuh Assets
Management Co.,
Ltd.		 Total
Transferred Price $104,835 $116,078 $ - $50,874 271,787
Add: Fair value of equity
held prior to the acquisition		 898,785 624,736 10,736 135,664 1,669,921
Non-controlling equity 988,284 638,064 10,744 152,622 1,789,714
Less: Fair value of
identifiable net assets
acquired		 (2,016,907) (1,388,303) (21,480) (339,160) (3,765,850)
Bargain purchase gains ($25,003) ($9,425) $ - $ - ($34,428)
from the acquisition
4. Net cash outflows from the
acquisition of subsidiaries
United Brightening
Development Corp.		 Kuo Chang
Enterprise Co.,
Ltd.		 Da Yao Engineering
& Consulting Co.,
Ltd.		 Hong Yuh Assets
Management Co.,
Ltd.
Consideration paid in cash $104,835 $116,078 $ - $50,874 271,787
Less: Cash and cash (67,713) (209,405) (20,222) (73,189) (370,529)
equivalents acquired
Total $37,122
($93,327)		 ($20,222) ($22,315) ($98,742)
~~287~~

  1. The above-mentioned subsidiaries generated revenue of NT$ 4,689 thousand from the acquisition date to December 31, 2015.

  2. If the combination occurred at beginning of the year, the pro forma operating revenue of the Group would be NT$ 49,786,088 thousand.

(XL) Disposal of subsidiaries

2016: None

2015:

The Group did not acquire shares of its subsidiary, Hong Yuh Assets Management Co., Ltd., through cash offerings in proportion to its ownership percentage of the company in January 2015. Thus, the Group's shareholding percentage dropped from 100% to 40%, which does not constitute control over the subsidiary. Details are as follows:

  1. Analysis on assets and liabilities over which the Group lost control
Hong Yuh Assets Management Co., Ltd.
Current assets
Cash and Cash Equivalents $89,271
Prepayment 159
Non-current Assets
Investment accounted for using the equity method 55,539
Refundable Deposit 686
Current liabilities
Other payables 3,055
Net assets disposed $142,600

2. Gain on disposal of subsidiaries

2. Gain on disposal of subsidiaries
Hong Yuh Assets Management Co., Ltd.
Consideration received $ -
Fair value of remaining investment 153,040
Net assets disposed (142,600)
Accumulated exchange difference of the subsidiary's net assets 495
Disposal interest $10,935

288

  1. Net cash inflows (outflows) from disposal of subsidiaries Consideration received in cash and cash equivalents $ - Less: Balance of cash and cash equivalents disposed 89,271 Net cash inflows (outflows) ($89,271)

(XLI) Transactions with non-controlling interests

1. Acquisition of additional equities in subsidiaries

2016:

Between January and December, 2016, the Group acquired Yieh Hsing Enterprise Co., Ltd. With NT$ 16,320 for its additional 0.55% of equities, leading to an increase on shareholding ratio from 55.84% to 56.39%. In August, 2016, the Group acquired United Brightening Development Corp. with NT$ 279,335 thousand for its additional 16.91% equity, leading to an increase in shareholding ratio from 62.59% to 79.5%. As the above transactions did not change the Group's control over those subsidiaries, they are treated as equity transactions.

Yieh Hsing Enterprise Co., Ltd.
nited Brightening Development Corp.		 Yieh Hsing Enterprise Co., Ltd.
nited Brightening Development Corp.
Carrying amount of non-controlling interests acquired $19,702 $321,089
Consideration paid to non-controlling interests (16,320) (279,335)
Capital surplus – Difference between equity price of
subsidiaries acquired or disposed of and its book value		 $3,382 $41,754

2015:

The Group acquired an additional 3.88%, 10.38% and 1.02% of equities in subsidiaries, Applied Wireless Identifications Group, Inc. (AWID), United Brightening Development Corp. and Yieh Hsing Enterprise Co., Ltd., with NT$ 3,020 thousand, NT$ 184,250 thousand and NT$ 26,003 thousand in cash between March to July, in May and between August to December in 2015,respectively. As a result, its holding over those three subsidies has increased from 87.59% to 91.47%, 51% to 61.38% and 54.82% to 55.84%, respectively. As the above transactions did not change the Group's control over those subsidiaries, they are treated as equity transactions.

Carrying amount of non-
controlling interests
acquired
Consideration paid to non-
controlling interests
Capital surplus –
Difference between yjr
equity price of subsidiaries
acquired or disposed of
and its book value		 AWID Asia Co., Ltd.
$3,020
(3,020)
$ -		 United Brightening
Development Corp.
Yieh Hsing Enterprise Co.,
Ltd.
$208,941
$37,487
(184,250)
(26,003)
$24,691
$11,484

289

  1. The Group did not subscript to the cash offering of its subsidiary in proportion to its shareholding percentage.

2016:

The Group did not subscript to the cash offering of its subsidiary in proportion to its shareholding percentage in February, March, August, in 2016, for EMMT Systems Corporation, Hong Yuh Assets Management Co.,Ltd, United Brightening Development Corp., respectively, leading to changes in the shareholding from 93.86% to 84.95%, 55% to 67.27%,61.38% to 62.59%, respectively.

As the above transaction did not change the Group's control over the subsidiaries, it is deemed as an equity transaction.

Subscription in cash
Changes in its holding over
subsidiary
shares of subsidiaries
equity according to
changes in holding		 EMMT Systems Corporation
($13,995)
16,155
$2,160		 Hong Yuh Assets Management Co., Ltd.nited Brightening Development
($150,000)
($45,869)
138,794
52,374
($11,206)
$6,505

2015:

The Group did not subscript to the cash offering of its subsidiary, Tycoons Steel International Co., Ltd. (TSI), in proportion to its shareholding percentage in January 2015. Thus, the shareholding percentage increased from 65.40% to 66.73%.

As the above transaction did not change the Group's control over the subsidiary, it is deemed as an equity transaction.

Subscription in cash
shares of subsidiaries equity according to changes in holding
Undistributed earnings - Changes in its holding over subsidiary		 TSI
($63,000)
51,518
($11,482)

VII. Related-party transactions

(I) The parent company and ultimate controller:

The Company is the ultimate controller of the Group.

  • (II) Significant transactions with related parties:

The balances and transactions between the Company and subsidiaries (e.g., related parties of the Company) are eliminated and are not disclosed in the preparation of consolidated financial statements. The Group changed its accounting treatment for its investment in Yieh United Steel Corporation to investments accounted for using the equity method in March 2015. Consequently, profit and loss items were classified under other related parties before March 2015 and associates after March 2015; and balance sheet items are recognized under associates. Details of transactions between the Group and other related parties are as follows:

290

1. Operating revenue

1. Operating revenue
Accounting subject
Sales income
Construction revenue		 Category of related parties
Associates
Other related parties
Total
Associates
Other related parties
Less: sales allowance
Total
Less: construction revenue
combined and eliminated
Construction revenue
Total		 2016
$3,433,260
363,949
$3,797,209
$272
820,506
(95)
820,683
(813,190)
$7,493		 2015
$2,542,023
513,325
$3,055,348
$358
343,372
-
343,730
(333,651)
$10,079

(A) Selling price to the Company's related parties, including hot rolled coil, galvanized coils are the same with those to other customers. Payment period was within one to two months.

(B) Selling price to the Group‟s related parties (hot rolled steel coil) is set with reference to the purchase price of a nonrelated party as a trading counterpart. Payment period of such transaction is within three months.

(C) Selling price of carbon steel and steel scraps to related parties are set with reference to the purchase price of a nonrelated party as a trading counterpart. Payment term is monthly, and closes in 15 days.

(D) Construction contracts between the Group and its related parties were established at prices negotiated by both parties. Contract proceeds were collected in accordance with the collection clauses stated in these contracts. Payment could be delayed only upon mutual consent.

(E) The Group sub-contracts projects of steel structure from related parties to other related parties. For the same project, the accounting treatment is to deem those as commissioning other related parties to supervise the project. Therefore, construction revenue eliminated for the year ending December 31, 2016 and 2015 was NT$ 813,190 thousand and NT$ 333,651 thousand, respectively.

2.Purchases
Associates
Other related parties
Total
Type of related party		 2016
2015
$5,168,322
$4,503,424
2,312,714
2,375,401
$7,481,036
$6,878,825

Items purchased by the Group from above related parties were mainly stainless billets and carbon steel billets. The purchase prices are similar to that offered to other suppliers. Payment term is LC at sight (not significantly different than terms to other suppliers) before shipment or T/T .

291

3.Accounts receivable - related parties (excluding loans to related parties)

Accounting subject
Notes receivable
Accounts receivable
Construction contracts
receivable
Other receivables		 Category of related parties
Associates
Other related parties
Total
Less: Bad debt allowance
Net
Associates
Other related parties
Total
Less: Bad debt allowance
Net
Associates
Other related parties
Total
Less: Bad debt allowance
Net
Associates
Other related parties
Total
Less: Bad debt allowance
Deferred gains from land sold
Net		 December 31, 2016
$7
218
$225
-
$225
$918,981
3,861
$922,842
(598)
$922,244
$301
344,114
$344,415
-
$344,415
$51,713
50,746
$102,459
-
(19,399)
$83,060		 December 31, 2015
$67
8,112
$8,179
-
$8,179
$507,183
262,315
$769,498
(1,874)
$767,624
$119
167,747
$167,866
-
$167,866
$26,000
54,987
$80,987
-
(19,399)
$61,588

Please refer to Note 6(VI) for details on deferred gains from land sold.

4.Accounts payable - related parties (excluding loans from related parties)

Accounting subject
Notes payable
Accounts payable
Construction contracts
payable		 Category of related parties
Associates
Other related parties
Total
Associates
Other related parties
Total
Other related parties		 December 31, 2016
$3,888
3,389
$7,277
-
$ 7,572
$7,572
-
$		 December 31, 2015
$2,246
1,147
$3,393
$13,629
13,844
$27,473
$1,437

292

Other payables
Prepayments
5. Prepayments		 Associates
Other related parties
Total
Other related parties
Type of related party
Other related parties
Associates
Total		 $4,294
6,796
$11,090
$69
December 31, 2016
$54,650
549
$55,199		 $4,540
11,168
$15,708
$656
December 31, 2015
$43,828
16
$43,844
  • 6.Asset transactions:

(1) Property, plant and equipment acquired:

2016:

Type of related party
Other related parties
Associates		 Transaction target
Transaction amount
construction-in-progress
$1,441,672
Other equipment
2,372

The above-mentioned transaction price was agreed on by both parties upon negotiation with reference to appraisal reports or market prices. As of December 31, 2016, the amount outstanding equaled NT$ 267 thousand.

2015:

Type of related party
Other related parties		 Transaction target
Transaction amount
construction-in-progress
(Note 1)
$527,747
Land and Building (Note
2)
161,849

(Note 1) The above-mentioned transaction price was agreed on by both parties upon negotiation with reference to appraisal reports or market prices. As of December 31, 2015, the amount outstanding equaled NT$ 431 thousand.

(Note 2) The Group purchased from other related party an office located in Zhongzheng District, Taipei. The abovementioned transaction price was agreed on by both parties upon negotiation with reference to appraisal reports or market prices. As of December 31, 2015, the amount was paid in its entirety.

293

(2) Disposal of property, plant, and equipment:

2016:
Name of related party
Other related parties		 Transaction object
Other Equipment		 Transaction amount
Gains or loss from disposal
$143
$99

The above-mentioned transaction price was agreed on by both parties. As of December 31, 2015, the transaction amount was collected in its entirely.

2015:
Name of related party
Other related parties		 Transaction target
Other equipment		 Transaction amount
Gains or loss from disposal
$693
$14

The above-mentioned transaction price was agreed on by both parties. As of December 31, 2015, the amount outstanding is NTD$ 693 thousand.

(3) Acquisition of investment property: None.

(4) Disposal of investment property: None.

(5) Acquisition of financial assets:

2016:
Type of related party
Other related parties
Associates		 Transaction amount
3700 thousand shares of UniPattern Corporation
$39,960
23,000 thousand shares of United Brightening Development C
279,335
Transaction object

The above-mentioned transaction price of shares was agreed on by both parties upon negotiation with reference to the net worth per share of the investees. As of December 31, 2016, transactions were fully paid.

2015:
Type of related party
Other related parties
Associates		 Transaction amount
$110,942
289,085
272,448
249,677
281,960
7,810 thousand shares of Kuo Chang Enterprise Co., Ltd.
21,581 thousand shares of United Brightening
Development Corp.
26,400 thousand shares of Eliter International Corporation
6,120 thousand shares of ASIAZONE Co., Limited
13,300 thousand shares of Skylark International Hotel Co.,
Ltd.
Transaction target

The above-mentioned transaction price of shares was agreed on by both parties upon negotiation with reference to the net worth per share of the investees. As of December 31, 2015, transactions were fully paid.

294

(6) Disposal of financial instrument: None.

  • (7) Acquisition of other assets: None.

  • (8) Disposal of other assets: None.

  • Loan to related parties: None.

  • Loan from related parties: None.

  • Guarantee and endorsement: None.

  • Others

(1) Miscellaneous income

Type of related party
Associates
Other related parties
Total		 2016
2015
$21,401
$16,538
4,996
7,415
$26,397
$23,953

These are mainly interest income, technical service income, and rent income. The rent price is determined by contract and received monthly or quarterly.

(2) Miscellaneous expenses

Type of related party
Associates
Other related parties
Total		 2016
2015
$62,142
$57,645
131,534
92,113
$193,676
$149,758

These are mainly service charges, export expenses, and rent expense. The rent price is determined by contract and paid monthly or quarterly.

  • (3) Construction contracts

  • (a) Unfinished construction contracts with related parties as of December 31, 2016 were as follows:

Type of related party
Associates
Other related parties		 Name of construction
Manufacturing and
installation of steel plates and
Above-ground structure of a
commercial building in E-Da		 Total contract price
Construction contract payables
$770
$301
-
1,820,723
344,114
(Note)
-
Construction contracts receivables

295 

(b). As of December 31, 2014, unfinished projects with related parties were set out below:

Construction contracts receivables
Type of Related Parties
Associates
Other related parties		 Name of
construction
Steel structure
and production
and installation
of overhead
cranes
The above-ground
structure
construction of
E-Da Asia Plaza
and construction
of a hospital
for cancer		 Total contract
price
Construction
amounts payable
$813
$119
-
2,409,712
167,747
(Note)
1,437		 
(Note): As Note 7 (II) 1 (E), the Group sub-contracts projects of steel structure from related parties
to other related parties. For the same project, the accounting treatment is to deem those as
commissioning other related parties to supervise the project.

(4) The Group's participation in the cash offering of related parties with an increase in investment�is a
2016:
Investee
Associates
Associates		 Investment Amount
236,850
206,305
Increment		 Shareholding Percentage
Number of shares
(thousand
23,685
20,630		 Before capital
increase
After capital
increase
43.85%
43.56%
(Note)
(Note)		 
(Note) Preferred shares of associates were purchased and recognized as debt instrument with no active mar

2015:
Investee
Associates
Associates
Associates
Associates
Associates		 Investment Amount
57,708
74,100
375,085
17,086
1,100,400
Increment		 Shareholding Percentage
Number of shares
(thousand
5,771
7,410
37,509
1,709
157,200		 Before Offering
After Offering
44.56%
44.56%
-
19% (Note)
33.82%
34.38%
17.09%
17.09% (Note)
25.56%
28.78%		 
(Note): with significant influence. Please refer to Note 6(X)1(5).

296

(III) Information about remunerations to the management:

Salary and other short-term employees‟ benefits
Benefits after retirement
Other long-term employees‟ benefits
Benefits after resignation
Share-based payments
Total
Item		 2016
2015
$93,182
$85,105
1,440
1,315
-
-
-
-
-
-
$94,622
$86,420

VIII. Pledged Assets

Assets below were put up as collateral for bank loans and performance guarantees:

Item 42,735 December 31, 2015
Pledged demand deposits $274,593 $530,986
Pledged time deposits 709,763 63,872
Sub-total of other financial assets - current $984,356 $594,858
Pledged demand deposits $55,071 $41,970
Pledged time deposits 40,857 47,422
Sub-total of other financial assets - non-current $95,928 $89,392
Property, plant and equipment (net) $23,843,645 $24,814,374
Long-term prepaid rent - land-use right (including current port 68,333 76,336
Investment property 866,164 867,011
Investment using the equity method 1,538,104 1,603,953
Total $27,396,530 $28,045,924

IX. Important Contingent Liabilities and Unrecognized Contractual Commitments

(I) Guarantee notes issued to banks for loans, purchases, contract performance, and warranty totaled NT$ 27,908,052 thousand and NT$ 30,907,334 thousand as at December 31, 2016 and 2015 respectively.

(II) Guarantee notes received for contract performance bond and purchase promise totaled NT$ 408,434 thousand and 376,106 thousand at December 31, 2015 and 2014, respectively.

(III) Unused letters of credits as of December 31, 2016 and 2015 , were as follows:

Unit: Thousand NTD

Item
L/C Amount		 December 31, 2016
December 31, 2015
USD 36,287
USD 10,788
NTD 575,072
NTD 361,954
JPY 8,459
JPY 896
AUD 64

297

(IV) As of December 31, 2016 and 2015, guarantee provided by banks for performance and warranty of the Group amounted to NT$ 194,543 thousand and NT$ 172,524 thousand, respectively.

(V) The Group entered purchase agreements for raw materials with suppliers of billets, including OUTOU KMPL , Medi-Top (China) Industrial Company Limited, China Base Ningbo Group, etc. at prices agreed on by both parties upon negotiation. As of December 31, 2016, the contract volume outstanding was 22,597 tons with a dollar amount of NT$ 297,304 thousand.

(VI) Material capital expenditure committed but not incurred:

Item
Property, plant and equipment		 December 31, 2016
December 31, 2015
$3,312,405
$6,164,744

(VII) Establishment of important construction contracts

  1. As of December 31, 2016, estimated total contract costs, contract costs paid, and expected completion dates for contracts of an amount over NT$150,000 thousand signed but not completed are summarized below:
Type of construction Contract price
Total estimated construction
cost		 Construction cost paid
Completion %		 Expected year of completion
Accumulated profit or loss
recognized
Construction of
Condominium with Tunwei
(Note 1)		 159,348
171,286		 168,679
98.48%		 2017
(11,938)
Construction of international
multi-purpose business
Kee Tai
(Note 2)		 213,778
216,600		 207,855
95.96%		 2017
(2,822)
Construction of plant No. 3
for Taiwan YKK Co., Ltd. in		 253,773
252,602		 210,083
83.17%		 2017
974
Main structure of the
commercial building at
(Note 3)		 154,469
169,101		 158,101
93.50%		 2017
(14,632)
6 40T-gantry cranes for
storage in the rear area at		 311,100
303,571		 230,071
75.79%		 2017
5,706

(Note 1): Contract amount increased by NT$ 1,133 thousand and total cost increased by NT$ 3,072 thousand during the period.

(Note 2): Contract amount increased by NT$ 20,808 thousand and total cost increased by NT$ 23,867 thousand during the period.

(Note 3): Contract amount increased by NT$ 8,184 thousand and total cost increased by NT$ 6,381 thousand during the period.

(Note 4): Construction cost decreased by NT$ 12,839 thousand during the period.

298

  1. As of December 31, 2015, estimated total contract costs, contract costs paid, and expected completion dates for contracts of an amount over NT$150,000 thousand signed but not completed are summarized below:
Type of construction Contract price
Total estimated construction
cost		 Construction cost paid
Completion %		 Expected year of completion
Accumulated profit or loss
recognized
Construction of
Condominium with Tunwei
Chin Pin
(Note 1)		 158,215
168,214		 162,553
96.63%		 2016
(9,999)
Construction of international
multi-purpose business
building with Hwa Xung Kee
Tai		 192,970
192,733		 156,011
80.95%		 2016
192
Construction of E-Da Cancer
Hospital, E-Da Medical
Foundation (Note 2)		 583,860
583,920		 576,813
98.78%		 2016
(60)
(Note 3)
Construction of JTI plants in
Tainan Technology Industrial
Park by Chung-Lu
Construction Co., Ltd.		 152,500
152,676		 149,856
98.15%		 2016
(176)
(Note 4)
Main structure of the
commercial building at
Banciao by Sun Pao Tsun
Construction Co., Ltd.		 146,285
162,720		 157,727
96.93%		 2016
(16,435)
6 40T-gantry cranes for
storage in the rear area at
Wharf No. 120 of Kaohsiung
Harbor		 311,100
316,410		 6,677
2.11%		 2016
(5,310)

(Note 1): Contract amount increased by NT$ 6,786 thousand and construction cost increased by 10,220 thousand during the period.

(Note 2): Contract amount decreased by NT$ 2,660 thousand and construction cost increased by NT$ 6,020 thousand during the period (Note 3): Contract amount increased by NT$2,500 thousand and construction cost increased by NT$ 2,686 thousand during the period. (Note 4): Construction cost increased by NT$ 6,635 thousand during the period.

299

(VIII) Operating lease contracts:

As a lessee:

The Group has leased assets including Yulin Section (Qiaotou plant) under an operation lease agreement with a term from 1996 to 2050. The Group has the right to renew the lease upon expiration. Lease expenses amounted to NT$ 25,183 thousand and NT$ 12,925 thousand were recognized for the years ending December 31, 2016 and 2015, respectively. Moreover, total future minimum lease payment payable due to un-cancellable contracts is as follows:

Item
No more than 1 year
More than 1 year but no
more than 5 years
Over 5 years
Total		 December 31, 2016
December 31, 2015
$15,484
$9,693
17,308
11,381
71,406
51,966
$104,198
$73,040

(IX) 1. The Group had split and transferred Plants No. 168 and 169 and land (hereafter, “the land in dispute”) located at WeiSuiXi Road, Gang Shan District to Shing Bang Industrial Co.,Ltd. in June 2014. As aluminum dross temporarily stored by New Sun Metal Industry Co., Ltd. was left unattended on the land, the subsidiary faced an administrative execution with a substituted fulfillment amount of NT$ 173,597 thousand charged by Administrative Enforcement Agency, Ministry of Justice by order of the Environmental Protection Bureau (hereafter referred to as the EPB), Kaohsiung City Government in February 2015. The company's assets, including deposits and stocks, within that amount are restricted from being transferred. The Group was dissatisfied with the order and had filed an appeal. The case is now being reviewed by the Kaohsiung High Administrative Court. To avoid an execution order on property, the Group has deposited NT$ 27,486 thousand to a designated court account (recognized under refundable deposit) in April 2015. The court then ruled to suspend the execution order. With regard to the incident above, the Group has entered a debt settlement agreement with Shing Bang Industrial Co., Ltd. The latter has agreed to assume relevant liabilities arising from the land in dispute and compensate for every possible damage in April 2015. It also issued a guarantee note of NT$ 173,597 thousand to the Group and agreed to pay an interest of 2% p.a. from the date of agreement to the maturity date of the note or the date of early redemption. The Group has recognized interest income of NT$2,839 thousand and NT$ 2,369 thousand for the year ending December 31, 2016 and 2015.

  1. Letter from the EPB notified the aforementioned enforcement had been repealed because an amount of NT$173,597 thousand had been deposited into the custody account of the EPB as secure to the Group‟s obligation of cleaning the dross; The amount was made by Lung Feng Real Estate Investment Co Ltd., the current owner of the land, in November, 2016. Accordingly the Group applied for a refund of the NT$ 27,486 guarantee amount from the court and Shing Bang Industrial Co., Ltd. took back the aforementioned guarantee note with the accrued interest stopped.

(X) Yieh Mau Corp. entered syndicated loan agreements with First Commercial Bank and Mega International Commercial Bank in June 2013. According to the contract, the Group and its related parties shall jointly hold more than 50% of Yieh Mau Corp.'s issued shares at all times. There has been no breach of contract as of December 31, 2016.

300

(XI) Great Emperor Hotel CO., LTD. ( the former E-Da Royal Skylark Hotel Co., Ltd.) and Kingsgarden International CO., LTD. (the former Kaohsiung E-Da Metropolis Co., Ltd.), two subsidiaries of the Group, entered syndicated loan agreements with Land Bank of Taiwan and First Commercial Bank in August 2014. According to the contract, the Group and its related parties shall jointly hold more than 50% of Great Emperor Hotel CO., LTD. and Kingsgarden International CO., LTD.'s issued shares and gain the majority of directors' seats at all times. Yieh Hsing Enterprise Co., Ltd.,a subsidiary, held 100% of Kingsgarden International CO., LTD. and Great Emperor Hotel CO., LTD. and acquire all directors' seats as of December 31, 2016.

(XII) E-Da Royal Hotel Co., Ltd. entered a joint liability agreement under a carveout with the Land Banks of Taiwan and other banks in September 2015. According to the agreement, the Group and its related parties shall jointly hold more than 50% of E-Da Royal Hotel Co., Ltd.'s issued shares at all times. There has been no breach of contract as of December 31, 2016.

X. Significant Disaster Losses: None

XI. Significant Subsequent Events: None.

XII. Others

  • (I) Capital risk management

The Group needs to maintain sufficient capital for the needs of its future expansion, plant and equipment improvement. Capital management requires operation plan and sufficient financial resources to ensure capital demands for operating capital, capital expenditure, research and development expense, loan repayment and dividend distribution in the next 12 months.

(II) Financial instruments

  1. Fair value information of financial instruments

  2. (1) Financial instruments not measured at fair value:

Management of the Group thinks the carrying amount of financial instruments not measured at fair value, including cash and cash equivalents, accounts receivables, other financial assets, refundable deposits, short-term loans, short-term bills payable, accounts payable, long-term loans (including loans due within 12 months or within one operation cycle), deposits received and long term payables, approximate their fair value or their fair value cannot be reliably measured (financial assets carried at cost and debt investments with no active markets), except for the following:

301

Item December 31,2016 December 31,2016
Fair value
Carrying amount
$278,469		 Level 1
Level 2
Level 3
-
$
$278,933
-
$
December 31, 2015
Financial liabilities:
Corporate Bonds payables
Item
Fair value
Carrying amount
$1,509,312		 Level 1
-
$		 Level 2
Level 3
$1,516,461
-
$
Financial liabilities:
Corporate Bonds payables		 
(2) Financial assets measured at fair value: Please refer to Note 12 (IV).

( III.) Financial risk management policies:

The Group's daily operations are affected by various financial risks, e.g. market risk (including
exchange rate, interest rate and price risks), credit risk and liquidity risk. The Group is devoted to
identify, assess and avoid market uncertainties in order to eliminate the potential adverse effects of
market changes on the financial performance. Before engaging in significant transactions, due approval
process by the Board of Directors must be carried out based on related protocols and internal control
procedures. While the financial plan is underway, the Group shall comply with relevant financial
operation procedures on the overall financial risk management and segregation of duties at all times.

1. The nature and degree of significant financial risks

(1) Market risk

A. Foreign exchange rate risk:

(A) The Group is exposed to exchange rate risk arising from the sales, purchases and borrowings in
currencies other than the Group's functional currency and net investments in foreign operations. The
functional currency for entities within the Group is mainly New Taiwan Dollars and there is also
Renminbi and US dollars. The abovementioned transactions are mostly dominated in Renminbi, US dollars
and Euro. To avoid a decrease in the value of assets dominated in foreign currency and volatility in
future cash flows due to changes in exchange rates, the Group hedges the exchange rate risk with
foreign-currency borrowings and derivative financial instruments (including forward exchange rate
swaps and cross currency swaps). Those derivative financial instruments can diminish but not
completely eliminate the impacts of changes in exchange rate. As net investments in foreign operations
are strategic investments, the Group does not hedge for those activities.

302 

(B)Exchange rate exposure and sensitivity analysis:
(B)Exchange rate exposure and sensitivity analysis:
Foreign currency
(Note)
Exchange rates
(Foreign currency : Functional currency)
Financial assets
Monetary items
USD:NTD
61,496
32.2500
USD:RMB
51,357
6.9370
RMB:USD
103,855
0.1442
Investment using equity method
USD:NTD
30,367
32.2500
Financial liabilities
Monetary items
USD:NTD
2,686
32.2500
USD:RMB
116,374
6.9370
RMB:USD
52,889
0.1442
Foreign currency
~~(Note)~~
Exchange rates
(Foreign currency : Functional currency)
Financial assets
Monetary items
USD:NTD
72,783
32.825
USD:RMB
83,185
6.4936
RMB:USD
43,096
0.1540
Investment using equity method
USD:NTD
22,172
32.825
Financial liabilities
Monetary items
USD:NTD
35,734
32.825
USD:RMB
143,576
6.4936
RMB:USD
298,704
0.1540		 December 31,2016
Carrying Amount
(New Taiwan
Dollars)
1,979,698
1,656,258
482,820
979,332
86,636
3,753,068
245,880		 Sensitivity Analysis
Range of change
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%
December		 Effect on gain or
loss
Effect on equity
19,797
-
16,563
-
4,828
-
-
9,793
(866)
-
(37,531)
-
(2,459)
-
31, 2015
Carrying Amount
(New Taiwan
~~Dollars)~~
2,389,081
2,730,558
217,849
727,787
1,172,963
4,712,871
1,509,942		 Sensitivity Analysis
Range of change
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%
Up 1%		 Effect on gain or
~~loss~~
Effect on equity
23,891
-
27,306
-
2,178
-
-
7,278
(11,730)
-
(47,129)
-
(15,099)
-		 
If NTD appreciated against the currencies above and all other variation factors hold constant, the impact generated as of December 31,
2015, and 2014 would stay the same with reverse result.

(Note) These are foreign currencies in respect of all consolidated entities' functional currency. Intercompany transactions with
foreign exchange risk fully and partially eliminated in the consolidated financial statements are all included.

303

(C) Total exchange gain/loss (including both realized and unrealized) from monetary items with significant influence due to exchange rate volatility amounted to NT$ 81,260 thousand and NT$ 112,855 thousand for the years ending December 31, 2016 and 2015, respectively.

B. Price risk

Investments at fair value under the consolidated balance sheets were classified as available-for-sale financial assets or financial assets at fair value through profit and loss; therefore, the Group was exposed to price risks from equity instruments. The Group primarily invests in domestic listed equity instruments and the price of which were impacted by the uncertainty of future prices.

For the years ending December 31, 2016 and 2015, if the prices of those financial instruments went up or down by 1%, held all other variables constant, net income from financial instruments at fair value through profit or loss would increase or decrease by NT$ 1,138 thousand and NT$ 1,356 thousand, respectively; and contribution from gains or losses on available-for-sale equity instruments to shareholders' equity would increase or decrease by NT$ 466 thousand and NT$ 524 thousand, respectively.

C. Interest rate risk

Interest rates of interest-bearing financial instruments held by the Group as of the reporting date are summarized as follows:

Item
Fixed-rate instruments:
Financial assets
Financial liabilities
Net
Floating-rate instruments:
Financial assets
Financial liabilities
Net		 Carrying amount
December 31, 2016
$2,829,572
(957,482)
$1,872,090
$5,929,260
(41,984,074)
($36,054,814)		 December 31, 2015
$1,966,072
(2,273,008)
($306,936)
$7,822,208
(40,334,886)
($32,512,678)

(A) Sensitivity analysis of fixed-interest instruments:

The Group possessed no material fixed-interest assets or liabilities at fair value through profit and loss or available for sale. No derivative instruments (interest swaps) qualifying as hedging tools under hedge accounting, was engaged to hedge fair value. Therefore, the fluctuation in interest rates on the reporting date will not affect the income and other comprehensive income.

304

(B) Sensitivity analysis of floating-interest instruments:

The interest-fluctuate instruments possessed by the Company were floating-interest assets (liabilities).
Therefore the effective interest rate, as well as the future cash flows, changes along with the market
movement. Every one percent increase (decrease) in the interest will increase (reduce) the net profit by
(NT$360,548) thousand and (NT$325,127) thousand, respectively, for 2016 and 2015.

(2) Credit risk

Credit risk refers to the risk of financial loss to the Group arising from default by counterparties of
financial instruments on the contract obligations. Credit risk of the Group mainly comes from receivables
under operating activities and bank deposits and other financial instruments under investing activities.
Operational credit risk and financial credit risk are managed seperately.

A.Credit risk related to operations:

To maintain the quality of accounts receivable, the Group has established the procedures for credit risk
management with regards to its operations.

Risk assessment on individual customer includes factors that could affect the customer's ability to pay,
such as the customer's financial status, the Group's internal credit ratings, historical transactions and
current economic conditions.

As of December 31, 2016 and 2015, accounts receivable of top-ten customers equaled 36.78% and 47.18% of the
consolidated accounts receivable, respectively. No significant credit concentration risk was shown from the
remaining receivables.

B. Financial credit risk:

Credit risks from bank deposits and other financial instruments are evaluated and monitored by the Group's
financial department.The Group does not expect significant credit risk because the counterparties are
creditworthy and investment-graded financial institutions, companies and government agencies.

C.The Group uses collateral and other credit enhancement to avoid credit risks from financial assets:

Information about financial assets recognized in the consolidated balance sheet and the financial impacts
of collaterals, master netting arrangements and other credit enhancement held by the Company on maximum
exposure to credit risk is as follows:
December 31, 2016 Collateral
$ -		 Master Netting
Arrangements
$ -		 Other Credit
Enhancement
$1,306,962		 Total
Receivables (including
related parties)
Dec. 31, 2015		 $1,306,962
Collateral
$ -		 Master Netting
Arrangements
$ -		 Other Credit
Enhancement
$986,688		 Total
Receivables (including
related parties)		 $986,688

305

(3) Liquidity Risk
A. Liquidity risk management policies:
The Group's objective in managing liquidity risk is to maintain a sufficient level of cash and cash equivalents, highly-liquid
marketable securities and credit lines with banks for daily operations in order to ensure the financial flexibility of the
Group.
B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity:
December 31,2016
Non-derivative
financial
liabilities		 Less than 6
months		 6-12 months 1--2 years 2--5 years Over 5 years Contractual
cash flows		 Carrying
amount
Short-term loan $9,510,250 $1,004,257 $ - $ - $ - $10,514,507 $10,514,507
Short-term notes and
bills payable		 - 679,461 - - - 679,461 679,013
Notes payable 2,093,951 299 - - - 2,094,250 2,094,250
Accounts payable 1,193,816 - - - - 1,193,816 1,193,816
Other payables 1,691,722 9,066 - - - 1,700,788 1,700,788
Corporate bonds payable
(including bonds to be
matured within one year
or within one operating
cycle)		 - 278,940 - - - 278,940 278,469
Long-term loans
payables (including
loans due within one
year or within one
operating cycle)		 3,027,453 1,821,211 4,525,739 17,034,452 5,165,475 31,574,330 31,469,567
Refundable Deposit - - - 16,739 2,000 18,739 18,739
Total $17,517,192 $3,793,234 $4,525,739 $17,051,191 $5,167,475 $48,054,831 $47,949,149
December 31, 2015
Non-derivative
financial
liabilities		 Less than 6
months		 6-12 months 1--2 years 2--5 years Over 5 years Contractual
cash flows		 Carrying
amount
Short-term loan $10,257,114 $1,926,805 $ - $ - $ - $12,183,919 $12,183,919
Short-term notes and
bills payable		 765,000 - - - - 765,000 763,696
Notes payable 748,138 600 360 - - 749,098 749,098
Accounts payable 959,960 - - - - 959,960 959,960
Other payables 1,031,081 4,589 35,087 - - 1,070,757 1,070,757
Corporate bonds payable - - 1,516,500 - - 1,516,500 1,509,312
Long-term loans
payables (including
loans due within one
year or within one
operating cycle)		 646,022 480,967 7,093,566 10,048,822 9,999,390 28,268,767 28,150,967
Refundable Deposit - 253 5,308 2,167 2,000 9,728 9,728
Total $14,407,315 $2,413,214 $8,650,821 $10,050,989 $10,001,390 $45,523,729 $45,397,437

The Group does not expect a significant difference in the cash flows timing or the actual amount from the maturity analysis.

~~306~~

(IV) Information on fair value:

1. For information on fair value of financial assets and financial liabilities not measured at fair value,
please refer to Note 10, II, (2), 1. For fair value of investment property measured at cost, please refer to
Note 6 (XV). For fair value of  investments in associates with quoted prices in an open market, please refer
to Note 6(X)

2. Definition of the three levels in fair value:

Level 1:

Level 1 inputs are quoted prices in active markets for identical instruments. An active market is a market
that meets all of the conditions set below: the items traded in the market are homogeneous, willing buyers
and sellers can normally be found at any time and prices are available to the public. The fair value of the
Group's investments in listed stocks, beneficiary certificates, on the-run Taiwan government bonds and
derivatives with quoted prices in an active market are all level 1 inputs.

Level 2:

Level 2 inputs are inputs other than quote market prices 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices) in active markets. The fair value
of the Group's investments in off the-run government bonds, corporate bonds, bank debentures, convertible
corporate bones and the majority of derivative instruments are all level 2 inputs.

Level 3:

Level 3 inputs refer to inputs used in the fair value measurement that are not observable from the
market.Some derivative instruments and equity instruments with no active market held by the Group are all
level 3 assets.

3. Information about fair value hierarchy:

The fair value hierarchy of financial instrument measured at fair value on a recurring basis is disclosed as fo
Level 1
Assets:
Recurring fair value
Financial assets at fair value through profit or loss
$103,795
Derivative financial instruments
-
Available- for-sale financial assets
Equity securities
46,575
Total
$150,370
Non-derivative financial assets held
for trade
Item		 December 31,2016 December 31,2016
Level 1 Level 2 Level 3
Total
-
$
$113,794
-
16,073
-
46,575
-
$
$176,442
$9,999
16,073
-
$150,370 $26,072

307

Level 1
assets:
Recurring fair value
Financial assets at fair value through profit or loss
$125,629
Derivative financial instruments
-
Available- for-sale financial assets
Equity securities
52,425
Total
$178,054
Item
Non-derivative financial assets held
for trade		 December 31, 2015 December 31, 2015
Level 1 Level 2 Level 3
Total
-
$
$135,628
-
149
-
52,425
-
$
$188,202
$9,999
149
-
$178,054 $10,148 
4. Fair value valuation technique for instruments measured at fair value:

(1) The fair value of financial instruments with quoted prices in active markets is the quoted market prices.
Market prices published by major trading centers and exchanges for on-the-run government bonds are the basis
for the fair value of listed equity instruments and debt instruments with quoted prices inactive markets. A
market is regarded as active if quoted prices are readily and regularlyavailable from an exchange, dealer,
broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm's length basis. If one of the conditions fails, the market is not
deemed active.In general, indications of an inactive market include a wide bid-ask spread, a significant
increase in the bid-ask spread and low level of trading volume. The fair value of financial instruments with
active markets held by the Group are stated by their natures and types as follows:

A. Listed stocks: closing prices

B. Open-end funds: net worth

(2) In evaluating financial instruments that are non-standard and with lower complexity,  e.g. debt
instruments with no active markets, interest rate swaps, foreign exchange swaps and options, the Group adopts
valuation techniques that are commonly used by market participants. The parameters used in the valuation
models for those financial instruments are normally observable data in the market.

(3) Valuation of derivative financial instruments adopts valuation models that are commonly used by market
participants, e.g. discounted cash flows method and option pricing model.

308 

(4) Outputs from the valuation models are estimates and valuation techniques may not be able to reflect
(VII) Disaster Losses:
all relevant factors of the financial and non-financial instruments held by the Group. Therefore, when
needed, estimates from the valuation model would be adjusted based on additional parameters, e.g. model
Part of the production equipment and inventory were immersed in water due to Typhoon Nepartak and Typhoon
risk or liquidity risk. According to the Group's policies of fair value valuation management and relevantMeranti in the 3rd season in 2016. The estimated losses are as follows:
control procedures, the Group's management considers that valuation adjustments as being necessary and
appropriate for a fair and just presentation of financial and non-financial instruments on theItemInventoryProperty, plant and equipmentTotal
consolidated balance sheet. Every price data and parameters used in the valuation is reviewed thoEstimated amount ofroughly
$12,167$19,625$31,792
(5) The Group incorporates the adjustment of credit risk assessment into the fair value measurement ofloss
financial and non-financial instruments to reflect the credit risk of counterparty and the credit qualityEstimated amount of(6,181)(11,299)(17,480)
claim
of the Group.
Amount of deductible
$5,986$8,326$14,312
5. Transfers between Leveby the Companyl 1 and Level 2  fair value hierarchy: None

6. Statement of changes in Level 3 fair value hierarchy: None. 

1. The flood impaired inventory of NT$ 12,167 thousand was sold at a lower price because of its irrepairable
7.  Quantitative information about the significant unobservable inputs (level 3) used in the fair value me
condition (recognized under other receivables).

8. Valuation process for Level 3 fair value measurement: Not applicable.

2. The flood impaired property, plant and equipment of NT$ 19,625 thousand is recognized under property, plant
9. For measurement of Level 3 fair value, the sensitivity analysis of reasonably possible alternativeand equipment - accumulatied impairment. The Company had to assume the minimum deductible of NT$ 8,326 thousand
assumptions on fair value: Not applicable.(recognized in other gains and losses). The rest of NT$ 11,299 thousand was claimable from the insurance
company. The Group repaired the various equipment in an active manner after the flood. For the current period,
repairment expense of NT$ 2,856 thousand had been written down to accumulated impairment.
(V) Transfer of financial assets

1. Transferred financial assets fully derecognized 

(1)The Group entered accounts receivable factoring agreement with Taishin International Bank. According
to the contract, the Group does not bear the risk of default over the transferred accounts receivablesXIII. Additional Disclosures
but only the loss from trade disputes. As the Group did not have any continued participation over those
(I) Information about significant transactions (before elimination in consolidation)
transferred accounts receivables, they were derecognized from the accounts. Information on outstanding
receivables is as follows:

1. Loans to others: Appendix TABLE 1

2. Endorsements and Guarantees: Appendix TABLE 2.

3. Marketable securities held: Appendix TABLE 3.

December 31, 2016: None 

December 31, 2015:4. Aggregate trading value on the same securities (including purchase and sales) reaching NT$300 million or 20
percent of the paid-in capital or more: Appendix TABLE 4.
FactoringFactoringAdvance -End of Period
5.  Property acquired reaching NT$300 million or 20% of the paid-in capital or more: Appendix TABLE 5.Amount
CounterpartyAmountEnd of PeriodAnnual %Amount
collectedin
6.  Property disposed of reaching NT$300 million or 20% of the paid-in capital or more: None.
Taishin
5,531         -4,9781.18%EUR 2,000
International
7. Purchases and sales with related parties reaching NT$100 million or 20% of the paid-in capital or more: Appen
(EUR 157)(EUR 142)

8. Receivables from Related Parties Exceeding $100 Million or 20% of the paid-in capital: Appendix TABLE 7. 

9. Trading activities in financial derivatives: Please refer to Note 6(II) for details.

2. Transferred financial assets not fully derecognized: None

10. Intercompany relationships and significant intercompany transactions: Appendix TABLE 8.

  • (VI) Offsetting financial assets and financial liabilities: None. (II) Reinvestment Information(before elimination in consolidation): Appendix TABLE 9.

  • (III) Investments in Mainland China(before elimination in consolidation): TABLE 10.

309

Appendix I

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Loan to other parties

31 December 2016

Unit: NT thousand dollars and thousand dollars in foreign currency

No. Loan to Other Parties by Company
Name		 Borrower Subject Relat
ed
Party
Maximum of
Balance in the
Period		 Balance at the
End of the
Period		 The Actual
Amount
Withdrawn
Amount		 Interest
Rate Range
Nature of
Loan
Amoun
t of
Transa
ction		 Reason for
Short-Term
Financing		 Amount
of
Allowan
ce for
Doubtfu
l
Account		 Coll ateral

Name		 Value
Cap of Loan Cap of Loan
(respectively) (sum)
0 Yieh Phui Enterprise Co.,Ltd. Great Emperor Hotel CO., LTD. Other Receivables -
Related Parties		 Y 350,000
350,000
110,000
2.50%
2		 － Operation － － － 11,015,060
(Note 2)
11,015,060
(Note 1)
0 Yieh Phui Enterprise Co.,Ltd. Kingsgarden International CO.,
LTD.		 Other Receivables -
Related Parties		 Y 400,000
400,000
200,000
2.50%
2		 － Operation － － － 11,015,060
(Note 2)
11,015,060
(Note 1)
1 EMMT Systems Corporation AWID Asia Co., Ltd. Other Receivables Y 19,000
8,000
8,000
2.955%
2		 － Operation － － － 148,176
148,176
(Note 2) (Note 1)
2 Yieh Phui (Hong Kong) Holdings
Limited		 Yieh Phui (China)
Technomaterial Co., Ltd.		 Long-Term
Receivables - Related
Parties		 Y 4,988,775
(RMB 42,000)
(USD 148,500)


3,554,073
(RMB 102,000)
(USD 95,500)


3,554,073
(RMB 102,000)
(USD 95,500)


3.7171%
-10.2055%

2		 － Operation － － － 11,015,060
(Note 3)
11,015,060
(Note 3)
3 Golden Developments Holdings Ltd. Yieh Phui (Hong Kong)
Holdings Limited		 Other Receivables -
Related Parties		 Y 1,505,621
(RMB 295,000)

241,748
(RMB 52,000)

241,748
(RMB 52,000)

5.43%
-5.85%

2		 － Operation － － － 11,015,060
(Note 3)
11,015,060
(Note 3)
4 Good Honor Holdings Ltd. Yieh Phui (Hong Kong)
Holdings Limited		 Long-Term
Receivables - Related
Parties		 Y 150,525
(USD 4,500)

145,125
(USD 4,500)

145,125
(USD 4,500)

1.58%
-2.70%

2		 － Operation － － － 11,015,060
(Note 3)
11,015,060
(Note 3)
5 Yieh Phui (China) Technomaterial Co.,
Ltd.		 Tianjin Lianfa Precision Steel
Corporation		 Long-Term
Receivables - Related
Parties		 Y 387,540
(RMB 75,000)

204,556
(RMB 44,000)

204,556
(RMB 44,000)

4.75%
2		 － Operation － － － 11,015,060
(Note 3)
11,015,060
(Note 3)
6 Applied Wireless Identifications Group,
Inc.		 EMMT Systems Corporation Other Receivables -
Related Parties		 Y 26,092
－		 － 2%
2		 － Operation － － － 50,530
(Note 2)
50,530
(Note 1)

310

7 Shin Phui Steel Corporation EMMT Systems Corporation Other Receivables -
Related Parties		 Y 15,000
15,000
－		 2.25%
2		 － Operation － － － 15,797
(Note 4)
126,375
(Note 4)
8 Shin Yang Steel Co., Ltd. EMMT Systems Corporation Other Receivables -
Related Parties		 Y 80,000
80,000
－		 - 2 － Operation － － － 152,727
(Note 4)
305,453
(Note 4)

(Note 1) The aggregate amount of the loan shall not exceed 40% of the net value of the borrower.

(Note 2) The amount of loan(s) lent to each borrower shall not exceed 40% of its net value.

(Note 3) When the Company lends money to a foreign company where the Company holds 100% of the voting shares directly and/or indirectly, the aggregate amount of the loan shall not exceed 40% of the net value of the Company, collectively or individually.

(Note 4) For entities requiring short-term financing, the aggregate amount of loans shall not exceed 40% of the net value of the borrower. As for Shin Yang Steel Co., Ltd., the aggregate amount of loans shall not exceed 20% of its net value. For each of the remaining entities, the aggregate amount of loans shall not exceed 5% of their net value.

(Note 5) Please fill out the nature of the loan according to the following instructions: For those who we have business contacts with please mark "1"; for those have short-term financing needs please mark "2".

(Note 6) Transactions between the above-mentioned parent companies and subsidiaries have been written-off.

311

Appendix II

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Endorsement/Guarantee Made for the Financing Needs of Other Parties 31 December 2016

Unit: NT thousand dollars and thousand dollars in foreign currency

No. Company Name of
Endorser/Guarantor		 Endorsee/Guarantee Endorsee/Guarantee Endorsement/Guar
antee Ceiling for a
Single Enterprise		 Endorsement/Guarante
e Ceiling during the
Period		 Maximum of the
Amount of
Endorsement/Guara
ntee during the End
of the Period		 Actual Amount of
Disbursement		 Amount of
Endorsement/
Guarantee
with security
on property		 Percentage of
Accumulated
Amount of
Endorsement/
Guarantee
accounted for
among the net
value in
current
Financial
Statements		 Endorsemen
t/Guarantee
Ceiling		 Endorse
ment/Gu
arantee
Made by
a Parent
Compan
y for a
Subsidia
ry
Endorse
ment/Gu
arantee
Made by
a
Subsidiar
y for a
Parent
Compan
y		 Endorsem
ent/Guara
ntee Made
for Parties
in China
Company Name Relationship
0 Yieh Phui Enterprise Co., Ltd.
(Note 1)		 Yieh Phui (China) Technomaterial
Co., Ltd..		 Subsidiary of the
Company's
subsidiary		 27,537,651
6,864,611
(RMB 1,345,000)

6,252,905
(RMB 1,345,000)

5,963,458
(RMB 1,282,740)

－		 22.71%
27,537,651
Y		 － Y
EMMT Systems Corporation The Company's
subsidiary		 27,537,651
130,000
130,000
41,433
－		 0.47%
27,537,651
Y		 － －
Shin Yang Steel Co., Ltd. The Company's
subsidiary		 27,537,651
1,886,000
1,886,000
905,227
336,000
6.85%
27,537,651
Y		 － －
Yieh Phui (Hong Kong) Holdings
Limited		 The Company's
subsidiary		 27,537,651
4,257,000
(USD 132,000)

4,257,000
(USD 132,000)

3,962,058
(USD 116,800)
(RMB 42,000)

－		 15.46%
27,537,651
Y		 － －
Golden Developments Holdings
Ltd.		 The Company's
subsidiary		 27,537,651
1,531,140
(RMB 300,000)
278,940
(RMB 60,000)
278,940
(RMB 60,000)
－		 1.01%
27,537,651
Y		 － －
1 Shin Phui Steel
Corporation(Note 2)		 Yieh Phui Enterprise Co.,Ltd. The Company's
Parent Company		 1,579,693
629,510
629,510
363,619
629,510
199.25%
1,579,693
－		 Y －
2 EMMT Systems Corporation
(Note 3)		 Awid China Co., Ltd. Subsidiary of the
Company's
subsidiary		 370,440
6,021
－		 － － － 370,440
Y		 － Y
3 Kingsgarden International CO.,
LTD.(Note 4)		 Great Emperor Hotel CO., LTD. (Note 9) 14,715,928
7,186,000
7,186,000
3,385,000
7,186,000
341.82%
14,715,928
－		 － －
4 Great Emperor Hotel Co.,
LTD.(Note 5)		 Kingsgarden International CO.,
LTD.		 (Note 9) 14,389,054
7,413,000
7,413,000
3,441,000
7,413,000
360.63%
14,389,054
－		 － －

312

5 Yieh Phui (China)
Technomaterial Co., Ltd..
(Note 6)		 Tianjin Lianfa Precision Steel
Corporation		 The Company's
subsidiary		 9,802,749
79,835
(RMB 17,000)

79,033
(RMB 17,000)

79,033
(RMB 17,000)

－		 0.81%
9,802,749
Y		 － Y
6 Shin Yang Steel Co., Ltd. (Note
7)		 Yieh Phui Enterprise Co.,Ltd. The Company's
Parent Company		 2,290,894
900,000
900,000
700,000
900,000
117.86%
2,290,894
－		 Y －

  • (Note 1): The aggregate amount of endorsement/guarantees made by the Company shall not exceed the net value of the Company; the amount of endorsement/guarantee provided to a single subsidiary shall not exceed the net value of the Company.

  • (Note 2): The aggregate amount of endorsement/guarantees made by Shin Phui shall not exceed five times the net value of Shin Phui; the amount of endorsement/guarantees provided to a single enterprise shall not exceed five times the net value of Shin Phui.

  • (Note 3): The aggregate amount of endorsement/guarantees made by EMMT shall not exceed the net value of EMMT; the amount of endorsement/guarantees provided to a single subsidiary shall not exceed the net value of EMMT.

  • (Note 4): The aggregate amount of endorsement/guarantees made by Kingsgarden shall not exceed seven times the net value of Kingsgarden; the amount of endorsement/guarantees provided to a single enterprise shall not exceed seven times the net value of Kingsgarden.

  • (Note 5): The aggregate amount of endorsement/guarantees made by Great Emperor shall not exceed seven times the net value of Great Emperor; the amount of endorsement/guarantees provided to a single enterprise shall not exceed seven times the net value of Great Emperor.

  • (Note 6): The aggregate amount of endorsement/guarantees made by Yieh Phui (China) shall not exceed the net value of Yieh Phui (China); The amount of endorsement/guarantees provided to a single subsidiary shall not exceed the net value of Yieh Phui (China).

  • (Note 7): The aggregate amount of endorsement/guarantee made by Shin Yang shall not exceed three times the net value of Shin Yang; the amount of endorsement/guarantees provided to a single enterprise shall not exceed three times the net value of Shin Yang.

  • (Note 8): Please refer to the certified or audited Financial Statement for the above-mentioned net value.

  • (Note 9): Companies in the same type of business and providing mutual endorsements/guarantees in favor of each other in accordance with the contractual obligations.

313

Appendix III

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

List of holder of securities (exclusive of investment in affiliated companies and joint venture)

31 December 2016

Unit: thousand shares; NT thousand dollars and foreign currency thousand dollars

Holder Type and Name of Securities Relationship
with the Issuer
of Securities		 Category The End of the Period The End of the Period The End of the Period Note
Number of
shares or
units
(thousand
shares)
Carrying
amount		 Shareholdi
ng Ratio		 Fair value
Yieh Phui
Enterprise Co.,Ltd.
Yieh Phui
Enterprise Co.,Ltd.
Yieh Phui
Enterprise Co.,Ltd.		 Beneficial Certificates / Asia Pacific (ex-Japan)
Investment Grade Government Bond Index Fund		 None Financial asset measured at fair value through
profit and loss-current		 500 4,406 － 4,406
Beneficiary Certificates / Eastspring Investments
South Africa Fixed Income Fund		 None Financial asset measured at fair value through
profit and loss-current		 300 8,203 － 8,203
Beneficiary Certificates / Paradigm Global Oil
Resources Securities Investment Trust Fund		 None Financial asset measured at fair value through
profit and loss-current		 516 3,268 － 3,268
Beneficiary Certificates / Sino Pacific RMB
Bond-Accu(TWD)		 None Financial asset measured at fair value through
profit and loss-current		 300 2,720 － 2,720
Beneficiary Certificates / Fu Hua China New
EconomyBalanced Fund		 None Financial asset measured at fair value through
profit and loss-current		 600 5,052 － 5,052
Beneficiary Certificates / Fuh Hwa China New
EconomyA Shares EquityFund		 None Financial asset measured at fair value through
profit and loss-current		 1,000 5,950 － 5,950
Beneficiary Certificates / Paradigm Pion Money
Market Fund		 None Financial asset measured at fair value through
profit and loss-current		 876 10,034 － 10,034
Beneficiary Certificates / Mega Greater China
Balanced Fund		 None Financial asset measured at fair value through
profit and loss-current		 1,000 9,120 － 9,120

314

Beneficiary Certificates / Franklin Templeton
SinoAm Multi-Asset Income Balanced Fund		 None Financial asset measured at fair value through
profit and loss-current		 1,000 9,910 － 9,910
Beneficiary Certificates / Prudential Financial
Multi-Income Fund of Funds		 None Financial asset measured at fair value through
profit and loss-current		 300 2,959 － 2,959
Beneficiary Certificates / HSBC China Multi-Asset
Income Balance Fund		 None Financial asset measured at fair value through
profit and loss-current		 500 4,995 － 4,995
Beneficiary Certificates / Union Global Balanced
Fund		 None Financial asset measured at fair value through
profit and loss-current		 500 5,029 － 5,029
Beneficiary Certificates / FSITC Global Financial
TechnologyTrust		 None Financial asset measured at fair value through
profit and loss-current		 500 4,985 － 4,985
Beneficiary Certificates / CTBC Global Silver Age
Balanced Income Fund		 None Financial asset measured at fair value through
profit and loss-current		 500 5,050 － 5,050
Beneficiary Certificates / Taishin RMB & USD
MoneyMarket Fund		 None Financial asset measured at fair value through
profit and loss-current		 500 5,038 － 5,038
Beneficiary certificates / AB FCP I Global High
Yield AT Income Bond		 None Financial asset measured at fair value through
profit and loss-current		 493 5,064 － 5,064
Total 91,783 91,783

315

Holder Type and Name of Securities Relationship
with the Issuer
of Securities		 Category The End of the Period The End of the Period The End of the Period The End of the Period Note
Number of
Shares
(thousand
shares)
Carrying
amount		 Shareholdi
ng Ratio		 Fair value
Financial bonds / Bank of Panshin's first issue of secondary
financial bonds of 2014		 None Financial asset measured at fair value through
profit and loss		 10,000
9,999
－		 9,999
Stock / Taiwan Vespa Co., Ltd. Relatedparty Financial Assets Carried at Cost 1,800
55,899
3.60%
－		 Notes
Stock / New SpringConstruction Corp. Relatedparty Financial Assets Carried at Cost 7,640
41,833
15.49%
－		 Notes
Stock / ShangYangVenture Capital Co., Ltd. None Financial Assets Carried at Cost 2,352
23,520
6.42%
－		 Notes
Stock / Taiwan Implant TechnologyCompany None Financial Assets Carried at Cost-None Current 1,891
18,913
4.20%
－		 Notes
Stock / Yangxin Commercial Bank Co., Ltd. None Financial Assets Carried at Cost 3,736
35,482
0.19%
－		 Notes
Stock / Global Venture Capital co., Ltd. None Financial Assets Carried at Cost 1,100
9,130
0.91%
－		 Notes
Stock / Yieh Corporation Limited Relatedparty Financial Assets Carried at Cost 200
2,002
5.60%
－		 Notes
Stock / Pacific Shipment Co., Ltd. Common
director(s)		 Financial Assets Carried at Cost 150
1,650
3.00%
－		 Notes
Stock / Neoflex TechnologyCo., Ltd. None Financial Assets Carried at Cost 104
1,060
0.27%
－		 Notes
Stock / Carpenter Code Information Co., Ltd. None Financial Assets Carried at Cost 24
535
0.96%
－		 Notes
Stock / Megagrowingventure capital Co., Ltd. None Financial Assets Carried at Cost 1,000
10,000
0.79%
－		 Notes
Stock /EDA Skylark Hotel Corporation Relatedparty Financial Assets Carried at Cost 13,688
281,960
13.68%
－		 Notes
Total 481,984 －
Stock / Asia-Pacific Telecom Co., Ltd None Available- for-sale Financial Assets -
non-current		 4,500
46,575
－		 46,575

316

Special Unit /E-Da Development Corp. Investee
evaluated by
equitymethod		 Debt Instrument in Non-Active Market - Non
Current		 17,065
170,654
－		 － Notes

Note: The price in the active market for financial assets measured by cost and investments in debt instruments in non-active markets do not exist and their fair values cannot be reliably

measured.

317

Owner of securities Type and Name of Securities Relationship
with the Issuer
of Securities
Category		 The End The End of the Period of the Period Note
Number of
Shares
(thousand
shares)		 Carrying
amount		 Shareholdin
g Ratio		 Market price
Goodhonor Holdings
Ltd.		 Share / Luxey International (Holdings) Ltd. None Financial asset measured at fair value through
profit and loss-current		 2,951 1,424
(USD 44)		 － 1,424
(USD 44)
Worthing Honor
Holdings Ltd		 Stock / See Corporation None Financial asset measured at fair value through
profit and loss-current		 1 － － －
EMMT Systems
Corporation		 Stock / Rodan (Taiwan) Ltd. None Financial Assets Carried at Cost 86 492 0.73%
－		 Notes
Yieh Hsing
Enterprise Co., Ltd.		 Fund / Taishin Emerging Markets
Opportunities EquityFund		 None Financial asset measured at fair value through
profit and loss-current		 500 2,570 － 2,570
Fund / Allianz Global Investors All Seasons
Return Funds of Bond Funds.		 None Financial asset measured at fair value through
profit and loss-current		 300 3,017 － 3,017
Fund / Union Global Balanced Fund. None Financial asset measured at fair value through
profit and loss-current		 133 2,004 － 2,004
Total 933
7,591		 7,591
Stock / Pacific Shipment Co., Ltd. Its director is
the chairman
of the
Company		 Financial Assets Carried at Cost 150
1,650		 3.00%
－		 Notes
Stock /Qiaotoubao Co., Ltd. None Financial Assets Carried at Cost 2,500
－		 5.00%
－		 Notes

318

Special Unit /E-Da Development Corp. Investee
evaluated by
equitymethod		 Debt Instrument in Non-Active Market - Non
Current
3,565
35,651		 － － Notes
Kingsgarden
International CO.,
LTD.		 Fund / HSBC China Multi-Asset Income
Balance Fund		 None Financial asset measured at fair value through
profit and loss-current
300
2,997		 － 2,997

Note: The price in the active markets for the financial assets measured by cost and investments in debt instruments in non-active markets do not exist and their fair values cannot be reliably

measured.

319

Appendix IV

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Amount of accumulated acquisition or disposal of the same securities reaches NT$300 million or 20% of the paid-in capital 31 December 2016

Unit: thousand shares; NT thousand dollars

Buyer or
seller		 Type and
Name of
Securities		 Category Trading
partner		 Relations
hip		 The beginning of the
period		 The beginning of the
period		 Buy Sell Sell The end of the period
Number of
shares		 Amount Number
of shares		 Amount Number
of shares		 Selling price
Cost of
Book
Value		 Gain (Loss)
on Disposal		 Number of
shares		 Amount
Yieh
Hsing
Enterpris
e Co.,
Ltd.		 Great Emperor
Hotel Co.,
LTD.
Other
non-current
liabilities - other
(balance of
investment
measured by the
equitymethod)		 Capital
injection		 The
Company
's
subsidiar
y		 180,000 (735,885)
(Note 2)		 30,000 281,657
(Note 1)		 － － － － 210,000 (454,228)
(Note 2)
Yieh Phui
Enterpris
e
Co.,Ltd.
United
Brightening
Development
Corp.		 Investment
using equity
method		 Yieh United
Steel's
capital
injection		 Affiliate
and the
Company
's
subsidiar
y		 79,235 1,119,078 28,876 413,301
(Note 3)		 － － － － 108,111 1,532,379

(Note 1): Inclusive of the increased amount of purchase of NTD 300,000,000 and the recognized investment (losses) gains of (NTD 18,343,000) using

320

the equity method.

(Note 2): The Company sold land nos. 16, 17 and 19 at Area Eastern Dragon, District Gushan, Kaohsiung to Great Emperor Hotel CO., LTD.in December 2012. The unrealized gain for the disposal of such land is NTD 2,445,476,000. Such balance after offsetting the investment using the equity method has been recorded as “Other non-current liabilities-other.”

(Note 3): Inclusive of the amount of increased purchase of NTD 279,335,000, capital injection of NTD 58,759,000, NTD 26,940,000 of the gains (losses) of investment recognized by the equity method and other comprehensive profit and loss, NTD (96,000) of gains (losses) recognized by shareholding ratio, NTD 104,000 of additional paid-in capital and NTD 48,259,000 of additional paid-in capital due to transactions of non-controlling interests and shares subscribed for without abiding by the shareholding ratio.

321

Appendix V

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Amount of acquisition of real estate reaches NTD300 million or 20% of the paid-in capital

1 January to 31 December 2016

Unit: NTD thousand dollars

Acquirer of
real estate		 Property
name		 Fact
Date		 Amount of
transaction		 Payment
status		 Trading partner Relation Information of previous transfer when the trading
partner in the transaction is a relatedparty.		 Information of previous transfer when the trading
partner in the transaction is a relatedparty.		 Information of previous transfer when the trading
partner in the transaction is a relatedparty.		 Information of previous transfer when the trading
partner in the transaction is a relatedparty.
Reference of
pricing		 The purpose
and usage of
acquisition		 Other
matters
agreed

Owner		 Relationship
with the
issuer		 Date of
transfer		 Amount
Kingsgarde
n
Internationa
l Co.,LTD.		 New
construction
project of
the
commercial
building of
E-da Asia
plaza
2014. 1.28~
2016. 5.10		 2,599,238 1,335,296 New Spring
Construction
Corp., Taiwan
Cement Co.,
Ltd., Yieh
Hsing
Enterprise Co.,
Ltd. and YIEH
PHUI
ENTERPRISE
CO.,LTD.
 Related
party,
parent
company
,
ultimate
parent
company
－		 － － － Decision made
after taken into
account the
valuation
report(s) of
professional and
agreed mutually
after discussion
or by price
enquiring,
comparing
and/or
negotiating.		 Developing a
shopping plaza
of luxury		 None
Great
Emperor
Hotel CO.,
LTD.		 2,519,404 1,295,794 Developing an
International
Tourism Hotel
Yieh Phui
(China)
Technomate
rial Co.,
Ltd..		 Plant 2013.6.8~
2014.8.13		 RMB 217,850
RMB 217,42
7
Shanghai
Baoye Group
Corp., Ltd.,
Shanghai
wenyu
construction
and
development		 Non-rela
ted
parties		 － － － － Agreed after
mutual discussion		 Production
Expansion		 None

322

Co., Ltd. etc.

Note: The above transaction between the parent company and its subsidiary has been offset.

323

Appendix VI

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

The purchase and sale with related parties amounted to NT $ 100 million or more than 20% of the paid-up capital 1 January to 31 December 2016

Unit: NT thousand dollars and thousand dollars in foreign currency

Purchase
(sales)
company		 Name of trading
partner		 Relationship Transaction status Transaction status Transaction status Unusual trade conditions
and its reasons		 Unusual trade conditions
and its reasons		 Bills and accounts receivable
(payable)		 Bills and accounts receivable
(payable)		 Note
Percentage
The ratio among total
Purchase of total Credit Credit bills and
Amount unit price Balance
(sales) purchase Period period accounts
(sales) receivable
(payable)
Yieh Phui
Enterprise
Co., Ltd.		 Yieh Hong Enterprise
co.,Ltd.		 Related party Purchase 1,602,814 8.85%
T / T before receipt		 － － － － －
Yieh United Steel
Corporation		 Investee
evaluated by
equitymethod		 Purchase 108,892 0.60%
Issuance of sight		 － － － － －
credit or T / T
before receipt
Yieh United Steel
Corporation		 Investee
evaluated by
equitymethod		 Sales 205,214 0.86%
Payment term of 15		 20,326 1.42% Accounts
days (once a － － receivable
month)
Yieh Corp. Related party Sales 237,902 1.00%
1-2 months		 － － 2,003 0.14% Accounts
receivable
Shin Phui Steel Co.,
LTD.		 The Company's
subsidiary		 Sales 237,769 1.00%
1-2 months		 － － 48,388 3.37% Accounts
receivable
Asiazone Co.,
Limited		 Investee
evaluated by
equitymethod		 Sales 1,495,876 6.27%
1-2 months		 103,422 7.21% Accounts
－ － receivable
New Spring
Construction Corp.		 Related party Sales 820,433 3.44%
subject to the		 － － － － －
contract
Yieh Phui
(Hong Kong)
Holdings
Limited		 Yieh United Steel
Corporation		 Investee where its
patent company
evaluated using
the equitymethod		 Sales 1,622,308
(USD 50,270)

100%		 3 months － － 769,969
(USD 23,875)		 100% Accounts
receivable

324

Angang Lianzhong
(Guangzhou)
Stainless Steel Co.,
Ltd.		 Related party Purchase 501,077
(USD 15,527)

31.29%		 T / T before receipt － － － － －
Yieh Phui
(China)
Technomateri
al Co.,Ltd..		 Tianjin Lianfa
Precision Steel
Corporation		 Parent company Sales 858,863
(RMB 176,737)

4.75%		 1-2 months － － 70,459
(RMB 15,156)		 13.06% Accounts
receivable
Yieh Hsing
Enterprise
Co.,Ltd.		 Yieh United Steel
Corporation		 Investee
evaluated by
equitymethod		 Purchase 5,057,974
86.08%		 Issuance of sight
credit or T / T
before receipt		 － － － － －
Shin Yang
Steel Co.,
Ltd.		 Yieh Hong Enterprise
co., Ltd.		 Related party Purchase 118,228
8.46%		 T / T before receipt － － 6,561
6.26%		 Accounts
payable

Note: The above transactions between the parent company and its subsidiary have been offset.

325

Appendix VII

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Accounts receivable from related parties amounting NT$100 million or 20 percent of paid-in capital or more

31 December 2016

Unit: NT thousand dollars and thousand dollars in foreign currency

Companies of account
receivable		 Name of trading partner Relationship Related party of
account
receivable
Balance of
payments		 Turnover
rate		 Overdue accounts
receivable from related
parties		 Overdue accounts
receivable from related
parties		 Amount of
related party of
account
receivable
collected after
the period
(Note 2)
Amount of
Allowance
for Doubtful
Account
Amount
Actions
taken
Yieh Phui Enterprise Co.,Ltd. Asiazone Co., Limited Investee evaluated by equity
method		 103,422
12.08		 － － 103,422
－
Great Emperor Hotel Co.,LTD. Parent company 110,000
(Note 1)		 － － － －
Kingsgarden International
Co.,LTD.		 Parent company 200,000
(Note 1)		 － － － －
Yieh Phui (Hong Kong)
Holdings Limited		 Yieh Phui (China) Technomaterial
Co., Ltd..		 Parent company 3,554,073
(RMB 102,000)
(USD 95,500)

－
(Note 1)		 － － USD 28,000 －
Golden Developments
Holdings Ltd.		 Yieh Phui (Hong Kong) Holdings
Limited		 Common ultimate parent
company		 241,748
(RMB 52,000)
(Note 1)		 － － － －
GOOD HONOR HOLDINGS
LTD.		 Yieh Phui (Hong Kong) Holdings
Limited		 Common ultimate parent
company		 145,125
(USD 4,500)
－
(Note 1)		 － － － －
Yieh Phui (China)
Technomaterial Co.,Ltd..		 Tianjin Lianfa Precision Steel
Corporation		 Parent company 204,556
(RMB 44,000)
－
(Note 1)		 － － RMB 4,000
－
Yieh Phui (Hong Kong)
Holdings Limited		 Yieh United Steel Corporation Investee where its patent company
evaluated usingthe equitymethod
769,969
(USD 23,875)
2.93		 － － USD 23,875
－

(Note 1): This is an account receivable where the turnover rate is not applicable.

326

(Note 2): Amount collected as of 21 March 2017.

(Note 3): Transactions between the above parent company and subsidiary have been offset.

327

Appendix VIII

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Business relations and important transaction between parent company and subsidiary

31 December 2016

Individual transactions for less than $50 million are not subject to disclosure and will be disclosed as assets and/or incomes. The related transactions will not be disclosed.

Unit: NTD thousand dollars

No.
(Note 1)		 Name of trading partner Trading relations The relationship with
trading partner (Note
2)		 Transaction Status Transaction Status


Category		 Amount Trade conditions Percentage
accounted for in
consolidated
revenue or total
assets ratio (Note
3)
0 Yieh Phui Enterprise Co.,Ltd. Shin Phui Steel Corporation 1 Sales income 237,769 － 0.45%
Long-termprepaid rent 80,300 － 0.10%
Shin YangSteel Co.,Ltd. 1 Sales income 79,818 － 0.15%
Great Emperor Hotel Co., LTD. 1 Other Receivables - Related 110,000 － 0.13%
Parties
Kingsgarden International Co.,LTD. 1 Other Receivables - Related 200,000 － 0.24%
Parties
1 Yieh Phui (Hong Kong) Yieh Phui (China) Technomaterial
1		 Long-term account 3,554,073 － 4.33%
Holdings Limited Co., Ltd.. receivable
2 Golden Developments Holdings Yieh Phui (Hong Kong) Holdings 3 Long-term account 241,748 － 0.29%
Ltd. Limited receivable
3 Goodhonor Holdings Ltd. Yieh Phui (Hong Kong) Holdings 3 Long-term account 145,125 － 0.18%
Limited receivable
4 Yieh Phui(China) Tianjin Lianfa Precision Steel 1 Sales income 858,863 － 1.63%

328

Technomaterial Co., Ltd.. Corporation Accounts receivable 70,459 70,459 － 0.09%
Long-term account 204,556 － 0.25%
receivable
No.
(Note 1)		 Name of trading partner Trading relations The relationship
with trading partner
(Note 2)		 Transaction Status

Category		 Amount Trade conditions Percentage
accounted for in
consolidated
revenue or total
assets ratio (Note
3)
5 Yieh Hsing Enterprise Co., Ltd. Great Emperor Hotel Co., LTD. 1 Sales income 52,944
－		 0.10%
6 Kingsgarden International
Co.,LTD.		 Yieh Hsing Enterprise Co., Ltd. 2 Land 2,522,985
Note 4		 3.08%
7 Great Emperor Hotel Co., LTD. Yieh Hsing Enterprise Co., Ltd. 2 Land 2,445,476
Note 4		 2.98%

Note 1: Business information between parent companies and subsidiaries shall be indicated by numbers. Please fill in the numbers following the instructions as below:

  1. Mark "0" for parent companies.

  2. Number the subsidiaries by numeral order according to the type of their parent company. The starting number is "1".

Note 2: Mark two of the three relationships between trading partners as instructed below:

  1. A parent company to a subsidiary.

  2. A subsidiary to a parent company.

  3. A subsidiary to a subsidiary.

  4. Note 3: If the percentage of the amount of the transaction accounted for in the consolidated revenue or assets belong to accounts in the balance sheet, it is calculated as balance as of the end of the period accounted for in the consolidated total assets. If it belongs to profit and loss, the percentage of accumulated amount accounted for in the consolidated revenue should be calculated.

329

Note 4: The payment of NTD 7,633,283,000 net of VAT of NTD 20,491,000 and the carrying amount of NTD 2,644,331,000 generates the profit of NTD 4,968,461,000. This was a downstream transaction between a parent company and its subsidiary, the unrealized profit has been offset completely.

Note 5: The transactions between the above-mentioned parent companies and subsidiaries have been offset.

330

Appendix IX

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Information of business re-invested

31 December 2016

Unit: NT thousand dollars and thousand dollars in foreign currency

Investor
Name		 Name of investee Location Service items Original amount of
investment		 Original amount of
investment		 Possession by the end of the period Possession by the end of the period Possession by the end of the period Investee
Profit or loss for
the current
period
Investment
gains and
losses
recognized in
the current
period		 Note
Then end of
the current
period		 The end of
previous year
Number of
shares
(thousand
shares)		 ratio Carrying
amount
Yieh Phui
Enterprise
Co.,Ltd.		 Yieh Phui (Hong Kong) Holdings
Limited
Hong Kong		 Investment 7,455,887
7,455,887
233,500
100%
9,818,285		 1,129,223 1,129,223
Champion Logistic Inc. Samoa Investment 1,913,111
1,913,111
57,000
97.44%
1,697,847		 (1,050) (1,023)
Eliter International Corp Kaohsiung
City		 Construction and
disposal of buildings		 2,833,595
2,614,667
283,584
32.84%
2,826,191		 (126,830) (41,739)
Yieh Hsing Enterprise Co., Ltd. Kaohsiung
City		 Wires industry 2,237,751
2,221,432
355,647
56.39%
1,596,329		 (256,004) (135,723)
TANGENG IRON WORKS CO.,
LTD.
Kaohsiung
City		 Purchase and sale
related to iron and
steel		 1,453,572
1,453,572
39,553
11.30%
1,357,233		 503,350 56,883
E-da development Co., Ltd. Kaohsiung
City		 Recreational
development
industry		 1,868,658
1,868,658
186,866
28.44%
1,201,890		 (249,488) (70,960)
United Brightening Development
Corp.
Kaohsiung
City		 Consultation of
manufacturing
technology of iron
and steel		 1,561,166
1,223,072
108,111
79.50%
1,532,379		 34,692 36,112

331

Shin Yang Steel Co., Ltd. Kaohsiung
City		 Business related to
iron and steel		 870,000
870,000
87,000
100%
763,632		 5,304 5,304
Synn Industrial Co., Ltd. Kaohsiung
City		 Business related to
iron and steel		 294,000
294,000
45,975
30%
615,566		 361,967 108,590
Yieh Mau Corp. Kaohsiung
City		 Trading and
manufacturing
business		 422,605
422,605
40,977
23%
535,129		 378,632 87,067
Kuo Chang Enterprise Co., Ltd. Kaohsiung
City		 Wholesale of
Ironware		 777,259
755,643
51,548
54.04%
690,453		 33,696 11,373
Asiazone Co., Limited Hong Kong Purchase and sale
related to iron and
steel		 595,424
595,424
15,090
32.80%
625,840		 (1,303) (428)
Shin Phui Steel Corporation Kaohsiung
City		 Trading of steel
goods		 295,736
295,736
30,968
100%
318,370		 3,167 2,379
Sin Bang Investment &
Development Co.,Ltd.		 Kaohsiung
City		 Investment 295,809
295,809
22,313
100%
280,860		 12,691 12,691
Tycoons Steel International Co.,
Ltd.		 Cayman
Islands		 Investment 427,629
427,629
14,700
28.27%
21,423		 (25,534) (7,218)
HsingJui Investments Limited Samoa Investment 4,603
4,603
5
100%
2,074		 1 1

332

Investor
Name		 Name of investee Location Service items Original amount of
investment		 Original amount of
investment		 Possessions at the end of the period Possessions at the end of the period Possessions at the end of the period Investee
Profit or loss
for the current
period		 Investment
gains and
losses
recognized in
the current
period		 Note
Then end of
the current
period		 The end of
previous year		 Number of
shares
(thousand
shares)		 ratio Carrying
amount
Yieh Phui
Enterprise
Co.,Ltd.		 EMMT Systems Corporation Taichung City Manufacture and
distribution of
military model of
printed circuit
boards		 306,158
292,163
28,651		 77.54%
287,237		 39,681 31,687
Good Honor Holdings Ltd. British Virgin
Islands		 Investment 14,723
14,723
46
100%
160,109		 1,335 1,335
Gen-Wan Technology Corp. Kaohsiung City Telecommunication
subcontract		 148,609
148,609
2,392		 86.99%
25,312		 2,989 2,600
ChengShin SecurityCo.,Ltd. KaohsiungCity Security 14,000
14,000
1,400
35%
15,147		 (1,464) (512)
Da Yao Engineering &
Consulting Co., Ltd.		 Kaohsiung City Business
management and
service		 9,800
9,800
980
49%
10,822		 160 78
E-Da Bus Transportation Co.,
Ltd.		 Kaohsiung City Automobile
transportation		 36,086
36,086
3,609		 17.09%
17,107		 (22,599) (3,861)
E-DA Tour Bus Co., Ltd. Kaohsiung City Automobile
transportation
industry		 9,500
9,500
950
19%
4,672		 (11,529) (2,190)
Golden Developments
Holdings Ltd.		 Hong Kong Investment 2,928
2,928
100
100%
7,046		 4,199 4,199
E-Da Cultural Creative
IndustryCo.,Ltd.		 Kaohsiung City Cultural creativity 38,000
38,000
3,800
19%
15,615		 (27,786) (592)

333

Worthing Honor Holdings Ltd. British Virgin
Islands		 Investment 6,672
6,672
100
100%
2,944		 2 2
Cheng Hsin House
Management Co.		 Kaohsiung City Business
management and
service		 3,915
3,915
320
32%
2,014		 1 1
E United Japan Co., Ltd. Japan Purchase and sale
related to iron and
steel		 8,027
8,027
-		 47%
3,560		 3,249 1,527
Skylark Hot Spring & Resort
Corp.		 Kaohsiung City Hotel industry 11,700
11,700
1,170		 14.63%
407		 (1,978) (289)
Eda Entertainment CO., LTD Kaohsiung City Entertainment
industry		 74,100
74,100
7,410
19%
51,989		 (32,366) (6,150)
Li Hui Development Co., Ltd. Kaohsiung City Business invested 321,216
321,216
56,468		 44.56%
313,941		 (2,778) (1,238) Note
1
Ji Chang Enterprise CO., LTD Kaohsiung City Business invested 5,050
5,050
946
45%
4,977		 (185) (83) Note
1
Yieh United Steel Corporation Kaohsiung City Iron and steel
business		 4,579,423
4,489,395
609,803		 24.39%
3,969,169		 163,352 34,400 Note
1
Hong Yuh Assets Management
Co.,Ltd.		 Kaohsiung City Business
management and
service		 338,000
60,000
37,000		 67.27%
253,910		 (88,103) (37,033)
E-Da Visual Effects Company
Limited.		 Kaohsiung City Entertainment
industry		 10,393
10,393
1,470
49%
2,334		 (10,751) (5,268)
Lian So(H.K)Co.,Limited HongKong Business invested 15,766
15,766
480
80%
14,512		 (1,350) (1,080)
Total 29,260,871
28,283,891
-		 - 29,046,325 1,816,593 1,210,065

Note 1: Due to the Company and Yieh United Steel and its subsidiaries Li-Hui and Zi Zhon's cross-shareholdings and mutual evaluations using the equity method, the investment gains and losses were subject to the treasury stock method. As such, related gains and losses of the Company recognized by Yieh United using the equity method were deducted from the gains and losses of the above mentioned investees for the current period.

334

Investor
Name		 Name of investee Location Service items Original amount of investment Original amount of investment Possessions bythe end of theperiod Possessions bythe end of theperiod Possessions bythe end of theperiod Investee
Profit or loss
for the current
period		 Investment
gains and
losses
recognized in
the current
period		 Note
Then end of the
current period		 The end of
previous year		 Number of
shares
(thousand
shares)		 ratio Carrying
amount
Shin Phui Steel Co.,
LTD.		 Groupco Technology Taichung
City		 RADIO 37,492
37,492
3,830
42.53%
4,339		 (2,124)
(903)
Yieh United Steel
Corporation		 Kaohsiun
gCity		 Business related
to iron and steel		 24,562
24,562
3,178
0.13%
20,682		 163,352
204		 Note 2
Gen-Wan Technology
Corp.		 EMMT Systems
Corporation		 Taichung
City		 Manufacture and
distribution of
military model of
printed circuit
boards		 27,376
27,376
2,738
7.41%
27,448		 39,681
3,078
EMMT Systems
Corporation		 Groupco Technology Taichung
City		 RADIO 45,000
45,000
4,500
49.97%
5,098		 (2,124)
(1,061)
Applied Wireless
Identifications Group,Inc.		 San
Francisco,
U.S.A.		 RFID 242,545
242,545
40,488
91.47%
115,551		 20,967
19,179
Unipattern Corp. Taipei
City		 Computer and
peripheral
equipment
manufacturing
industry		 39,960
-		 3,700
41.11%
43,425		 (2,443)
3,542
Applied Wireless
Identifications
Group,Inc.		 AWID Asia Co., Ltd. Kaohsiun
g City		 Telecommunicati
ons equipment
wholesale
industry		 80,915
(USD 2,509)

67,193
(USD 2,047)

3,030
100%
18,810
(USD 583)

(1,146)
(USD 36)

(1,146)
(USD 36)
Champion Logistic Inc. Tycoons Steel International
Co.,Ltd.		 Cayman
Islands		 Investment 645,000
(USD 20,000)
656,500
(USD 20,000)
20,000
38.46%
29,146
(USD 904)
(25,534)
(USD 791)
(9,821)
(USD 304)

335

Tycoons Steel
International Co., Ltd.		 Guang Lian Steel (Vietnam)
Co., Ltd.		 Vietnam Business related
to iron and steel		 1,415,775
(USD 43,900)

1,418,040
(USD 43,200)

43,900
100%
6,046
(USD 187)

(20,863)
(USD 646)

(20,863)
(USD 646)
pre-payment for
shares-Guang Lian Steel
(Vietnam)Co.,Ltd.		 Vietnam Business related
to iron and steel		 - - - - - - - Note 1
Shin Yang Steel Co.,
Ltd.		 Hong Yuh Assets
Management Co.,Ltd.		 Kaohsiun
g City		 Business
management and
service		 - 160,000
-		 - - (88,103)
(21,388)
Yieh United Steel
Corporation		 Kaohsiun
gCity		 Business related
to iron and steel		 17,385
17,385
2,195
0.09%
14,287		 163,352
141		 Note 2
Sin Bang Investment &
Development Co., Ltd.		 Tangeng Iron Works Co.,
Ltd.		 Kaohsiun
g City		 Purchases and
sales related to
iron and steel.		 265,482
265,482
7,224
2.06%
247,887		 503,350
10,389
Kuo Chang Enterprise
Co., Ltd.		 Yieh United Steel
Corporation		 Kaohsiun
gCity		 Business related
to iron and steel		 439,197
439,197
56,817
2.27%
369,882		 163,352
3,712		 Note 2
Eliter International Corp Kaohsiun
g City		 Construction and
disposal of
buildings		 219,977
206,400
21,558
2.50%
214,897		 (126,830)
(3,186)

Note 1: In the first quarter of 2015, the impairment losses have been fully recorded.

Note 2: Due to the Company and Yieh United's cross-shareholdings and mutual evaluations using the equity method, the investment gains and losses were subject to the treasury stock method. As such, related gains and losses of the Company recognized by Yieh United using the equity method were deducted from the gains and losses of the above mentioned investees for the current period.

336

Investor
Name		 Name of investee Location Service items Original amount of
investment		 Original amount of
investment		 Possessions by the end of the period Possessions by the end of the period Possessions by the end of the period
Investee
Profit or loss
for the current
period		 Investment
gains and
losses
recognized
in the current
period
Note
Then end
of the
current
period		 The end of
previous
year		 Number of
shares
(thousand
shares)		 ratio Carrying
amount
Kuo Chang Enterprise
Co.,Ltd.		 Tangeng Iron Works Co.,
Ltd.		 Kaohsiung
City		 Purchases and sales
related to iron and steel		 786,714
820,554
21,328		 6.09%
1,030,225
503,350
31,571
United Brightening
Development Corp.		 Chao Ying Investment
Development Co.,,Ltd.		 Kaohsiung
City		 Investment 341,992
288,992
30,400
100%
307,903
(1,229)
(1,229)
Yieh United Steel
Corporation		 Kaohsiung
City		 Business related to iron
and steel		 449,508
449,508
58,151		 2.33%
378,502
163,352
3,735		 Note
1
Champion Logistic Inc. Samoa Investment 49,376
49,376
1,500		 2.56%
44,680
(1,050)		 (27)
Da Yao Engineering &
ConsultingCo.,Ltd.		 Kaohsiung
City		 Business management
and service		 199
199
20		 1.00%
220
160
2
TANGENG IRON WORKS
CO.,LTD.		 Kaohsiung
City		 Purchase and sale related
to iron and steel		 1,177,838 1,177,838
32,050		 9.16%
1,528,058
503,350
46,092
Tycoons Steel International
Co.,Ltd.		 Cayman
Islands		 Investment 9,374
9,374
300		 0.58%
437
(25,534)
(147)
Eliter International Corp Kaohsiung
City		 Construction and
disposal of buildings		 70,393
66,048
6,898
0.8%
68,775
(126,830)
(1,012)
Chao Ying Investment
Development Co.,,Ltd.		 Tangeng Iron Works Co.,
Ltd.		 Kaohsiung
City		 Purchase and sale related
to iron and steel		 336,957
290,251
8,898		 2.55%
305,329
503,350
11,898
Hong Yuh Assets
Management Co.,Ltd.		 Pt.Yieh Ferro Oriental Indonesia Tradingbusiness 9,265
9,265
400
40%
3,896
(4,926)		 (1,970)
Pt. E-United Ferro Indonesia Indonesia Metal manufacturing
industry		 93,462
79,830
250
100%
62,556
(13,821)
(13,821)
Pt.Yieh Ferro Indonesia Indonesia Metal manufacturing
industry		 1,633
-		 50
10%
1,493
(1,411)
(141)
Pt.Genba Mvlti Mineral Indonesia Nickel miningbusiness 273,875
205,975
9,765
49%
263,869
(19,960)		 (10,006)
Prepayment of shares -. Pt
Genba Indo Resources		 Indonesia Nickel mining business 9,371
9,371
-		 - 9,371
-		 -
Lian So(H.K)Co.,
Limited		 Pt. Yieh Ferro Indonesia Indonesia Metal manufacturing
industry		 14,112
(USD 450)
-		 450 90% 13,440
(1,411)
(1,270)
Yieh Hsing Enterprise
Co., Ltd.		 Great Emperor Hotel Co.,
LTD.		 Kaohsiung
City		 Hotel industry 2,100,000
1,800,000
210,000
100%
-(Note 2)		 (11,963)
(18,343)		 Note
3
Kingsgarden International
Co.,LTD.		 Kaohsiung
City		 Development and leasing
of residence and
buildings and operation
of department stores.		 2,150,000
1,880,000
215,000
100%
-(Note 2)		 (11,478)
(17,906)		 Note
3
United Winner Metals L.P Virginia,
U.S.A.		 Steel recycling industry 109,371
110,469
-		 33.75%
85,727
11,752
3,966

337

Cheng Shin Security Co.,
Ltd.		 Kaohsiung
City		 Security system service
industry		 4,000
4,000
400
10%
4,328
(1,464)
(146)
Cheng Hsin House
Management Co.		 Kaohsiung
City		 Maintenance,
management and
consultant of utilities,
air-conditioning, and
parkinglots		 750
750
75		 7.50%
472
2
-
Eliter International Corp Kaohsiung
City		 Building construction 639,772
639,772
64,043		 7.42%
638,480
(126,830)
(9,237)
E-da development Co., Ltd. Kaohsiung
City		 Recreational
development industry		 390,380
390,380
39,038		 5.94%
252,849
(249,488)
(14,824)
Yieh United Steel
Corporation		 Kaohsiung
City		 Steel-related 20,204
20,204
2,542		 0.10%
16,548
163,352
163		 Note
1
Kingsgarden
International Co.,LTD.		 I-Hwa International Co., Ltd. Kaohsiung
City		 Residence and building
development and rental
industry		 4,200
4,200
420
70%
2,564
(2,305)
(1,614)

Note 1: Due to the Company and Yieh United Steel's cross-shareholdings and mutual evaluations using the equity method, the investment gains and losses were subject to the treasury stock method. As such, related gains and losses of the Company recognized by Yieh United using the equity method were deducted from the gains and losses of the above mentioned investees for the current period.

Note 2: The Company sold land no. 16, 17 and 19 at Area Eastern Dragon, District Gushan, Kaohsiung to Great Emperor Hotel CO., LTD.in December 2012. The unrealized gain from the disposal of land is NTD 4,968,461, 000. After offsetting the investment using the equity method, the balance of NTD 943,410,000 was recorded as “Other non-current liabilities-other.” Note 3: The internal profits subject to the basis of the consolidated financial statements have been deducted. Note 4: The transactions between the above mentioned parent companies and subsidiaries have been offset.

338

Appendix X

Yieh Phui Enterprise Co., Ltd. and its subsidiaries

Disclosure of information related to investment in mainland China

1 January to 31 December 2016

1 January to 31 December 2016 31 December 2016 31 December 2016 31 December 2016 31 December 2016 31 December 2016 31 December 2016 31 December 2016
Unit: NT thousand dollars and thousand dollars in foreign currency
Investor Name of
Chinese
investee		 Service items Actual
paid-in
capital		 Investments
(Note 1)		 Aggregate
investment
amount
remitted from
Taiwan at the
beginning of
the period		 Amount remitted from
Taiwan or recollected as of
currentperiod		 Aggregate
investment
amount
remitted from
Taiwan at the
end of the
period		 Profit and
loss of
the
investee
as of
current
period
The
shareholding
ratio of the
Company's
investment,
directly or
indirectly		 Investment
gain (loss)
recognized
in current
period
(Note 2)		 Investme
nt as of
the end
of
current
period
Carrying
amount		 Investme
nt
revenue
transferr
ed back
to
Taiwan
as of the
end of
the
period
Outgoing Recollected
Yieh Phui
Enterprise
Co.,Ltd.		 Yieh Phui
(China)
Technomaterial
Co., Ltd..		 Pickling steel
coils, cold rolled
coil,
manufacture and
distribution of
galvanized and
stoving-varnishe
d steel cois

7,617,450
(USD
236,200)
(Note 6)


2. 1		 7,530,375
(USD
233,500)


－		 － 7,530,375
(USD
233,500)


1,137,16
5
100%
1,137,165
(2.b)

9,802,74
9
－
Changshu
Changhui
Trading Co.,
Ltd.		 Trading of steel
goods		 46,490
(RMB
10,000)


2. 1
(Note 4)		 － － － － 369
100%
369
(2.b)

47,446
－
Tianjin Lianfa
Precision Steel
Corporation.
(Note 5)		 Manufacture
and distribution
of upscale
special
alloy-steel coils		 435,375
(USD
13,500)


2. 1
(Note 5)		 － － － － (113,460)
100%
(113,460)
(2.b)

11,448
－
AWID
Asia Co.,
Ltd.		 AWID China
Co., Ltd.
(Shanghai)		 Wholesale of
telecommunicati
on equipment		 20,790
(RMB
4,472)

1.		 15,983
(RMB 3,438)

4,807
(RMB
1,034)

－		 20,790
(RMB 4,472)

(3,335)
100%
(3,335)
(2. c)

4,691
－
AWID China
Co., Ltd.
(Changshu)
(Note 7)		 Wholesale of
telecommunicati
on equipment		 9,675
(USD 300)

1.		 － 9,675
(USD 300)

－		 9,675
(USD 300)

(936)
100%
(936)
(2. c)

8,379
－

Name of investor Name of Chinese investee Aggregate investment amount remitted Investment amount approved by Limitation on investment in

339

from Taiwan to Mainland China at the
end of the period		 Investment Commission of Ministry
of Economic Affairs		 Mainland China by Investment
Commission of Ministry of
Economic Affairs
Yieh Phui Enterprise
Co.,Ltd.		 Yieh Phui (China) Technomaterial
Co.,Ltd..		 7,530,375 (USD 233,500) 7,617,450 (USD 236,200) 16,522,591
AWID Asia Co., Ltd. AWID China Co.,Ltd.(Shanghai) 20,790(RMB 4,472) 20,790(RMB 4,472) 80,000
AWID China Co.,Ltd.(Changshu) 9,675(USD 300) 9,675(USD 300) 80,000

340 

  - Note 1: There are three types of investment method. Mark one of the types from the following:

     - (1) Direct investment in mainland China.

     - (2) Investment in China through a company in a third region (Please list such company)

        1. Yieh Phui (Hong Kong) Holdings Limited

     - (3) Others.

  - Note 2: Investment gains and losses recognized in the current period:

     - (1) If there is no investment gains or losses for business under preparation. Please describe explicitly.

     - (2) Herewith are the three types of investment gains and losses. Please describe explicitly.

        1. Certified financial statements audited by CPA firms in Taiwan which have partnerships with international CPA firms.

        2. Financial statements audited by a CPA firm of Taiwan's parent company.

        3. Other issues.

  - Note 3: For amounts stated in foreign currency in this chart, the exchange rate as of the date of the Financial Statement is adopted for the carrying value of investments at the end of the period (USD:NTD=1:32.25 `；` RMB:NTD=1:4.649). The gains and losses recognized in the period adopted the average exchange rate during 1 January to 31 December 2016 (USD:NTD= 1:32.2719 `；` RMB:NTD=1:4.8629) for currency conversion.

  - Note 4: The investment in Changshu Changhui Trading Co., Ltd. was made by Yieh Phui (China) Technomaterial Co., Ltd.. with its own capital of RMB 10,000,000. Aggregate investment amount is RMB 10,000,000 as of 31 December 2016.

  - Note 5: The Company originally held 100% of interests in Tianjin Lianfa Precision Steel Corporation. in China through Hsing Jui Investments Limited (the paid-up capital was USD 13,500,000). The said interests have been transferred to Yieh Phui (China) Technomaterial Co., Ltd.. in the consideration of RMB 20,000,000 on July 2015. The previously-mentioned consideration has been remitted to the Company in Taiwan. After deducting the mandatory tax, the actual amount received is RMB 19,990,000 (approximately USD 3,213,000).

  - Note 6: Yieh Phui (China) Technomaterial Co., Ltd.. has transferred earnings of USD 2,700,000 into capital in April 2016. E Hui (China) Technology Materials Co., Ltd. in April 2016 transferred the capital increase in earnings of USD 2,700.

  - Note 7: AWID China Co., Ltd. (Changshu) was established in September 2016 and was invested by AWID Asia Co., Ltd., where AWID Asia Co., Ltd. holds 100% of interests. Such information has been filed with the Investment Commission in accordance with regulations.

  - Note 8: The investment in Changshu Chiyang New Construction Material Co., Ltd. has been recollected in February 2013 by the disposal of 100% of the shareholdings. The amount of investment and earnings has been recovered from Jiansu Jiayang construction and installation. The new building materials Changshu Kai Yeung Investment Co., Ltd. had been liquidated in 2012. As such:

     - (1) Aggregate amount of investment in Chinese subsidiaries disposed from Taiwan is: NTD 498,539,000.

     - (2) Aggregate amount of investment recollected from Chinese subsidiaries disposed is: NTD 69,518,000.

  1. Major transactions between the Company and Chinese investees or companies in the third region, directly or indirectly, are as follows:

  2. Major transactions with Chinese investees: please refer to note 13, appendix 6 to 8.

  3. Financing with Chinese investees: please refer to note 13 and appendix 1.

  4. Endorsement/Guarantees for Chinese investees: please refer to note 13 and appendix 2.

341

14. Segment information
(I)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 reporting segments are separated as follows:
A. Yieh Phui Business Group: Mainly Engages in the production and sales of coated steel, and the production and installation
of overhead cranes.
B. Yieh Hsing Business Group: Mainly engages in the production and sales of processed steel coils and steel tubes.
C. Yieh Phui (China) Business Group: Mainly engages in the production and sales of coated steel.
D. Other Business Groups: Mainly engages in the production and sales of steel-related products, production and sales of
military supplies, wholesale of telecommunication appliances, and investment activities.
(II)Measurement basis:
The decision maker of the consolidated entities monitors the operation results of the operation units and make decisions on
resource allocation and performance evaluation. The segment's performance is evaluated by its operation income (loss) and is
measured in consistent with the principles used in preparing consolidated financial statements. Because the consolidated
companies do not include assets and liabilities in management report, the measurement amounts for segment assets and
liabilities are zero. The accounting policy of segment reporting is the same as that described in Note 2 of the consolidated
financial statements.
(III)Segment financial information:
2016
Yieh Phui
(China)
Item Yieh Phui
Business Group		 Yieh Hsing
Business Group		 Business
Group		 Others Adjustment and
Elimination		 Total
Revenue
Revenue from external
customers		 $23,544,241 $7,172,643 $19,027,254 $3,916,462 ($813,190) $52,847,410
Revenue from inter-
segment sales		 323,424 99,869 848,513 76,634 (1,348,440) -
Total revenue $23,867,665 $7,272,512 $19,875,767 $3,993,096 ($2,161,630) $52,847,410
Segment income (loss) $2,064,727 ($37,278) $1,766,217 $16,548 $33,823 $3,844,037
Non-operating revenues
and expenses		 (471,965)
Net profit before tax $3,372,072
Income tax expense
(gain)		 993,527
Net profit after tax $2,378,545
Total assets $82,036,490
Total liabilities $51,792,511
2015
Yieh Phui
(China)
Item Yieh Phui
Business Group		 Yieh Hsing
Business Group		 Business
Group		 Others Adjustment and
Elimination		 Total
Revenue
Revenue from external
customers		 $21,798,574 $7,344,046 $17,487,220 $3,488,645 ($333,651) $49,784,834
Revenue from inter-
segment sales		 425,024 160,112 383,566 95,816 (1,064,518) -
Total revenue $22,223,598 $7,504,158 $17,870,786 $3,584,461 ($1,398,169) $49,784,834
Segment income (loss) $558,658 ($269,953) $775,983 ($258,454) $55,443 $861,677
Non-operating revenues
and expenses		 (2,458,392)
Net profit before tax ($1,596,715)
Income tax expense
(gain)		 18,122
Net profit after tax ($1,614,837)
Total assets $76,359,996
Total liabilities $47,356,151

342

(IV) Information on product and service:

Revenue from main products and services of the Company's continuing operations is classified by operating segments. Please refer to the disclosure of revenue by segments.

(V) Geographical information:

  1. Revenue from external customers (Revenue was categorized based on countries where customers are located.)
Region
Taiwan
America
Asia
Europe
Other regions
Total		 2016
2015
$17,993,200
$14,964,634
7,267,810
7,236,324
24,302,802
23,837,438
2,137,112
2,157,147
1,146,486
1,589,291
$52,847,410
$49,784,834

2. Non-current assets:

Region
Taiwan
Mainland China
Other regions
Total		 December 31, 2016
December 31, 2015
$40,360,055
$38,863,267
15,735,071
14,959,488
50,117
-
$56,145,243
$53,822,755

(VI) Major customers: No customer has reached the disclosure standards.

343

Appendix II Individual Financial Statement for the Last Fiscal Year

==> picture [173 x 30] intentionally omitted <==

Crowe Horwath (TW) CPAs

Member Crowe Horwath International

27F., No.6, Siwei 3 Rd., Lingya Dist., Kaohsiung, Taiwan R.O.C. Tel: (07) 3312133 Fax: (07) 3331710

AUDIT REPORT OF THE ACCOUNTANTS

To Yieh Phui Enterprise Co., Ltd.

Audit Report

The accountants have audited the Individual Financial Statements of Yieh Phui Enterprise Co., Ltd. (“Yieh Phui” or the “company”), which include the Balance Sheet as of 31 December 2016 and 2015, Statement of Comprehensive Income, Statement of Changes in Equity, Cash Flow Statement, and Notes to the Individual Financial Statements (including a Summary of Significant Accounting Policies) for the period 1 January to 31 December of 2016 and 2015.

Based on our review, our findings, and the audit reports of other accountants (please refer to the "Other Matters" section), the Individual Financial Statements have been compiled in accordance with the Regulations Governing the Preparation of Financial Reports and are sufficient in presenting the financial position of Yieh Phui as of 31 December 2016 and 2015, its financial performance, and its cash flow for the period of 1 January to 31 December of 2016 and 2015.

Basis of the Audit

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Individual Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards (GAAS). Our responsibility under the above-mentioned regulations will be further explained in the section titled "Accountant's Responsibility in Auditing the Individual Financial Statements." We have complied with the ethical requirements for accountants, fulfilled the relevant responsibilities under such requirements, and we have maintained our independence from Yieh Phui. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit.

Key Audit Matters

Key audit matters refer to the most vital matters in the process of auditing of 2016 Individal

344

Individual Financial Statements of Yieh Phui based on the accountants’ professional judgment. These matters have been dealt with during the process of auditing and compiling the Individual Financial Statements and in the preparation of our audit opinion. As such, we do not respond to each key matter individually. Herewith, we recite the key matters regarding the Individual Financial Statements of Yieh Phui in 2016:

I. Timing of Sales Revenue Recognition

Please refer to: note 4(25) of the Individual Financial Statements for accounting policies regarding revenue recognition; note 5(2)1. of the Individual Financial Statements for critical accounting estimates and assumptions regarding revenue recognition; and note 6(26) of the Individual Financial Statements for details regarding revenue recognition. Description of key audit matters:

The timing of sales revenue recognition has to do with confirming the time of transfer of ownership and risk to the customer. Since the sales conditions for each major customer may differ, Yieh Phui determines whether to transfer the ownership and risk of goods sold to the customer according to the trading conditions of each order. As the timing of recognizing the sales revenue may have a major impact on Yieh Phui’s financial performance, we have thus included it as one of the key audit matters.

Audit process adopted:

Our audit process included investigating the effectiveness of the design and execution of internal controls at the time of trial sales for revenue recognition, conducting surveys to sample the trading conditions with major customers, and putting in place trial deadlines to determine the appropriateness of the timing of sales for revenue recognition. II. Inventory Valuation

Please refer to: note 4(12) of the Individual Financial Statements for the accounting policies regarding inventory valuation; note 5(2)5. of the Individual Financial Statements for critical accounting estimates and assumptions regarding inventory valuation; and note 6(7) of the Individual Financial Statements for details of inventory valuation.

Description of key audit matters:

Yieh Phui’s inventory amounted to NT$3,650,015,000 (total cost of inventory of NT$3,652,353,000 minus the allowance for inventory valuation losses of NT$2,338,000) on 31 December 2016, which accounted for 7.57% of total assets. The inventory valuation is based on the lower of the value of cost and net realizable value. Given that the valuation of net realizable value of inventory has a significant impact on critical evaluations and estimates, and since inventory valuation is dependent on the frequently volatile fluctuations of international metals prices, we have

345

thus included this item in the key audit matters.

Audit process adopted:

Our major audit process included obtaining valuation information of the cost and net realizable value of inventory, conducting surveys to sample estimated selling prices and the most recent sales records, and assessing the appropriateness of management's basis for estimating the net realizable value.

Other Matters

Part of the Individual Financial Statements for 2016 and 2015 relating to investee(s) recognized under the equity method were audited separately by other accountants. Those reports were used as input for assessing the values of the companies in the Individual Financial Statements of our audit report. The value of investments in affiliated companies recognized under the equity method as of 31 December 2016 and 2015 were NT$4,422,752,000 and NT$3,808,043,000, respectively, each accounting for 9.17% and 8.40% of total assets. The share of profits from affiliated companies using the equity method in 2016 and 2015 were NT$123,277,000 and (NT$189,732,000), respectively, each accounting for 4.09% and 17.82% of income before tax.

The Management’s Responsibility and the Governing Body of the Individual Financial Statements

It is the management’s responsibility to prepare the Individual Financial Statements with appropriate expression in accordance with the Regulations Governing the Preparation of Financial Reports approved and published by the Financial Supervisory Commission. The company’s management is also responsible for the necessary internal controls when preparing the Individual Financial Statements so as to avoid material misstatements due to fraud or errors therein.

In preparing the Individual Financial Statements, the responsibility of management includes the assessment of the sustainability of the company, disclosure of related matters, and the adoption of a consistent accounting basis, unless the management intends to liquidate the company, terminate the business, or no practicable measures other than liquidation or termination of the business can be taken.

The governing bodies of Yieh Phui (including the Audit Committee) have the responsibility to oversee the financial reporting process.

The accountants’ Responsibility in Auditing the Individual Financial Statements

The purpose of our audit is to provide reasonable certainty that the Individual Financial Statements as a whole does not contain material misstatements due to fraud or errors. "Reasonable certainty" refers to a high level of credibility. Nevertheless, our audit, which was carried out

346

according to GAAS, does not guarantee that a material misstatement(s) will be detected in the Individual Financial Statements. There may still be material misstatements due to fraud or errors. If it could have been reasonably anticipated that misstated amounts, individually or in aggregate, would have influenced the economic decisions made by the users of the Individual Financial Statements, it will be deemed as material.

We have exercised professional judgment and maintained professional skepticism while abiding by GAAS in our audit. The following tasks have also been performed:

  1. Identified and evaluated the risk of material a misstatement(s) due to fraud or errors in the Individual Financial Statements, designed and carried out appropriate countermeasures for the assessed risks, and obtained sufficient and appropriate evidence as the basis for the audit report. As fraud may involve collusion, forgery, deliberate omissions, false statements, or violations of internal controls, the risks of material a misstatements due to fraud is greater than that due to errors.

  2. Acquired the necessary understanding of internal controls pertaining to the audit so as to provide appropriate audit procedures under such circumstances. Nevertheless, the purpose of such an understanding is not to provide any opinion on the effectiveness of the internal controls at Yieh Phui.

  3. Evaluated the appropriateness of the accounting policies adopted by management and the rationality of the accounting estimates and the relevant disclosures.

  4. Assessed the appropriateness of the going-concern principle adopted by management as well as any factors that may cause material risks to the company’s existence. If we are of the opinion that material risks exist in these matters or under these conditions, we will remind the users of the Individual Financial Statements to pay attention to relevant disclosures in the audit report, or revise the audit opinion if such disclosures are inappropriate. Our conclusion is based on the audit evidence obtained as of the date of the audit report. Nevertheless, there may be factors in the future that may cause the operations of Yieh Phui to be unstainable.

  5. Evaluated the overall expression, structure and contents of the Individual Financial Statements, including the relevant Notes, and whether the Individual Financial Statements fairly present the relevant transactions and events.

  6. Obtained adequate and appropriate audit evidence regarding financial information of Yieh Phui’s internal units so as to provide opinions for the Individual Financial Statements. We are responsible for the supervision and execution of auditing Yieh Phui and the preparation of the audit opinion.

347

Communications between us and the company’s governing body take account of the scope and timing of the planned audit and significant audit findings, including any significant deficiencies in the internal controls during the audit process.

We have also provided the governing body with our statement of independence in accordance with the professional ethics of accountants and communicated with the governing body the facts and issues that may be deemed to have an influence on our independence as accountants as well as other matters (including related protective measures).

Through communications with the governing body, we determined the key audit matters for the company’s 2016 Individual Financial Statements. Such matters have been explicitly highlighted in the audit report, but do not include information undisclosable by law or, in extremely rare cases and with reasonable anticipation, where we decided not to communicate specific items in the audit report as the negative effects of such disclosure would exceed the benefits gained for public interest.

Crowe Horwath (TW) CPAs Accountant: Huang, Ling-Wen

Accountant: Hsieh, Ren-Yao

No. of the official approval: FSC No. 10200032833

21 March 2017

348

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Standalone Balance Sheet
For the Years Ended December 31, 2016 and Unit: In Thousands of New
2015
December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015
Assets Notes Amount ％ Amount ％ Code Liabilities and equity Notes Amount ％ Amount ％
Current assets Current liabilities
Cash and Cash Equivalents 6 (I) $1,545,921 3 $1,753,811 4 ~~2~~100 Short-term loan 6 (XVI) $6,185,868 13 $7,909,065 18
Financial assets at fair value 6 (II) 91,783 - 100,107 - 2110 Short-term notes and bills
payable		 6 (XVII) 339,777 1 439,587 1
through profit or loss - 2150 Notes payable 642,048 1 604,833 1
Notes receivable - net 6 (III) 865 - 48,443 - ~~2~~170 Accounts payable 700,059 1 515,536 1
Accounts receivable-net 6 (IV) 1,246,049 3 951,132 2 2190 Construction contract 6 (V) 29,465 - 30,932 -
Accounts receivable--related
parties (net)		 ~~7~~ 182,160 - 449,474 1 ~~2~~200 Other payables 6 (XVIII) 567,757 1 451,782 1
Construction contracts
receivable		 6 (V) 301,108 1 264,088 1 ~~2~~230 Current income tax
liabilities		 275,785 1 - -
Construction contract
receivables –relatedparties		 6 (V). 7 345,888 1 184,524 - ~~2~~250 Provision - current 6 (XIX) 40,271 - 75,851 -
Other receivables 6 (VI) 134,250 - 61,592 - ~~2~~310 Advance receipts 1,508,314 3 358,153 1
Other Receivables - Related
Parties		 ~~7~~ 323,800 1 15,891 - ~~2~~320 Long-term liabilities- 6 (20) 787,147 2 291,200 1
Current income tax assets - - 6,558 - current portion
Inventory 6 (VII) 3,650,015 7 2,193,707 6 ---------------- ---- ---------------- ----
Prepayment 6 (VIII) 284,301 1 206,729 - 21XX Total current liabilities 11,076,491 23 10,676,939 24
Other financial assets - 8 93,817 - 55,066 - ---------------- ---- ---------------- ----
---------------- ---- ---------------- ---- Non-current liabilities
Total current assets 8,199,957 17 6,291,122 14 2540 Long-term loans 6 (20) 8,803,213 19 7,986,274 18
---------------- ---- ---------------- ---- ~~2~~570 Deferred income tax
liabilities		 6 (XXXI) 108,870 - 100,664 -
Non-current Assets ~~2~~640 Net defined benefit
liability- non-current		 6 (XXI) 704,847 1 676,491 1
Financial assets at fair value 6 (II) 9,999 - 9,999 - ~~2~~645 Deposit received 2,000 - 2,000 -
through profit or loss ---------------- ---- ---------------- ----
Available- for-sale financial
assets -non-current		 6 (X) 46,575 - 52,425 - 25XX Total noncurrent
liabilities		 9,618,930 20 8,765,429 19
Financial assets carried at
cost- non-current		 6 (XI) 481,984 1 460,071 1 ---------------- ---- ---------------- ----
Investments in debt
instruments with no active		 6 (XII) 170,654 - - - 2XXX Total liabilities 20,695,421 43 19,442,368 43
- non-current ---------------- ---- ---------------- ----
Investment using equity method 6 (IX) 29,046,325 60 27,874,922 61 Capital
Property, plant and equipment 6 (XIII) 8,559,554 18 8,939,016 20 3110 Capital of Common Shares 6 (XXII) 17,180,905 35 17,180,905 39
Investment property, net 6 (XIV) 1,287,158 3 1,288,006 3 ~~3~~200 Capital surplus 6 (XXIII) 4,737,131 10 4,673,787 10
Deferred income tax assets 6 (XXXI) 296,756 1 275,511 1 Retained earnings
Refundable Deposit 3,844 - 5,715 - ~~3~~310 Legal reserve 6 (XXIV) 2,448,261 5 2,448,261 5
Other financial assets - non-
current		 ~~8~~ 40,857 - 47,422 - ~~3~~320 Special Reserve 6 (XXIV) 327,757 1 327,757 1
Long-term prepaid rents 6 (XV) 89,409 - 82,700 - ~~3~~350 Undistributed earnings 6 (XXIV) 3,010,948 6 608,642 1
---------------- ---- ---------------- ---- ~~3~~400 Other equity 6 (XXV) -167,351 - 645,189 1
Total Non-Current Assets 40,033,115 83 39,035,787 86 ---------------- ---- ---------------- ----
3XXX Equity 27,537,651 57 25,884,541 57
---------------- ---- ---------------- ---- ---------------- ---- ---------------- ----
Total assets $48,233,072 100 $45,326,909 100 1XXX Total liabilities and equity $48,233,072 100 $45,326,909 100
================ ==== ================ ==== ================ ==== ================ ====
(Please refer to the
Chairperson: Lin, I-Shou ~~349~~
Manager: Wu, Lin-Maw		 Accounting Manager: Lin,Jian-Hong
Yieh Phui Enterprise Co., Ltd.
Standalone Statement of Comprehensive Income
For the Years Ended December 31, 2016 and
2015 Unit: In Thousands of New Taiwan Dollars
2016 2015
Code Item Notes Amount ％ Amount ％
4000 Operating Revenue 6 (XXVI) $23,867,665 100 $22,223,598 100
5000 Operating cost 6 (VII) 20,009,747 84 20,354,559 92
----------------- ---- ----------------- ----
5900 Gross profit (loss) 3,857,918 16 1,869,039 8
Operating expenses
6100 Selling expenses 1,396,827 5 959,146 3
6200 Administrative Expense 396,364 2 351,235 2
----------------- ---- ----------------- ----
6000 Total operating expenses 1,793,191 7 1,310,381 5
----------------- ---- ----------------- ----
6900 Operating income (loss) 2,064,727 9 558,658 3
----------------- ---- ----------------- ----
Non-operating income and
expenses
7010 Other income 6 (XXVII) 113,804 - 276,232 1
7020 Other gains and losses 6 (XXVIII) -20,049 - 502,611 2
7050 Finance costs 6 (XXX) -355,796 -1 -319,100 -1
7070 Share of the loss (profit) of
subsidiaries, associates and
joint ventures recognized under
equity method		 1,210,065 5 -2,083,059 -9
----------------- ---- ----------------- ----
7000 Total non-operating income and
expenses		 948,024 4 -1,623,316 -7
----------------- ---- ----------------- ----
7900 Net income (loss) before tax 3,012,751 13 -1,064,658 -4
7950 Income tax expenses (or
benefits)		 6 (XXXI) 510,746 2 -110,872 -
----------------- ---- ----------------- ----
8200 Net income (loss) 2,502,005 11 -953,786 -4
----------------- ---- ----------------- ----
Other comprehensive income
(loss), net:
Those that will not be
reclassified subsequently to
profit or loss:
8311 Re-measurement of defined
benefit plan		 -51,013 - -50,938 -
8330 Share of other consolidated
loss (profit) of subsidiaries,		 -37,215 - -29,730 -
8349 Income tax expense (or
benefits) relating to items		 -11,383 - -8,802 -
Items that may be reclassified
subsequently to profit or loss:
8362 Unrealized gain (loss) on
available-for-sale		 -5,850 - 223,374 1
financial assets
8380 Share of other consolidated
loss (profit) of subsidiaries,
associates and joint ventures
recognized under equity method		 -949,026 -3 12,054 -
8399 Income tax expense (or
benefits) relating to items
that may be		 -142,336 -1 -28,759 -
reclassified to profit or loss
----------------- ---- ----------------- ----
8300 Other comprehensive income
(loss), net		 6 (XXXII) -889,385 -4 192,321 1
----------------- ---- ----------------- ----
8500 Total comprehensive income
(loss), net		 $1,612,620 7 $-761,465 -3
================= ==== ================= ====
Basic earnings per share (NTD)
9750 Basic earnings per share 6(XXXIII) $1.46 $-0.56
================= =================
(Please refer to the notes to
the financial statement)
Chairperson:Lin, I-Shou Manager: Wu, Lin-Maw Accounting Manager:

350

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Standalone Statement of Changes in Equity
For the Years Ended December 31, 2016and
~~2~~015 Unit: In Thousands of New Taiwan Dollars
Other Equity Items
Capital Retained earnings Exchange differences
on		 Unrealized gain
(loss)		 Profit (loss) on
Item Common shares Capital
Surplus		 Legal reserve Special
reserve		 Undistributed
earnings		 translation of
foreign financial
statements		 on available-for-
sale financial
assets		 hedge instrument for
effective hedge		 Total equity
Balance as of January 1, 2015 $16,680,490 $4,627,688 $2,324,376 $327,757 $2,649,026 $625,476 $-235,257 $-9,217 $26,990,339
Earnings allocation and
distribution:
Legal reserve - - 123,885 - -123,885 - - - -
Cash dividends for common stock - - - - -333,610 - - - -333,610
Stock dividends for common stock 500,415 - - - -500,415 - - - -
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Total 500,415 - 123,885 - -957,910 - - - -333,610
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Net profit (loss) - - - - -953,786 - - - -953,786
Other comprehensive income (loss) - - - - -71,866 -42,009 289,899 16,297 192,321
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Total comprehensive income (loss) - - - - -1,025,652 -42,009 289,899 16,297 -761,465
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Changes in associated companies and
joint ventures		 - 9,924 - - -45,340 - - - -35,416
accounted for using equity method
Difference between the price
received from acquisition		 - 36,175 - - - - - - 36,175
or disposal of interest in
subsidiaries and book value
Change in ownership interests in
subsidiaries		 - - - - -11,482 - - - -11,482
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Balance as of December 31, 2015 17,180,905 4,673,787 2,448,261 327,757 608,642 583,467 54,642 7,080 25,884,541
Net profit (loss) - - - - 2,502,005 - - - 2,502,005
Other comprehensive income (loss) - - - - -76,845 -809,765 -7,080 4,305 -889,385
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Total comprehensive income (loss) - - - - 2,425,160 -809,765 -7,080 4,305 1,612,620
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Changes in associated companies and
joint ventures		 - 9,543 - - -11,648 - - - -2,105
accounted for using equity method
Difference between the price
received from acquisition		 - 45,136 - - - - - - 45,136
or disposal of interest in
subsidiaries and book value
Change in ownership interests in
subsidiaries		 - 8,665 - - -11,206 - - - -2,541
---------------- --------------
--		 ---------------- --------------
--		 --------------
--		 ---------------- ---------------- ---------------- ----------------
Balance as of December 31, 2016 $17,180,905 $4,737,131 $2,448,261 $327,757 $3,010,948 $-226,298 $47,562 $11,385 $27,537,651
================ ==============
==		 ================ ==============
==		 ==============
==		 ================ ================ ================ ================
(Please refer to the notes to the financial statement)
Chairperson :Lin, I-Shou Manager: Wu, Lin-Maw

351

Yieh Phui Enterprise Co., Ltd.
Statements of Cash Flows
For the Years Ended December 31, 2016 and
~~2~~015
Unit: In Thousands of New Taiwan Dollars
Item 2016 2015
Cash flow from operating activities
Net income (loss) before tax $3,012,751 $-1~~,~~064,658
Adjustments:
Income and expense items
Depreciation 528,387 501,676
Net loss (gain) from financial assets and liabilities at fair value
through profit or loss		 2,118 -10,787
Interest expense 355,796 319,100
Interest Income -3,696 -2,425
Dividend income -7,906 -11,948
Share of the loss (profit) of associates and joint ventures -1,210,065 2,083,0
Loss (gain) on disposal of property, plant and equipment 18,408 26,479
Reclassification of property, plant and equipment to expense 15,848 20,907
Gain (loss) on disposal of investment -150 -17,764
Impairment loss on non-financial assets 2,564 -
Gain from bargain purchase - -
Others 52,192 21,179
---------- -------
Total income and expense items -246,504 2,428,7
---------- -------
Changes in operating assets and liabilities
Net changes in operating assets
(Increase) decrease in held-for-trading financial assets 6,206 132,221
(Increase) decrease in notes receivable 47,801 -33,124
(Increase) decrease in accounts receivable -296,416 391,182
(Increase) decrease in accounts receivable- related parties 268,590 460,523
(Increase) decrease in construction contract receivables -198,384 -59,658
(Increase) decrease in other receivables -62,151 84,907
(Increase) decrease in inventories -1,460,500 738,139
(Increase) decrease in prepayments -77,572 -77,511
(Increase) decrease in other financial assets - 5,619
---------- -------
Total net changes in operating assets -1,772,426 1,642,2
---------- -------
Net changes in operating liabilities
Increase (decrease) in notes payable 37,215 69,285
Increase (decrease) in accounts payable 184,523 -
Increase (decrease) in construction contract payable -1,467 -5,793
Increase (decrease) in other payables 110,841 664
Increase (decrease) in provision -35,580 5,326
Increase (decrease) in advance receipts 1,150,161 217,291
Increase (decrease) in defined benefit liability, net -22,657 -27,733
---------- -------
Total net changes in operating liabilities 1,423,036 66,135
---------- -------
Total net changes in operating assets and liabilities -349,390 1,708,4
---------- -------
Total adjustments -595,894 4,137,2
---------- -------
Cash inflow (outflow) from operations 2,416,857 3,072,5
Interest received 3,298 16,231
Dividends received 25,606 23,048
Interest paid -354,151 -
Income tax refunded (paid) -87,723 -
---------- -------
Net cash provided by (used in) operating activities 2,003,887 2,677,0
---------- -------

(continued on next page)

352

Cash flows from investing activities
Acquisition of available-for-sale financial assets - -18,373
Acquisition of investments in debt instruments with no
active markets		 -170,654 -
Acquisition of financial assets carried at cost -21,913 -292,442
Disposal of financial assets carried at cost 150 97,576
Acquisition of the investment using equity method -976,981 -3,547,970
Proceeds received from capital reduction of investee
accounted for by using equity method		 - 1,250,651
Acquisition of property, plant and equipment -181,034 -417,626
Disposal of property, plant and equipment 76 -
Increases in refundable deposits - -1,590
Decreases in refundable deposits 1,871 -
Increase in other receivables - related parties -310,000 -
Increase in other financial assets -32,186 -9,565
Increase in other non-current assets -6,709 -
Decrease in other non-current assets - 2,400
------------ -----------------
Net cash provided by (used in) investing activities -1,697,380 -2,936,939
------------ -----------------
Cash flows from financing activities
Decreases in short-term loan -1,723,197 -862,848
Decrease in short-term notes and bills payables -100,000 -50,000
Issuance of long-term debts 1,600,000 7,180,000
Repayments of long-term debts -291,200 -4,464,000
Distribution of cash dividends - -333,610
------------ -----------------
Net cash provided by (used in) financing activities -514,397 1,469,542
------------ -----------------
Net increase (decrease) in cash and cash equivalents -207,890 1,209,603
Cash and Cash Equivalents, Beginning of Year 1,753,811 544,208
------------ -----------------
Cash and Cash Equivalents, End of Year $1,545,921 $1,753,811
============ =================
(Please refer to the notes to the financial report)
Chairperson: Lin, I-Shou Manager: Wu, Lin-
Maw		 Accounting
Manager:
Lin,Jian-Hong

353

Yieh Phui Enterprise Co., Ltd.

Notes to Standalone Financial Statement

December 31, 2016 and 2015

(Amount in Thousand NTD, Unless Otherwise Stated)

I. Company Profile

1. Yieh Phui Enterprise Co., Ltd. (hereinafter referred to as the Company) was established in April 1978,
currently a listed company in Taiwan Stock Exchange (hereafter referred to as TWSE). The Company engages
mainly in the processing, manufacturing marketing and import/export trading of  rolled steel coils,
refined steel,molded steel, steel / iron wires, galvanized / pre-painted / surface-treated metals.

2. The Company’s Board of Directors resolved on May 23, 2005 to merge (simplified merger) with Lien Kang
Heavy Industrial Co., Ltd, with the Company as the surviving company.The record date of the merger was set
on August 30, 2005.Consolidated Shares Every 2.5 common shares of Lien Kang Heavy Industrial Co., Ltd.
were converted into 1 common share of the Company. The Company issued additional 4,859 thousand common
shares for this merger. Rights and obligations of holders of the newly issued shares were the same as
those of the Company’s original shareholders.

3. Lien Kang Heavy Industrial Co., Ltd., incorporated on November 23, 1989, mainly engages in
manufacturing, processing and trading of the various mechanical spare parts, as well as pipe installation
and engineering design / manufacture / installation.

4. The Company's steel pipe department, due to its business expansion, was separated from the Company, and
was named as Shin Yang Steel Co. Ltd.. Relevant investment on this was approved by the Board of Directors
on January 18th, 2011, and a total of 191 employees were transferred to Shin Yang Steel Co., Ltd..

5. New Taiwan Dollars (NTD) shall be the functional currency of the Company, and the presentation currency
of the Company’s financial statements.

II. Approval date and procedures of the financial statements

The standalone financial statement was approved and announced by the board of directors on March 21, 2017.

III. Application of New and Amended International Financial Reporting Standards and Interpretations

(I) Effects of the adoption of new and amended IFRSs endorsed by the Financial Supervisory Commission
(“FSC”) : None.

(II) Effects of non-adoption of the new and amended IFRSs endorsed by FSC  or of the amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers: Pursuant to Jin Guan
Zheng Shen Zi No. 1050050021 and No. 1050026834 issued by the FSC, starting from 2017, the Company should
adopt the IASB issued and FSC endorsed scope of IFRSs [ consisting of International Financial Reporting
Standards (IFRS), International Accounting Standards (IAS), Interpretations of International Financial
Reporting Standards (IFRIC), and Interpretations of IASs (SIC)], as well as the relevant amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers.

354 

New, Revised, Amended Standards and Intrpretations

Effective Date issued by IASB (Note 1)

"Annual Improvements to IFRSs 2010-2012 Cycle"July 1, 2014 (Note 2)
"Annual Improvements to IFRSs 2011-2013 Cycle"July 1, 2014
"Annual Improvements to IFRSs 2012-2014 Cycle"January 1, 2016 (Note 3)
Amendments to IFRS10, IFRS12 and IAS28 “Investment Entities:January 1, 2016
Applying the Consolidation Exception”
Amendments to IFRS 11 in "Accounting for Acquisitions of Interests in
January 1, 2016
Joint Operations"
IFRS 14 "Regulatory Deferral Accounts"January 1, 2016
Amendments to IAS 1 in "Disclosure Initiative"January 1, 2016
Amendments to IAS 16 and IAS 38 in "Clarification of Acceptable Methods
January 1, 2016
of Depreciation and Amortization"
Amendments to IAS 16 and IAS 41 in "Agriculture: Bearer Plants"January 1, 2016
Amendments to IAS 19 in "Defined Benefit Plans: Employee Contributions"July 1, 2014
Amendments to IAS 36 in "Recoverable Amount Disclosures for Non-
January 1, 2014
Financial Assets"
Amendments to IAS39 in "Novation of Derivatives and Continuation of
January 1, 2014
Hedge Accounting"
IFRIC 21 "Levies"January 1, 2014
Amendments to IAS 27 in "Equity Method in Separate Financial
January 1, 2016
Statements"

Note 1: The aforementioned new, revised or amended standards or interpretations are effective
after the fiscal year beginning on or after the effective dates, unless stated otherwise.

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

Note 3: The amendment to IFRS 5 is applied prospectively to annual periods beginning on or after
January 1, 2016; the remaining amendments are retrospectively apply to annual periods beginning
on or after January 1, 2016. Except for the following, the application of  the aforementioned
new, amended, and revised standards and interpretations should not have any material impact on
the Company's accounting policies:

1. Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 "Fair Value Measurement", the IASB at the same time made an amendment to the
disclosure requirements in IAS 36 "Impairment of Assets"; as a result, the Company must disclose
more in every reporting period the recoverable amount of an asset or each cash-generating
unit.The amendments to IAS 36 clarify that the Company is required to disclose the recoverable
amount only upon an impairment accrual or reversal. Furthermore, the Company is required to
disclose the level of the fair value and key valuation assumption (Level 2 or Level 3) if the
recoverable amount of the impaired assets are measured on the basis of fair value less cost of
disposal.

355 

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

In accordance with the 2017 version of IFRSs, the amendment adds disclosure requirements on
various accounting items, impairment of non-financial assets, related party transactions,
goodwill,  as well as emphasizing certain requirements on recognition and measurement.
According to the amendment, where  the board chairman or president of another company or
institution is the same person as the board chairman or president of the issuer, or is the
spouse or a relative within the second degree or closer of the board chairman or president of
the issuer, a party, unless it can be established that no control or significant influence
exists, shall be deemed to have a substantive related party relationship. Furthermore, where the
transaction amount or balance of any single related party reaches 10% of the Company's
transaction amount or balance of that type of transaction, the Company shall present
individually the names  and relationships of each such related party.

 Besides, where the acquired company has significant differences between the expected benefits
and the actual benefits after the acquisition, the information shall be disclosed.

When applying the aforementioned amendment retrospectively in 2017, disclosure is required on
related party transaction and goodwill impairment.

Aside from the aforesaid effects, as of the issuance date of this standalone financial
statement, the Company continuously assesses the effects of the amendments to other standards
and interpretations. The result shall be disclosed when the assessment is completed. The result
shall be disclosed when the assessment is completed.

(III)  Effects of IFRSs issued by IASB but not yet endorsed by the FSC:

The Company is not applicable to IFRSs issued by IASB but not yet endorsed by the FSC.As of the
issuance date of this parent company only financial statement, no other effective dates of any
standards are announced by the FSC, except for IFRS 15 and IFRS 9 being effective in and after
2018.
New, Revised, Amended Standardsand Intrpretations Effective Dates Announced by IASB
Amendments to IFRS 2 in "Classification and Measurement of Share-based
Payment Transactions" January 1, 2018
Amendment to IFRS4 “Applying IFRS 9 'Financial Instruments' With IFRS
4 Insurance Contracts” January 1, 2018
IFRS 9 "Financial instruments" January 1, 2018
Amendments to IFRS 9 and IFRS 7 in "Mandatory Effective Date and
Transition Disclosures" January 1, 2018
Amendments to IFRS 10 and IAS 28 "Sales or Contributions of Assets Undecided
between Its Associate/Joint Venture"
IFRS 15 "Revenue from Contracts with Customers" January 1, 2018
Amendments to IFRS 15 in "Clarifications of IFRS 15" January 1, 2018
IFRS 16 "Leases" January 1, 2019
Amendments to IAS 7 "Disclosure Initiative" January 1, 2017
Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized
Losses" January 1, 2017
Amendments to IAS 40 "Transfers of Investment Property" January 1, 2018

356 

New, Revised, Amended Standards and IntrpretationsEffective Dates Announced by IASB
IFRIC 22 "Foreign Currency Transactions and Advanced Consideration"January 1, 2018
Annual Improvements to 2014-2016 Cycle: IFRS 1 "First-time Adoption of
IFRSs"January 1, 2018
Annual Improvements to 2014-2016 Cycle: IFRS 12 "Disclosure of
Interests in Other Entities"January 1, 2017
Annual Improvements to 2014-2016 Cycle: IAS 28 "Investments in
Associates and Joint Venture"January 1, 2018

Note: The aforementioned new, revised or amended standards or interpretations are effective
after the fiscal year beginning on or after the effective dates, unless stated otherwise. Except
for the following, the application of  the aforementioned new, amended, and revised standards
and interpretations should not have any material impact on the Company's accounting policies:

1. IFRS 9 "Financial Instruments"

(1) Recognition and measurement of financial assets

Financial assets, originally were within the scope of IAS 39 "Financial Instruments: Recognition
and Measurement", are subsequently measured at amortized cost or at fair value. IFRS 9
requirements for the classification of financial assets are stated below:

The Company's debt instruments, if of which the contractual cash flows come solely as payments
on principles and as interests on the principle amount outstanding, are classified and measured
as follows:

A.  Debt instruments, if of which the objective of holding is to  collect contractual cash
flows, are measured at amortized cost. Such financial assets are assessed for impairment
continuously with impairment loss recognized in profit or loss, if any. Interest revenue is
recognized in profit or loss by using the effective interest method;

B.  Debt instruments, if of which the objective of holding is to collect contractual cash flows
and to dispose of financial assets, are measured at fair value through other comprehensive
income (FVTOCI). Interest revenue of such financial assets is recognized in profit or loss by
using the effective rate method. Impairment of such financial assets is continuously assessed,
and the gains or losses of impairment, or gains or losses of exchange, shall be recognized in
profit or loss, while changes in fair value are recognized in other comprehensive income.

The Company's financial assets not belong to the above classifications are measured at fair
value, of which any changes are to be recognized in profit or loss. However, the Company may
choose to designate an equity investment that is not held for trading to be measured at fair
value through other comprehensive income upon initial recognition. Gains or losses of such
financial assets, except for dividend income which is recognized in profit or loss, are
recognized in other comprehensive income. No subsequent assessment for impairment is required,
andthecumulativegainorlossinfairvaluepreviouslyrecognizedinothercomprehensive

357

(2) Impairments of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”.
The credit loss allowance is required for financial assets measured at amortized cost, and financial assets mandatory
measured at FVTOCI, lease receivables, contract assets arising from IFRS 15  "Revenue from Contracts with Customer",
written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses
is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss
allowance measured at full lifetime expected credit losses is required for a financial asset, provided its credit risk
has increased significantly since initial recognition. However, a credit loss allowance for full lifetime expected
credit losses is required for accounts receivable consisting no material financial component.

Besides, for original credit-impaired  financial assets, the Company takes into account the expected credit losses on
initial recognition in calculating the credit-adjusted effective interest rate. The subsequent credit loss allowance
is measured upon the cumulative expected credit loss.

2. IFRS 15 “Revenue from Contracts with Customers”

IFRS 15, which sets up principles for recognizing revenue that apply to all contracts with customers, will supersede
IAS 18 "Revenue" and IAS 11 "Construction Contracts" and other interpretations. When applying IFRS 15, the Company
recognizes revenue by applying the following steps:

(1) Identify the contract with the customer;

(2) Identify the performance obligations in the contract;

  • (3) Determine the transaction price;

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

(5) Recognize revenue upon satisfaction of performance obligations. Upon the effectiveness of IFRS 15 and other
relevant amendments, the Company may elect to apply the Standard either retrospectively to each prior reporting period
presented or retrospectively recognize the cumulative effect of initial application to this Standard at the date of
"initial application".

3. IFRS16 "Leases"

IFRS 16, which governs the accounting standards for leases, will supersede IAS 17 "Leases" and other relevant
interpretations. When IFRS 16 is applicable and the Company as lessee, the Company shall recognize in the consolidated
balance sheets the right-of -use assets and lease liabilities for all leases, except for low-value and short-term
leases which shall be subject to accounting standards similar to "operating leases" in IAS 17. The standalone
statements of comprehensive income shall state clearly and respectively the depreciation expense of the right-of-use
assets, the interest expense accrued on the lease liability. The interest should be calculated using the effective
rate method. On the standalone statements of cash flows, cash payments for principle of lease liabilities shall be
classified in financing activities, whereas cash payments for interest of lease liabilities shall be classified in
operating activities. IFRS 16 is not expected to have any material impact on the accounting of the Company as a
lessor.

 Upon the effectiveness of IFRS 16, the Company may elect to apply the Standard either retrospectively to each prior
reporting period presented or retrospectively recognize the cumulative effect of initial application to this Standard
at the date of "initial application".

358 

Aside from the aforesaid effects, as of the issuance date of this standalone financial
statement, the Company continuously assesses the effects of the amendments to other standards
and interpretations. The assessment will be disclosed upon completion.

IV. Summary of Significant Accounting Policies

Accounting policies applied in preparing this standalone financial statement are listed
below.Unless otherwise stated, the policies shall be applicable to all reporting periods
presented.
  • (I) Statement of Compliance 
The standalone financial statement has been prepared in accordance with Regulations Governing
the Preparation of Financial Reports by Securities Issuers
  • (II) Basis of Preparation

1. Except for the following significant items, the standalone financial statements have been prepared under the historical cost convention: 

(1) Financial assets and liabilities measured at fair value through profit or loss, i.e. FVTPL,
(including derivatives).

  • (2) Available-for-sale financial assets measured at fair value.

  • (3) Cash-settled share-based payment arrangement measured at fair value. 

(4) Defined benefit liability is derived from retirement plan assets less the present value of
net defined benefit obligation.

2. Critical accounting estimates are required when preparing financial statements based on the
IFRSs endorsed by FSC. When the Company adopts the accounting policies, the management is
required to exercise judgments on highly judgmental or complex items or significant assumptions
and estimates with regards to the standalone financial statements. Please refer to Note 5 for
details.

3. In preparing  the standalone financial statement, subsidiaries, associates and joint ventures
are accounted for using equity method. To assure consistency between the standalone financial
statement and the consolidated financial statement on the current profit or loss, other
comprehensive income, and equity , any accounting differences arising from the standalone
preparation basis and the consolidated preparation from the standalone preparation basis and the
conolidated preparation basis are to be adjusted by adusting “Investments Accounted for Using
Equity Method”, “Share of Profit (Loss) of Subsidiaries, Associates and Joint Ventures
Accounted for Using Equity Method ”, “Share of Other Comprehensive Income of Subsidiaries,
Associates and Joint Ventures Accounted for Using Equity Method” and other equity items.

(III) Foreign Currency Translation

1. Foreign Currency Transaction and Balance

(1) Foreign currency transaction is translated to the functional currency by using the spot
exchange rate on the trade date or measurement date. Any translation differences occurred are to
be recognized in the current profit or loss.

(2) Balances of monetary assets and liabilities denominated in foreign currencies are translated
at the spot exchange rates prevailing at the balance sheet date. Exchange gains or losses are
recognized in profit or loss.

359 

(3) Non-monetary items measured at fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value was determined and exchange
differences arising are included in profit or loss for the year. However, where the changes in
fair value are recognized in other comprehensive income, any exchange component of that gain or
loss is recognized in other comprehensive income.Non-monetary items measured at historical cost
that are denominated in foreign currencies are recognized using the exchange rates as at the
transaction date and are not retranslated.

2. Translation from Foreign Operations

(1) The operating results and financial position of all  subsidiaries  and associates that have a
functional currency different from the presentation currency are translated into the presentation
currency as follows:

A. Assets and liabilities for each balance sheet presented are translated at the closing exchange
rate at the end of the financial reporting period;

B. Income and expenses for each statement of comprehensive income are translated at average
exchange rates of that period; and

C.  All resulting exchange differences are recognized in other comprehensive income.

(2) When the foreign operation partially disposed of or sold is an associate, exchange
differences that were recorded in other comprehensive income are proportionately reclassified to
profit or loss as part of the gain or loss on sale.In addition, if the Company still retains
partial interests in the former foreign associate after losing significant influence over the
former foreign associate, such transactions should be accounted for as disposal of all interest
in these foreign operations.

(3) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange
differences that were recorded in other comprehensive income are proportionately transferred to
the non-controlling interest in this foreign operation. In addition, if the Company still retains
partial interests in the former foreign subsidiary after losing control of the former foreign
subsidiary, such transactions should be accounted for as disposal of all interest in these
foreign operations.

(IV) Classification of current and non-current assets and liabilities

1. Rolled Steel (Product) Department

(1) Assets that meet one of the following criteria are classified as current assets:

A. Assets that are expected to be realized, or are intended to be sold or consumed within the
normal operating cycle;

B. Assets held primarily for trading purposes;

C. Assets that are expected to be realized within 12 months after 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 settle liabilities more than twelve months after the end of the
balance sheet date.

Otherwise they are classified as non-current assets.

(2)  Liabilities that meet one of the following criteria are classified as current liabilities:

A. Liabilities that are expected to be settled within the normal operating cycle;

B. Assets held primarily for trading purposes;

360

C. Liabilities that are expected to be settled within 12 months after the balance sheet date;

D. Liabilities for which the repayment date cannot be extended unconditionally to more than 12 months
after 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.

Otherwise they are classified as non-current liabilities

2. Heavy Industry Department

The business cycle of the majority of our construction contracts is longer than12 months. As a result,
assets and liabilities related to the construction contracts are classified as current or non-current
assets and liabilities according to the business cycle.

(V) Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank deposits and shortterm, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value (including time deposits with terms equal to or less than three months).

(VI) Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and financial liabilities are recognized
initially at fair value.Upon initial recognition, transaction costs that are directly attributable to the
acquisition or issuance of the financial assets and financial liabilities  (except for financial assets
and financial liabilities at fair value through profit or loss) should be added to, or subtracted from the
fair value of such financial assets and financial liabilities.Transaction costs that  are directly
attributable to financial assets and financial liabilities at FVTPL shall be recognized immediately in
profit or loss.

(VII) Financial assets measured at FVTPL

1. Financial assets at FVTPL refer to financial assets held for trading or financial assets designated
upon initial recognition at fair value through profit or loss.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
hedging instruments pursuant to hedge accounting. Financial assets that meet one of the following criteria
are designated as at FVTPL on initial recognition:

  • (1) Being a hybrid (combined) contract; or

  • (2) Capable of eliminating or significantly reducing inconsistency on measurement or recognition.

  • (3) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. 

2. On a regular way purchase or sale basis, financial assets at FVTPL are recognized and derecognized
using trade date accounting.

361 

3. Financial assets at FVTPL are initially recognized at fair value. Related
transaction costs are recognized in profit or loss. Such financial assets are
subsequently remeasured and stated at fair value, and any changes in the fair value of
such financial assets are recognized in profit or loss. For equity instrument
investments that do not have quoted prices in an active market or derivatives linked
to those investments that do not have quoted prices in an active market and must be
settled by delivery of such unquoted equity instruments, when their fair value cannot
be reliably measured, the Company would classify them as "financial assets measured at
cost ".

(VIII) Loans and receivables

1. Accounts receivable

Accounts receivables refer to trade receivables generated from goods sold or services
rendered in the normal course of business. They are recognized at fair value upon
initial recognition and subsequently measured at amortized cost using the effective
interest method, less any impairment, except for short-term receivables on which the
effect of discounting is immaterial.

2. Bond investments with no active market

(1) This refers to bond investments that do not have quoted prices in an active market
but have fixed or determinable payments and meet the following criteria:

A. Not classified as at FVTPL.

B. Not designated as available-for-sale.

C. Not for which the holder may not recover substantially all of its initial
investment, other than because of credit deterioration.

(2) On a regular way purchase or sale basis, bond investments with no active market
are recognized using trade date accounting.

(3) Bond investments with no active market are recognized at fair value as of the
transaction date plus transaction cost upon initial recognition. They are subsequently
measured at amortized cost using the effective interest method, less any impairment.
Amortization of discounts or premium under the effective interest method is recognized
in profit or loss

(IX) Available-for-sale financial assets

1.  Available-for-sale financial assets are non-derivatives that are either designated
in this category or not classified in any of the other categories

2. On a regular way purchase or sale basis, available-for-sale financial assets are
recognized and derecognized using trade date accounting.

3. 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.For equity instrument investments that do not have
quoted prices in an active market or derivatives linked to those investments that do
not have quoted prices in an active market and must be settled by delivery of such
unquoted equity instruments, when their fair value cannot be reliably measured, the
Company would classify them as "financial assets measured at cost ".

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(X) Impairments of Financial Assets

1. The Company 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 has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.

2. The criteria that the Company uses to determine whether there is objective evidence of an impairment
loss is as follows:

  • (1) Significant financial difficulty of the issuer or debtor;

  • (2) A breach of contract, such as a default or delinquency in interest or principal payments; 

(3) The Company granted the borrower a concession that a lender would not otherwise consider for economic
or legal reasons relating to the borrower’s financial difficulty;

  • (4) It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

  • (5) The disappearance of an active market for that financial asset because of financial difficulties; or 

(6) 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 unfavorable economic conditions that
correlate with defaults on the assets in the group.

(7) 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; or

(8) A significant or prolonged decline in the fair value of an investment in an equity instrument below
itscost
3. When the Company assesses that there has been objective evidence of impairment and an impairment loss
has occurred, accounting for impairment is made as follows in accordance with the category of financial
assets:

(1) Loans and Receivables

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.

(2) Financial assets measured at cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows discounted at the  financial asset’s original effective
interest rate, and is recognized in profit or loss. Impairment loss for this category shall not be
reversed subsequently.

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(3) 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, such impairment loss is then
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.

(XI) Derecognition of financial assets

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

1. The contractual rights to receive cash flows from the financial asset expire

2. The contractual rights to receive cash flows from the financial asset have been transferred
and the Company has transferred substantially all risks and rewards of ownership of the
financial asset.

3. To transfer the contractual rights to receive cash flows of ownership of the financial asset
but the Company has not retained the control of financial asset. On derecognition of a financial
asset in its entirety, the difference between the asset's carrying amount and the sum of the
consideration received or receivable and the cumulative gain or loss that had been recognized in
“other equity – unrealized gain/loss of available-for-sale financial assets” under other
comprehensive income is recognized in profit or loss.

(XII) Inventories

Inventories are stated at the lower of cost and net realizable value under the perpetual
inventory system.  Cost is determined using the weighted-average method. The costs of work in
progress and finished goods include cost of raw materials, direct labor, other direct cost and a
proportion of manufacturing overheads (based on normal operating capacity), excluding borrowing
cost. The item by item approach is used in applying the lower of cost and net realizable value.
Net realizable value is the balance of estimated selling price in normal operating course less
the estimated cost of completion and applicable variable selling expenses.

(XIII) Construction Contracts

1. A construction contract is defined as a contract specifically negotiated for the construction
of an asset in IAS 11 "Construction contracts". When the outcome of a construction contract can
be estimated reliably and it is probable that the contract is profitable, revenue is recognized
based on the proportion of work completed using the percentage of completion method during the
duration of the contract Contract costs are recognized as an expense when incurred.The stage of
completion is determined based on the proportion that contract costs incurred for work performed
to the end of reporting date bear to the estimated total contract costs. When it is probable
that total contract costs will exceed total contract revenues, the expected loss shall be
recognized as an expense immediately. If the outcome of a construction contract cannot be
estimated reliably, revenue shall be recognized only to the extent of incurred contract costs
that is probable to be recovered.

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2. Contract revenue shall comprise variations in contract work, claims and incentive payments to
the extent that they are agreed on by the customer and are capable of being reliably measured.
The Company should present the gross amount due from customers for contract work, i.e. when
costs incurred plus recognized profits (less recognized losses) exceeds the progress billings,
as an asset and recognize it as construction contract receivables.If the progress billings
exceed the sum of costs incurred plus recognized profits (less recognized losses), the amount is
presented as a liability and recognize it as construction contract receivables.

(XIV) Investments accounted for under the equity method -  subsidiaries /associates

1. Subsidiaries refer to entities (including structured entities) controlled by the Company.
Control is achieved when the Company 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.

2. Unrealized gains or losses aring from the transactions between the Company and its
subsidiaries  have been eliminated.Accounting policies of subsidiaries are adjusted, when
necessary, to remain consistent with those of the Company.

3. The Company’s share of its associates’ post-acquisition profits or losses is recognized in
profit or loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income.When the Company's share of losses in an subsidiary
equals or exceeds its interest in the associate, the Company shall continue to recognize losses
in proportion to its shareholding percentage in such associate.

4. A change in the ownership interest of a subsidiary without a lose of control (transactions
with non-controlling interests) is accounted for as an equity transaction, 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
recognized directly in equity.

5. When the Company loses control of a subsidiary, any investment retained in the former
subsidiary should be remeasured at fair value and be regarded as the fair value on initial
recognition of a financial asset or, when appropriate, as the cost on initial recognition of an
investment in an associate or a joint venture. difference between fair value and carrying amount
should be recognized in profit or loss. All amounts recognized in other comprehensive income in
relation to that subsidiary should be accounted for on the same basis as would be required if
the Company had directly disposed of the related assets or liabilities. Therefore, if a gain or
loss previously recognized in other comprehensive income would be reclassified to profit or loss
on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss
from equity to profit or loss when it loses control on that subsidiary.

6. Associates are all entities over which the Company has significant influence but not control.
In general, it is presumed that the investor has significant influence, if an investor holds,
directly or indirectly 20% or more of the voting power of the investee. Investments in
associates are accounted for using the equity method and are initially recognized at cost.

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7. The Company’s share of its associates’ post-acquisition profits or losses is recognized in
profit or loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income. When the Company’s share of losses in an associate
equals or exceeds its interest in the associate (including any other unsecured receivables) the
Company does not recognize further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.

8. Unrealized gains on transactions between the Company and its associates are eliminated to the
extent of the Company’s interest in the associates. Unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of associates are adjusted, when necessary, to remain consistent with those of the
Company.

9. If the Company does not subscript to new shares issued by an associate in proportion to its
shareholding percentage in the associate and results in a change in its investment percentage
(while still maintains significant influence), the changes in net equity would be adjusted
through “capital surplus” and “investments accounted for under the equity method”. If the
Company's investment percentage in the associate is reduced, in addition to the above
adjustments, the Company should also reclassify to profit or loss the proportion of the gain or
loss which is previously recognized in other comprehensive income and relative to that reduction
in ownership interest when such gain or loss would be reclassified to profit or loss on the
disposal of the related assets or liabilities.

10. When the Company disposes its investment in an associate and loses significant influence
over this associate, the accounting treatment for amounts previously recognized in other
comprehensive income in relation to the associate are the same as the one required if the
relevant assets or liabilities were directly disposed of. That is, if gain/loss previously
recognized in other comprehensive income will be reclassified to profit or loss upon disposal of
relevant assets or liabilities, such gain/loss will be reclassified from equity to profit or
loss when the Company loses significant influence over the associate. If it still retains
significant influence over this associate, then the amounts previously recognized in other
comprehensive income in relation to the associate are reclassified to profit or loss
proportionately in accordance with the aforementioned approach.

11. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, the profit or loss for the period and other comprehensive income presented in parent
company only financial reports shall be the same as the allocations of profit or loss for the
period and of other comprehensive income attributable to owners of the parent presented in the
financial reports prepared on a consolidated basis, and the owners' equity presented in the
parent company only financial reports shall be the same as the equity attributable to owners of
the parent presented in the financial reports prepared on a consolidated basis.

(XV) Property, plant and equipment

1. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during
the construction period are capitalized.

2. 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 Company 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.

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3. Except for land which is not depreciated, other property, plant and equipment apply cost
model and are depreciated using the straight-line method to allocate their cost over their
estimated useful lives. The Company reviews each assets' residual values, useful lives and
depreciation methods at the end of each financial year. 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:

Buildings
Main building for plants40～ 55 years
Building ancillary10～ 25 years
Machinery and equipment5～ 35 years
Other equipment2～ 20 years

4. Property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset is the difference between proceeds from disposal and carrying amount of the asset, and is
recognized in profit or loss.

(XVI) Leased assets / lessee

1. Based on the conditions of the contract, a lease that transfers substantially all the risks
and rewards incidental to ownership of an asset to the Company is classified as a finance lease.

(1) At the commencement of the lease term, a lease should be recognized as assets and
liabilities at the lower of the fair value of the leased property or the present value of the
minimum lease payments.

(2) In subsequent measurement, minimum lease payments is apportioned between the finance cost
and the reduction of the outstanding liability. The finance cost is allocated to each period
during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability.

(3) Property, plant and equipment acquired through a finance lease is depreciated over its
useful life. If there is no reasonable certainty that the Company will obtain ownership by the
end of the lease term, the asset shall be depreciated over the shorter of the lease term and its
useful life.

2. Operating leases are leases other than finance leases.For operating leases, lease payments
(excluding incentives from the lessor) are recognized as an expense on a straight-line basis
during the lease term.

(XVII) Investment property

Investment property is property held to earn rentals or for capital appreciation or both
(including property under construction for such purpose). It also includes land held for a
currently undetermined future use.

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An investment property is measured initially at its cost (including transaction cost)
and subsequently measured at cost less accumulated depreciation and impairment loss.
The Company applies the straight-line method for depreciation.

Investment property under construction is recognized at cost less accumulated
impairment loss. Costs include professional service fee and borrowing costs that meet
the conditions for capitalization.

Depreciation on those assets begins when they reach their estimated useful
conditions. Gain or loss arising from the derecognition of an investment property,
i.e. the difference between proceeds from disposal and the carrying amount of the
asset,isrecognizedinprofitorlossfortheyear.

(XVIII) Impairment of non-financial assets

The Company 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 when the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell or value
in use. When the circumstances or reasons for recognizing impairment loss for an
asset in prior years no longer exist, the impairment loss shall be reversed to the
extentofthelosspreviouslyrecognizedinprofitorloss.

(XIX) Provisions

Provisions (including estimates on short-term employee benefits and sales returns and
allowances)are recognized when the Company has a present legal or constructive
obligation as a result of past events, and it is probable that an outflow of economic
resources will be required to settle the obligation and the amount of the obligation
can be reliably estimated. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the balance sheet date. The
discount rate used is a pre-tax discount rate which reflects current market
assessments of the time value of money and the risks specific to the liability. The
discounted amortization amount is recognized as interest expense. Provisions are not
recognized for future operating losses.
(XX) Employee benefits

1. 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 recognized as expenses in that period when the employees render servic.

2. Pensions

(1) Defined contribution plans

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

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(2) Defined benefit plans

A. Net obligation under a defined benefit plan is defined as the present value of pension
benefits that employees will receive on retirement for their services with the Company in
current period or prior periods. The amount recognized is the present value of the defined
benefit obligation at the balance sheet date less the fair value of plan assets. The defined
benefit net obligation is calculated annually by independent actuaries using the projected unit
credit method. The discount rate used is determined by using interest rates of government bonds
(at the balance sheet date) that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating to the terms of the related pension
liability.

B. Remeasurement arising on defined benefit plans are recognized in other comprehensive income
in the period in which they arise and are presented as retained earnings.

C. Expenses associated with past service costs are recognized immediately in profit or loss.

3. Compensation to employees and remuneration to directors and supervisors

Compensation to employees and remuneration to directors and supervisors are recognized as
expenses and liabilities, provided that such recognition is required under legal or constructive
obligations and those amounts can be reliably estimated. However, if the accrued amounts are
different from the actual distributed amounts as resolved subsequently, the differences should
be recognized based on the accounting for changes in estimates.

4. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of
employment as a result from either the Company’s decision to terminate an employee's employment
before the normal retirement date, or an employee's decision to accept an offer of redundancy
benefits in exchange for the termination of employment. The Company recognizes expenses at the
earlier of when it can no longer withdraw the termination contracts or when it recognizes
relevant restructuring costs. Benefits due more than 12 months after balance sheet date are
discounted to their present value.

(XXI) Financial liabilities and equity instruments

1. Classification of financial liabilities and equity instruments

The Company classifies debt and equity instruments issued in accordance with the substance of
the contractual arrangement and the definitions of a financial liability and an equity
instrument.

2. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Company is
recognized as the net of proceeds less direct issuance costs.

3. Financial liabilities

Financial liabilities that are not held for trading and are not designated as at FVTPL are
accounted for at amortized costs at the end of subsequent accounting periods.

4. Derecognition of financial liabilities

The Company will derecognize a financial liability only when the obligation under the obligation
is discharged, cancelled or expired When a financial liability is derecognized, the difference
between the carrying value of financial liability derecognized and the consideration paid or
payable (including any non-cash asset transferred or liability assumed) should be recorded into
profits or losses of the current period.

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(XXII) Capital

Common shares are classified as equity.Incremental cost that can be attributed directly to the issuance of new shares or warrants is
recognized as a deduction to proceeds under equity.

(XXIII) Share-based payment

1. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity
instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to
equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting
conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates
of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date.
Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

2. For the cash-settled share-based payment arrangements, the fair value of liabilities assumed are recognized as compensation cost and
liabilities over the vesting period and measured as the fair value of equity instruments granted on each balance sheet and settlement
dates. Changes are recognized in profit or loss.

(XXIV) Income tax

1. Income tax expense 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.

2. 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 countries where the Company operates and generates taxable income. Undistributed Earnings. An additional 10% tax is levied on the
unappropriated retained earnings and is recorded as income tax expense in the year the shareholders resolve to retain the earnings.

3. Deferred income tax adopts the balance sheet approach. It is recognized as the temporary difference between the tax bases of assets and
liabilities and their carrying amounts in standalone balance sheet at the reporting date. 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 subsidiaries, except where the timing of the reversal of the temporary difference is controlled by
the Company 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.

370 

4. 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, unused taxable loss
and unused income tax credits can be utilized. At each balance sheet date, unrecognized and
recognized deferred income tax assets are reassessed.

5. Current income tax assets and liabilities are offset and the net amount is 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 realize 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.

6. Tax incentives from acquisitions of equipment or technology, research and development
expenditures, employees' training costs and equity investments are recognized in the form of tax
credits.

(XXV) Revenue recognition

1. Sales of goods

(1) The Company engages mainly in the processing, manufacturing of galvanized / pre-painted /
surface-treated rolled steel coils.Revenue is measured at the fair value of the consideration
received or receivable, taking into account sales returns, rebates and discounts, for the sale
of goods to external customers in the ordinary course of the Company’s activities. Revenue
arising from the sales of goods should be recognized when the following criteria are met:

(A) the significant risks and rewards of ownership of the goods have passed to the customer;

(B)neither continuing managerial involvement nor effective control over the goods sold have been
retained;

(C) the amount of revenue can be measured reliably;

(D) it is probable that the economic benefits associated with the transaction will flow to the
Company.

(E) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Supplying material for processing is not accounted for as sales of goods because he significant
risks and rewards of ownership of the processed goods have not transferred.

(2) The Company offers customers volume discounts and right of return for defective products.
Estimates on such discounts and returns are based on historical experience. Provisions for such
liabilities are recorded when the sales are recognized.

2. Revenue from services, technical services, leases, dividends and interests

(1) The sales of service occur from services rendered in accordance with contracts and is
recognized as revenue by reference to the stage of completion of the contract activity. If a
specific task is far more important than the rest, the recognition of revenue should be delayed
until that specific task is completed.

(2) Revenue of technical service rendered is recognized in accordance with contracts when it is
probable that the economic benefits associated with the transaction will flow to the Company and
the amount of revenue can be measured reliably.

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(3) Income from leases are recognized as revenue on straight-line basis during the duration of
leases.

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

(5) Interest income is accrued on a time basis by reference to the principal outstanding and at
the effective interest rate applicable.

3. Construction contracts

Please refer to Note 4(XIII) for details on the recognition of revenue from construction
contracts.

(XXVI) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a
qualifying asset are capitalized as part of the cost of the respective assets until the asset is
ready for its intended use or sale.

Income earned on the temporary investment of the borrowing specifically for the capital
expenditure of a qualifying asset is deducted from borrowing cost that meets the capitalization
condition.

Except for the above, other borrowing costs are recognized in profit or loss.

V. The Primary Sources of Uncertainties in Major Accounting Judgments, Estimates, and
Assumptions

Major accounting judgments, estimates, and assumptions adopted in applying the Company’s
accounting policies for the preparation of this standalone financial statement are as follows:

(I) Major judgments

1. Financial assets - impairment of equity investments

Pursuant to IAS 39, major judgements from the Company are required in determining whether a
financial asset - equity investment is impaired.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. Financial assets measured at costs

Equity instruments held by the Company with no public quotes from active markets, when recently
accessible information is not sufficient to determine their fair value and thus their value
cannot be reliably measured, are classified as "financial assets measured at cost".

3. Revenue recognition

The determination of whether the Company is acting as principal or agent in a transaction is
based on an evaluation of the Company’s exposure to the significant risks and rewards
associated with the sale of goods in accordance with the business model and substance of the
transaction. When the Company is exposed to significant risks and rewards associated with sale
of products or provision of services, it is acting as a principal and the revenue is recognized
as the gross amount of economic benefit receivable or received. If the Company is acting as an
agent, revenue recognized equals to the net amount of transaction.

372 

The Company engages mainly in the processing, manufacturing of galvanized / pre-painted /
surface-treated rolled steel coils. As it meets the following criteria, gross amounts are
recognized as revenue.

  • (1) The Group is primarily responsible for providing of goods or services

  • (2) The Group has inventory risk

  • (3) The Group has customer credit risk

  • (II) Critical accounting estimates and assumptions

1. Revenue recognition

Revenue from sales of goods is principally recognized when the goods are delivered and titles
have passed.Provisions for relevant returns and allowances are estimated based on historical
experience and other known factors and recognized as a deduction item to revenue in the period
when goods are sold.The Company regularly review the reasonability of such estimates. As of
December 31, 2016, provisions for sales return and allowance were NT$ 2,599 thousand.

2. Impairment assessment of tangible and intangible assets

The Company assesses impairment based on its subjective judgement and determines the separate
cash flows of a specific group of assets, useful lives of assets and the future possible income
and expenses arising from the assets depending on how assets are utilized and industrial
characteristics. Any changes in economic circumstances or in the estimates due to the Company’s
strategy might cause material impairment on assets in the future. For the year ended December
31, 2016, the Company recognized impairment loss of NT$ 2,564 thousand.

3. Impairment assessment of investments accounted for using equity method

When there is an indication that an investment accounted for using equity method may be impaired
and its carrying amount cannot be recovered, the Company would immediately conduct impairment
assessment on the asset. The Company evaluates recoverable amount based on the discounted
expected future cash flows or cash dividends from the investees and the discounted future cash
flows from disposal of the investment. It also analyses the reasonability of relevant
assumptions. For the year ended December 31, 2016, the Company recognized impairment loss of NT$
0 thousand.

4. Realizability of deferred income tax assets 

Deferred income tax assets are recognized only to the extent that it is probable that future
taxable income will be available against which the deductible temporary differences can be
utilized. Assessment of the realizability of deferred income tax assets involves critical
accounting judgements and estimates of the management, including the assumptions of expected
future sales revenue growth rate and profit rate, tax exempt duration, available tax credits,
tax planning, etc. Any changes in global economic environment, industrial environment, and laws
and regulations might cause material adjustments to deferred income tax assets. As of December
31, 2016, the Company recognized deferred income tax assets of NT$ 296,756 thousand.

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5. Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must
determine the net realizable value of inventories on balance sheet date using judgements and
estimates. The Company evaluates the amounts of normal inventory consumption, obsolete
inventories or inventories without market selling value on balance sheet date, and writes down
the cost of inventories to the net realizable value. As of December 31, 2016, the carrying
amount of inventories was NT$ 3,650,015 thousand (less the provision for obsolete inventory and
inventory valuation losses of NT$ 2,338 thousand).

6. Calculation of net defined benefit liabilities

In calculating the present value of defined benefit obligations, the Company must exercise
judgements and estimates in determining relevant actuarial assumptions, including the discount
rate and future growth rate for salary, on the balance sheet date. Any changes in the actuarial
assumptions may have caused material impacts on the Company’s defined benefit obligations. As
of December 31, 2016, the carrying amount of the Company’s net defined benefit liabilities was
NT$ 704,847 thousand.

7. Financial assets – fair value assessment on unlisted stocks with no active markets 

Unlisted stocks with no active markets held by the Company are carried at cost net of impairment
losses as at the balance sheet date. As the range of reasonable estimates on fair value is
significant and various probabilities cannot be reasonably assessed, management of the Company
deems the fair value cannot be measured reliably.

VI. Description for important accounting subjects

(I) Cash and cash equivalents

Cash
Checking account
Demand deposits
Cash equivalents
Time deposits within three months
Short-term notes and bills within three months
Total
Item		 December 31, 2016
$1,890
240,190
1,239,341
64,500
-
$1,545,921		 December 31, 2015
$1,890
200,169
1,453,543
32,825
65,384
$1,753,811 
No cash or its equivalent was pledged as collateral by the Company.

374 

(II) Financial assets and liabilities at fair value through profit
Non-derivative financial assets - current
Bond funds
Derivative financial assets – current
Interest and currency swap contracts
Total
Non-derivative financial assets – non-current
Financial bonds
Item		 December 31, 2016
$91,783
-
$91,783
$9,999		 December 31, 2015
$99,958
149
$100,107
$9,999 
1. Net income (loss) recognized for 2016 and 2015 are NT$ (2,367) thousand and NT$ 10,025 thousand, respectively.

2. No financial asset at fair value through profit or loss was pledged by the Company as collateral. 

3. The Company enters exchange rate swap contracts with banks to hedge exchange rate risk of assets denominated in
foreign currencies. However, as the Company does not plan on adopting hedge accounting, those contracts are accounted
for as financial instruments at fair value through profit or loss of which the changes in fair value are recognized in
profit or loss, upon initial recognition. Outstanding contracts are as follows:
December 31, 2016: None
December 31, 2015 Nominal Principal Due Date Exchange Rate
Exchange rate swap USD 20,000 105. 1.28 USD/NTD 32.837
Item December 31, 2016 December 31, 2015
Notes receivable $869 $48,670
Less: Bad debt allowance (4) (227)
Notes receivable - net $865 $48,443
1.As of December 31, 2016 and 2015, no notes receivable was pledged as collateral by the Company.
2.Please refer to Note 7(II)3. for transactions with related parties.
Bond funds $91,783 $99,958
Derivative financial assets – current
Interest and currency swap contracts - 149
Total $91,783 $100,107
Non-derivative financial assets – non-current
Financial bonds $9,999 $9,999 
1. Net income (loss) recognized for 2016 and 2015 are NT$ (2,367) thousand and NT$ 10,025 thousand, respectively.

2. No financial asset at fair value through profit or loss was pledged by the Company as collateral.

3. The Company enters exchange rate swap contracts with banks to hedge exchange rate risk of assets denominated in
foreign currencies. However, as the Company does not plan on adopting hedge accounting, those contracts are accounted
for as financial instruments at fair value through profit or loss of which the changes in fair value are recognized in
profit or loss, upon initial recognition. Outstanding contracts are as follows:

December 31, 2016: None
December 31, 2015
Exchange rate swap
(III) Notes receivable - net		 Nominal Principal
USD 20,000
Item
Notes receivable
Less: Bad debt allowance
Notes receivable - net		 Due Date
Exchange Rate
105. 1.28
USD/NTD 32.837
December 31, 2016
December 31, 2015
$869
$48,670
(4)
(227)
$865
$48,443

  • 1.As of December 31, 2016 and 2015, no notes receivable was pledged as collateral by the Company.

  • 2.. Please refer to Note 7(II)3. for transactions with related parties.

375 

(IV) Accounts receivable- Net
Item December 31, 2016 December 31, 2015
Accounts receivable $1,252,004 $955,588
Less: Bad debt provision (5,955) (4,456)
Accounts receivable-net $1,246,049 $951,132 
1. The Company’s accounts receivables that are not overdue nor impaired all meet the credit standards stipulated
based on the counterparties' industrial characteristics, operation scale and profitability. The average collection
period for Carbon Steel Department and is 30 to 60 days. The collection period for Engineering Department is based on
contracts.

2. The Company does not have significant overdue accounts receivables or notes receivables that are not impaired.

3. Changes in allowance for doubtful account: (Include notes receivables, accounts receivables and accounts receivables - related parties)

receivables - related parties)
Item
Impairment loss by individual
assessment		 2016
Impairment loss by Beginning
balance group assessment		 Total
Beginning balance
-
$
Provision of impairment
loss
-
Reversal of impairment loss
-
Write-off of uncollectible
accounts
-
Ending balance
-
$
Item
Impairment loss by individual
assessment		 -
$
-
-
-
-
$		 $6,557
-
-
-
$6,557
2015		 $6,557
-
-
-
$6,557
Impairment loss by Beginning
balance group assessment		 Total
Beginning balance
Provision of impairment
loss
Reversal of impairment loss
Write-off of uncollectible
accounts
Ending balance		 -
$
-
-
-
-
$		 $7,597
-
-
(1,040)
$6,557		 $7,597
-
-
(1,040)
$6,557 
NT$ 0 thousand of impairment was recognized through assessment of allowance for accounts receivable as of December 31,
2016 and 2015.

4. As of December 31, 2016 and 2015, no accounts receivable was pledged as collateral by the Company.

376

(V) Construction contract amount receivable (payable) (V) Construction contract amount receivable (payable) (V) Construction contract amount receivable (payable) (V) Construction contract amount receivable (payable)
Item December 31, 2016 December 31, 2015
Total costs incurred and profits recognized $2,567,715 $2,452,003
Less: Allowance for price decline (3,752) (15,063)
Less: Construction progresspayment (1,946,432) (2,019,260)
Net assets and liabilities of undergoing
contracts		 $617,531 $417,680
Assets listed as:
Construction contract receivables – non-
related parties		 $301,108 $264,088
Construction contract receivables –
related parties		 345,888 184,524
Construction contract payables – non-
related parties		 (29,402) (29,495)
Construction contract payables – related
parties		 (63) (1,437)
$617,531 $417,680
(VI) Other receivables
Item December 31, 2016 December 31, 2015
Business tax refundable $78,000 $61,000
Purchase allowance receivable 47,999 388
Insurance claim receivable 8,018 -
Interest receivable 192 185
Others 41 19
Total $134,250 $61,592
Less: Bad debt allowance - -
Net $134,250 $61,592
Insurance claims receivables are amounts to be claimed from the insurance company for the estimated loss of
typhoon (flood) in this period. Please refer to Note 12 (VII).

377 

(VII) Inventory and cost of sales
(VII) Inventory and cost of sales
Item December 31, 2016 December 31, 2015
Rolled Steel (Product) Department
Raw materials $857,320 $716,931
Supplies 14,575 12,226
Work in process 610,016 384,362
Finished products 1,953,614 880,724
By-products and scraps 55,372 40,974
Subtotal $3,490,897 $2,035,217
Less: Allowance for inventory valuation and obsolescence loss (1,016) (4,273)
Net $3,489,881 $2,030,944
Heavy Industry Department:
Raw materials $158,000 $172,138
Supplies 3,456 5,337
Subtotal $161,456 $177,475
Less: Allowance for inventory valuation and obsolescence loss (1,322) (14,712)
Net $160,134 $162,763
Total $3,650,015 $2,193,707
1. Inventory gains (losses) in 2016 and 2015 recognized as cost of sales are as follows:
Item 2016 2015
Cost of inventories sold $18,316,892 $18,886,204
Engineering costs 1,594,832 1,356,565
cost of processing 109,853 55,955
Unabsorbed manufacturing overheads 18,796 70,323
Loss on physical inventory - 1,568
Inventory valuation losses and obsolescence (Gain from price
recovery of inventory)		 (27,958) (16,056)
Insurance claims (2,668) -
Total operating costs $20,009,747 $20,354,559
2. As the Company raised prices on certain products as a result of market stablization, the net realizable value of
inventories recovered. The Company recognized inventory valuation loss (recovery gain) of NT$ 27,958 thousand and NT$ 16,056
thousand for the years ended December 31, 2016 and 2015, respectively.
3. No inventory was pledged by the Company as collateral.
By-products and scraps 55,372 40,974
Subtotal $55,372 $40,974
Less: Allowance for inventory valuation and obsolescence loss (1,016) (4,273)
Net $54,356 $36,701
Heavy Industry Department:
Raw materials $158,000 $172,138
Supplies 3,456 5,337
Subtotal $161,456 $177,475
Less: Allowance for inventory valuation and obsolescence loss (1,322) (14,712)
Net $160,134 $162,763
Total $214,490 $199,464
1. Inventory gains (losses) in 2016 and 2015 recognized as cost of sales are as follows:
Item 2016 2015
Cost of inventories sold $18,316,892 $18,886,204
Engineering costs 1,594,832 1,356,565
cost of processing 109,853 55,955
Unabsorbed manufacturing overheads 18,796 70,323
Loss on physical inventory - 1,568
Inventory valuation losses and obsolescence (Gain from price
recovery of inventory)		 (27,958) (16,056)
Insurance claims (2,668) -
Total operating costs $20,009,747 $20,354,559 
2. As the Company raised prices on certain products as a result of market stablization, the net realizable value of
inventories recovered. The Company recognized inventory valuation loss (recovery gain) of NT$ 27,958 thousand and NT$ 16,056
thousand for the years ended December 31, 2016 and 2015, respectively.

3. No inventory was pledged by the Company as collateral.

378

(VIII) Prepayments

(VIII) Prepayments
Item
Sea freight prepaid
Prepaid rental
Prepaid usage rights
Other prepayments
Total
(IX) Investments under equity method
Subsidiaries
Yieh Phui (Hong Kong) Holdings Limited
Champion Logistic Inc.
Yieh Hsing Enterprise Co., Ltd.
Others
Subtotal
Associates:
Associates with significance:
Yieh United Steel Corporation (Note)
Eliter Internaional Corp
Tangeng Iron Works Co., Ltd.
E-da Development Co., Ltd.
Associates without significance
Subtotal
Total
Prepaid material purchases
Prepaid insurance premium
Investee		 December 31, 2016
$170,362
28,228
57,342
5,494
2,906
19,969
$284,301
December 31, 2016
$9,818,285
1,697,847
1,596,329
4,371,083
$17,483,544
$3,969,169
2,826,191
1,357,233
1,201,890
2,208,298
$11,562,781
$29,046,325		 December 31, 2015
$138,667
29,687
10,944
4,273
2,400
20,758
$206,729
December 31, 2015
$9,499,935
1,729,225
1,773,887
3,644,157
$16,647,204
$3,930,682
2,651,026
1,303,113
1,273,523
2,069,374
$11,227,718
$27,874,922

1. Subsidiaries:

(1) For information about the Company’s  subsidiaries , please refer to Note 4 (III) of the 2016 consolidated financial
statements.

(2) Except for Hsinjui Investments Limited - Lianso (H.K.) Co., Limited and Worthing Honor Holdings Ltd, all investment under
equity method and the Company’s share of profit or loss and share of other consolidated gains or losses  are calculated based
on an audited financial report by an independent public accountant. However, the management deemed that there wouldn’t be
material adjustments to the financial reports of the aforementioned  subsidiaries  if they had been audited by an independent
public accountant.
public accountant.
Champion Logistic Inc.
Yieh Hsing Enterprise Co., Ltd.
Others
Subtotal
Associates:
Associates with significance:
Yieh United Steel Corporation (Note)
Eliter International Corp
Tangeng Iron Works Co., Ltd.
E-da Development Co., Ltd.
Associates without significance
Subtotal
Total		 1,697,847
1,596,329
4,371,083
$7,665,259
$3,969,169
2,826,191
1,357,233
1,201,890
2,208,298
$11,562,781
$19,228,040		 1,729,225
1,773,887
3,644,157
$7,147,269
$3,930,682
2,651,026
1,303,113
1,273,523
2,069,374
$11,227,718
$18,374,987

1. Subsidiaries:

(1) For information about the Company’s  subsidiaries , please refer to Note 4 (III) of the 2016 consolidated financial
statements.

(2) Except forHsinjui Investments Limited - Lianso (H.K.) Co., Limited and Worthing Honor Holdings Ltd., all investment under equity method and the Company’s share of profit or loss and share of other consolidated gains or losses are calculated based on an audited financial report by an independent public accountant. However, the management deemed that there wouldn’t be 379 material adjustments to the financial reports of the aforementioned subsidiaries if they had been audited by an independent public accountant.

380

2. Associates:

  • (1) Major associates of the Company are as follows:
Yieh United Steel Corporation
Eliter Internaional Corp
Tangeng Iron Works Co., Ltd.
E-da Development Co., Ltd.		 Company name Shareholding Percentage
December 31, 2016
24.39%
32.84%
11.30%
28.44%		 December 31, 2015
23.86%
32.57%
11.30%
28.44%		 
Please refer to Appendix 8 and 9 in Note 13 for the nature of business, main operation location and countries of
registration of the associates listed above.

(2)The summarized financial information in respect of the Company’s major associates is as follows:

A. Balance sheet:
A. Balance sheet:
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Carrying amount of associate
Current assets
Non-current Assets
Current liabilities
Non-current liabilities
Equity
Share of net assets of associates
Carrying amount of associate
Unrealized gain/loss from transactions with associates
Unrealized gain/loss from transactions with associates		 Yieh United Steel Corporation(Note)
December 31, 2016
December 31, 2015
$7,877,307
$7,511,121
38,915,187
37,523,851
20,599,883
18,058,762
9,917,563
10,504,278
$16,275,048
$16,471,932
$3,969,169
$3,930,682
-
-
$3,969,169
$3,930,682
Eliter Internaional Corp		 December 31, 2015
$7,511,121
37,523,851
18,058,762
10,504,278
$16,471,932
$3,930,682
-
$3,930,682
December 31, 2016
$7,081,451
4,445,457
1,337,910
1,439,078
$8,749,920
$2,873,779
(47,588)
$2,826,191		 December 31, 2015
$7,115,282
4,618,368
2,412,809
1,036,704
$8,284,137
$2,698,252
(47,226)
$2,651,026

381

Tangeng Iron Works Co., Ltd. Tangeng Iron Works Co., Ltd. Tangeng Iron Works Co., Ltd.
December 31, 2016
December 31, 2015
Current assets $4,408,426 $3,855,712
Non-current Assets 24,133,403 24,202,732
Current liabilities 4,188,691 3,780,842
Non-current liabilities 10,010,973 10,414,346
Equity $14,342,165 $13,863,256
Share of net assets of associates $1,357,233 $1,303,113
Unrealized gain/loss from
transactions with associates		 - -
Carrying amount of associate $1,357,233 $1,303,113
E-da Development Co., Ltd.
December 31, 2016
December 31, 2015
Current assets $315,078 $317,309
Non-current Assets 9,076,611 9,463,500
Current liabilities 1,641,262 1,765,084
Non-current liabilities 3,495,049 3,507,811
Equity $4,255,378 $4,507,914
Share of net assets of associates $1,210,325 $1,282,152
Unrealized gain/loss from
transactions with associates		 (8,435) (8,629)
Carrying amount of associate $1,201,890 $1,273,523
B. Statement of comprehensive income:
Yieh United Steel Corporation (Note)
2016 2015
Operating Revenue $41,713,114 $39,734,120
Net income (loss) $163,352 ($5,913,932)
Other comprehensive income (net): (361,465) (249,331)
Total comprehensive income ($198,113) ($6,163,263)
Dividends received from associates -
$		 -
$

382

Eliter Internaional Corp Internaional Corp
2016 2015
Operating Revenue $310,954 $635,651
Net income (loss) ($126,830) $81,685
Other comprehensive income (net): - -
Total comprehensive income ($126,830) $81,685
Dividends received from associates -
$		 -
$
Tangeng Iron Works Co., Ltd.
2016 2015
Operating Revenue $13,021,328 $12,847,332
Net income (loss) $503,350 ($930,463)
Other comprehensive income (net): (24,441) 13,452
Total comprehensive income $478,909 ($917,011)
Dividends received from associates -
$		 -
$
E-da Development Co., Ltd.
2016 2015
Operating Revenue $1,005,719 $1,155,773
Net income (loss) ($249,488) ($244,310)
Other comprehensive income (net): (3,048) (8,635)
Total comprehensive income ($252,536) ($252,945)
Dividends received from associates -
$		 -
$
(3) Shares of individually insignificant
summarized as follows:		 associates of the Company are
2016 2015
Share of:
Net income (loss) $176,574 ($37,314)
Other comprehensive income (net): (19,787) 23,113
Total comprehensive income $156,787 ($14,201)

383 

(4) Associates of the Company with quoted prices in active market (Level 1 fair value inputs) are as
follow:
follow:
Yieh United Steel Corporation (Note)
Tangeng Iron Works Co., Ltd.
Total		 December 31, 2016
$3,014,333
1,853,058
$4,867,391		 December 31, 2015
$3,058,722
1,775,930
$4,834,652 
(Note): The fair value information above does not include shares acquired in private placement during the
period and are not allowed to be transferred freely in open markets.

(5) For Skylark Hot Spring &amp; Resort Corp., E-Da Cultural Creative Industries Co., Ltd.,  E-Da Tour Bus
Corporation, E-Da Bus Transportation Co., Ltd. and E-Da Entertainment Co., the Company has significant
influence either as a result of holding more than 20% of their respective shares with its subsidiaries, or
being a director in such entities. Consequently, those entities are accounted for using equity method.

(6) The Company recognized its investment in Yieh United Steel Corporation as an available-for-sale
financial asset as of December 31, 2014. Since the Company has significant influence over Yieh United
Steel Corporation when combining the shares acquired in 2015 and shares held by the new consolidated
subsidiaries, Yieh United Steel Corporation was accounted for using equity method starting March 2015. The
bargain purchase gain from the acquisition of Yieh United Steel Corporation amounted to NT$ 466,277
thousand for the year ended December 31, 2015. Please refer to Note 6(XXXIII) for details.

(7) The Company participated in the private placement of Yieh United Steel Corporation in December 2015
with NT$ 1,100,400 thousand. As a result of the participation, its shareholding percentage increased to
23.86%. Pursuant to the Securities and Exchange Act, securities from private placement can only be traded
freely in the open markets when they are held for three years from the delivery date and the issuer has
completed the supplementary procedures of public offering.

(8) Due to cross ownership and the adoption of equity method between the Company and Yieh United Steel
Corporation, an investee accounted for using equity method, investment gain/loss is recognized using the
treasurystockapproach.

(9) After the Company acquired shares of Kuo Chang Enterprise Co., Ltd., United Brightening Development
Corp. and Da Yao Engineering &amp; Consulting Co., Ltd. from other parties in March 2015, its shareholding
percentage in each of those companies has exceeded 50%. Thus, they were included in the consolidated
financial statement in the first quarter of 2015.

(10) As The Company acquired additional shares in a capital increase by Hong Yuh Assets Management
Co.,Ltd. in September, 2015, its cross shareholding on such company exceeded 50%. As a result, The Company
is deemed to have control over such company and listed such company as an investee.

384 

(11) Except for E United Japan Co., Ltd., investments accounted for using equity method and the Company’s share of profit or loss and
other comprehensive income are calculated based on audited financial statements of those investees. However, management of the management
does not think unaudited financial statements of above investees would have a significant impact on the Company.

(12) As of December 31, 2016 and 2015, no investments under equity method were pledged as collateral by the Company.
  • (X) Available-for-sale financial assets - non-current
Item
Stocks listed in TWSE or TPEX		 December 31, 2016
$46,575		 December 31, 2015
$52,425 
As of December 31, 2016 and 2015, no available-for-sale financial asset was pledged as collateral.

(XI) Financial assets at cost - non-current
Domestic stocks not traded in TWSE
Foreign stocks not traded in stock		 Item
Total
or TPEX
markets		 December 31, 2016
$479,982
2,002
$481,984		 December 31, 2015
$458,069
2,002
$460,071 
1. The investments above were classified as financial assets held at cost because no reasonable and reliable assessments were available to
determine their fair values for lacking of quoted price from active market and insufficient information about other similar industries and
the investee’s financial information. These investments are measured at cost minus accumulated impairment loss as of the balance sheet
date.

2. For the years ended December 31, 2016 and 2015, the Company recognized impairment loss of NT$ 0 thousand.

3. As of December 31, 2016 and 2015, no financial assets carried at cost were pledged as collateral.

385 

Preferred shares$170,654
Less: cumulative impairment-
Net$170,654

December 31, 2015: None.

1.The Company acquired preferred shares on E-Da Development Corp. (with annual yield rates of 2.5%, three years of
issuance period, cumulative and non-participating, cash settled at one time upon maturity). E-Da Development Corp.
engages in business of department stores and amusement parks.

2. For the year ended December 31, 2016, the Company recognized impairment loss of NT$ 0 thousand.

3. As of December 31, 2016, no bond investments with no active market were pledged as collateral by the Company.

(XIII) Property, plant and equipment

(XIII) Property, plant and equipment
Land
Buildings
Machinery and equipment
Other equipment
Total cost
Less: accumulated depreciation
Accumulated impairment
Total
Provision of impairment loss
-
Reversal of impairment loss
-
Equipment to be inspected and construction in progress
Item		 December 31, 2016
$1,506,714
3,679,482
13,527,047
1,264,348
305,546
$20,283,137
(11,493,088)
(230,495)
$8,559,554
-
-		 December 31, 2015
$1,506,714
3,679,337
12,797,887
1,303,735
964,279
$20,251,952
(11,089,820)
(223,116)
$8,939,016
-
-

386

Land Buildings Machinery
equipment		 Other
equipment		 Equipment-to-be-
inspected and		 Total
Cost
Balance as of Jan 1, 2016 $1,506,714 $3,679,337 $12,797,887 $1,303,735 $964,279 $20,251,952
Additions - 523 30,222 12,937 144,582 188,264
Disposal - (8,270) (65,764) (68,721) - (142,755)
Reclassification - 7,537 764,702 16,397 (788,636) -
Inventory transfer in - 355 - - 1,169 1,524
Transferred to expenses - - - - (15,848) (15,848)
Balance as of December
31, 2016		 $1,506,714 $3,679,482 $13,527,047 $1,264,348 $305,546 $20,283,137
Accumulated depreciation
and impairment
Balance as of Jan 1, 2016 $ - $1,738,430 $8,377,523 $973,867 $223,116 $11,312,936
Depreciation expenses - 109,858 337,552 80,129 - 527,539
Disposal - (6,135) (50,431) (67,705) - (124,271)
Impairment loss - 3,596 4,318 - - 7,914
Repair expense less - (318) (217) - - (535)
accumulated impairment
Balance as of December
31, 2016		 $ - $1,845,431 $8,668,745 $986,291 $223,116 $11,723,583
Equipment-to-be-
inspected and
Land Buildings Machinery
equipment		 Other
equipment		 construction in
progress		 Total
Cost
Balance as of January 1,
2015		 $1,135,510 $3,658,298 $12,667,945 $1,746,347 $986,508 $20,194,608
Additions 5,347 25,778 45,427 8,111 339,312 423,975
Disposal - (4,739) (83,018) (493,103) - (580,860)
Reclassification 132,112 - 167,533 53,299 (352,944) -
Investmentproperty 233,745 - - - - 233,745
transfer in
Inventory transfer in - - - - 5,096 5,096
Transferred to expenses - - - (10,919) (13,693) (24,612)
Balance as of December
31, 2015		 $1,506,714 $3,679,337 $12,797,887 $1,303,735 $964,279 $20,251,952
Accumulated depreciation
and impairment
Balance as of January 1,
2015		 $ - $1,632,888 $8,113,983 $1,400,206 $223,116 $11,370,193
Depreciation - 109,660 321,753 69,416 - 500,829
Disposal - (4,118) (58,213) (492,050) - (554,381)
Impairment loss - - - - - -
Transferred to expenses - - - (3,705) - (3,705)
Balance as of December
31, 2015		 $ - $1,738,430 $8,377,523 $973,867 $223,116 $11,312,936

387 

1. Acquisitions during the period and adjustments for cash flows related to acquisitions of property,
plant and equipment:
plant and equipment:
Increase in property, plant and equipment
Repair payment on wind disasters
Item
Increase/decrease in payables for purchase of
equipment
Property, plant and equipment purchases paid in
cash		 2016
$188,264
535
(7,765)
$181,034		 2015
$423,975
-
(6,349)
$417,626 
2. Please refer to Note 6(XXX) for details on the amount of capitalized borrowing costs.

3. Impairment losses for property, plant and equipment  recognized for July and September, 2016,  were NT$
7,914 thousand. Incurred repairment expense amounted to NT$ 535 thousand which was written down to
accumulative impaiment and was partially claimable from the insurance company. Please refer to Note 12

(VII)fordetails.

4. For the information about property, plant and equipment pledged as collateral, please see Note 8 for details

5. The accumulated impairment losses , which were provided for painting equipment and other equipment in Pingnan plant due to the termination of expansion of such plant, were NT$ 223,116 thousand as of December 31, 2016 and 2015. 

6. The Company’s land amounting to NT$ 8,516 thousand as of December 31 2016 and 2015 is unable to be
registered under the name of the company due to regulation restriction. Accordingly, the ownership was
registered under the name of an individual with a mortgage registration as safeguard measures.

(XIV) Investment property net

(XIV) Investment property net
Items
Land
Buildings
Total cost
Net
Land
Cost
Balance as of Jan 1,
2016
$1,269,017
Additions
-
Disposal
-
Balance as of December
31, 2016
$1,269,017
Accumulated depreciation
Balance as of Jan 1,
2016
-
$
Depreciation expenses
-
Less: accumulated depreciation		 December 31, 2016
$1,269,017
26,604
$1,295,621
(8,463)
$1,287,158
Buildings
$26,604
-
-
$26,604
$7,615
848		 December 31, 2015
$1,269,017
26,604
$1,295,621
(7,615)
$1,288,006
Total
$1,295,621
-
-
$1,295,621
$7,615
848

388

Balance
as of
December
31, 2016		 $ - $ - $8,463 $8,463
Land Buildings Total
Cost
Balance as
of January
1, 2015		 $1,502,762 $26,604 $1,529,366
Additions - - -
Disposal - - -
Transferred to property, plant and equipmen (233,745)
t		 - (233,745)
Balance as of December 31, 2015 $1,269,017 $26,604 $1,295,621
Accumulated depreciation
Balance as of January 1, 2015 -
$		 $6,768 $6,768
Depreciation expenses - 847 847
Balance as of December 31, 2015 -
$		 $7,615 $7,615
1.Rental revenue and direct operating expenses of investment property:
Item 2016 2015
Rental revenue from investment property $11,796 $12,633
Incurred by investment property generating rental
revenue in current period		 $1,749 $1,104
Direct operating expenses
Direct operating expenses $18,073 $11,860
incurred by investment property not generating rental
revenue in current period
2. Investment property held by the Company in Qiaotou Dist., Kaohsiung City and in Fangliau
Township, Pingtung County were evaluated by independent appraisers . The appraisal adopted the
comparison method, with reference to the market evidences in real estate markets. The fair value of
those investment properties were NT$ 2,584,556 thousand in 2016 and 2015 as well. Those are Level 3
fair value inputs. Please refer to Note 12(IV).
3.For details about investment property pledged as collateral, please see Note 8.
(XV)Long-term prepaid rental
Item December 31, 2016
December 31, 2015
Long-term prepaid rent $92,315 $85,100
Less: Transfer within 12 months (2,906) (2,400)
Total $89,409 $82,700

389 

For long-term prepaid rent with subsidiaries, please refer to Note 7 (II) 11.

(XVI) Short-term loan
(XVI) Short-term loan
Type of Loan
Amount
Interest Rate
$3,195,868
1.53%-2.25%
Credit loans
2,990,000
1.39%-2.25%
Total
$6,185,868
Type of Loan
Amount
Interest Rate
Credit for material purchases
$3,879,065
1.3086%-2.25%
Credit loans
4,030,000
1.50%-2.25%
Total
$7,909,065
December 31,2016
Credit for material purchases
December 31, 2015		 December 31,2016
Amount
Interest Rate
$3,195,868
1.53%-2.25%
2,990,000
1.39%-2.25%
$6,185,868
December 31, 2015		 Interest Rate
Interest Rate
1.3086%-2.25%
1.50%-2.25%		 
Short-term loans are pledged as loan collateral for some of financial assets, the property, plant, and
equipment. Please refer to Note 8 for details.

(XVII) Short-term notes and bills payable
(XVII) Short-term notes and bills payable
Item
December 31, 2016
Commercial paper payable
$340,000
Less: Unamortized
discounts
(223)
Net
$339,777
Interest rate range
1.637%-1.738%
(XVIII) Other payables
Item
December 31, 2016
Compensations payable
$327,734
Utility expenses payable
36,675
Equipment payment
36,434
26,767
Cash dividends payable – f
22,781
Repairing charges payable
19,086
Interest payable
17,682
9,066
Consumables payable
7,447
Tax and duty payables
4,143
Others
59,942
Export and transportation expenses payable
Employees benefits payables and remuneration payable		 December 31, 2016
$340,000
(223)
$339,777
1.637%-1.738%
December 31, 2016		 December 31, 2015
$440,000
(413)
$439,587
1.622%-1.902%
December 31, 2015
$179,825
39,102
28,669
35,879
22,634
18,010
20,313
-
6,718
46,203
54,429

390 

$567,757

$451,782

Total

Please refer to Note 7 (II) 4 for related party transactions.

(XIX) Provision - current
Item
Employee benefits
Sales return & discount
Total
Item
Employee benefits
January 1, 2016
$35,819
Recognized in current perio
37,672
(35,819)
December 31, 2016
$37,672
Item
Employee benefits
January 1, 2015
$35,649
Recognized in current perio
35,819
(35,649)
December 31, 2015
$35,819
Written down in current
period
Written down in current
period		 December 31, 2016
$37,672
2,599
$40,271
Sales return & discount
$40,032
2,599
(40,032)
$2,599
Sales return & discount
$34,876
40,032
(34,876)
$40,032		 December 31, 2015
$35,819
40,032
$75,851
Total
$75,851
40,271
(75,851)
$40,271
Total
$70,525
75,851
(70,525)
$75,851

1. Provision for employee benefits is an estimate of the short-term service leave vested to employees. 

2. Provision for sales return &amp; discount is estimated based on historical experience,
judgement from the management, and other known reasons for possible return or discount on steel
coils and steel tubes, to be deducted from the sale revenue stated in the current period when
the goods are sold.
  • (XX) Long-term loans and current portion of long-term liabilities
Item
December 31, 2016
Bank syndicated loan
$6,880,000
Secured loans from banks
2,624,800
Unsecured loans from banks
100,000
Total
$9,604,800
Less: Unamortized discounts
(14,440)
Less: Due within 12 months
(787,147)
Long-term loans
$8,803,213
Interest rate range
1.72%-2.325%		 December 31, 2015
$6,880,000
1,316,000
100,000
$8,296,000
(18,526)
(291,200)
$7,986,274
2%-2.42%

391

1. Please refer to Note 8 for the collaterals of the above bank loans.

2. According to syndicated loan agreements with banks, the Company needs to maintain several financial ratios, including current ratio, liability ratio and interest coverage ratio, at a certain level, calculated based on the audited annual consolidated financial statements and the reviewed semi-annual consolidated financial statements for the duration of the contracts. The Company found all financial ratios from the 2016 consolidated financial statements meet the standards as set by the loan agreements. 

(XXI) Pensions

1. Defined contribution plans 

(1) The pension system based on the Labor Pension Act which is applicable to the Company’s
domestic entities is a defined contribution plan managed by government. Companies would make
monthly contribution equal to 6% of each employee's monthly salary to the employees' individual
pension accounts at the Bureau of Labor Insurance.

(2) Contributions based on the percentage stipulated in the defined contribution pension plans
of the Company and recognized as expenses in the consolidated statement of comprehensive income
were NT$ 45,072 thousand and NT$ 42,924 thousand for the years ended December 31, 2016 and 2015,
respectively.

2. Defined benefit plans

(1) The pension plan under the Labor Standards Law, which is applicable to the Company’s
domestic entities, is a defined benefit pension plan managed by the government. Under the
defined benefit pension plan, pension benefits are based on the average monthly salaries and
wages of the last 6 months prior to retirement and the duration of employment. Those companies
contributes monthly an amount equal to 4.2% of the employees' monthly salaries and wages to the
retirement fund deposited with Bank of Taiwan, under the name of the independent retirement fund
committee. Before the end of year, if the balance at the retirement fund is not sufficient to
cover all employees retiring next year, a lump-sum deposit should be made before March-end of
the following year to cover the difference. The retirement fund is managed by the Bureau of
Labor Funds, Ministry of Labor. The Company does not have rights to influence its investment
management strategy.

(2) The amounts recognized in the consolidated balance sheet for obligations from defined
benefit plans are as follows
benefit plans are as follows
Item
Present value of defined benefit obligations
Fair value of planned assets
Net defined benefit liabilities		 December 31, 2016
$1,392,240
(687,393)
$704,847		 December 31, 2015
$1,366,450
(689,959)
$676,491

392

(3) Changes in net defined benefit liabilities are as follows:

Item
Present value of defined
~~benefit obligations~~
Balance as of January 1
$1,366,450
Cost of service
Current service cost
9,941
Interest expense (income)
16,922
Past service cost
-
Loss (gain) on settlement
-
$26,863
Remeasurement
Return on planned assets
-
(excluding amount included in net interest)
Actuarial (gain) loss
Changes in the
demographic assumptions
4,525
Changes in financial
assumptions
(77,371)
Experience adjustment
120,019
Recognized in other compreh
$47,173
Contribution from employer
-
Benefits paid
(48,246)
Balance as of December 31
$1,392,240
Item
Present value of defined
~~benefit obligations~~
Balance as of January 1
$1,330,930
Cost of service
Current service cost
10,312
Interest expense (income)
23,063
Past service cost
-
Loss (gain) on settlement
(3,644)
Recognized in profit and
loss
$29,731
Recognized in profit and
loss		 2016
Fair value of planned
~~assets~~
($689,959)
-
(8,695)
-
-
($8,695)
$3,840
-
-
-
$3,840
(40,825)
48,246
($687,393)
2015		 Net defined benefit
~~liabilities~~
$676,491
9,941
8,227
-
-
$18,168
$3,840
4,525
(77,371)
120,019
$51,013
(40,825)
-
$704,847
Present value of defined
~~benefit obligations~~
$1,330,930
10,312
23,063
-
(3,644)
$29,731		 Fair value of planned
~~assets~~
($677,644)
-
(11,961)
-
-
($11,961)		 Net defined benefit
~~liabilities~~
$653,286
10,312
11,102
-
(3,644)
$17,770

393

Remeasurement

Remeasurement
Return on planned assets
Amount included in net interest
net interest)
Actuarial (gain) loss
Changes in the demographic
assumptions
Changes in financial
assumptions
Experience adjustment
Recognized in other
comprehensive income
Contribution from employer
Benefits paid
Balance as of December 31		 -
5,291
75,472
(23,918)
$56,845
-
(51,056)
$1,366,450		 ($5,907)
-
-
-
($5,907)
(39,071)
44,624
$689,959		 ($5,907)
5,291
75,472
(23,918)
$50,938
(39,071)
(6,432)
$676,491 
(4) Through the pension plan under the Labor Standards Law, the Company is exposed to the following risks:

A. Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the
government's designated authorities or under the mandated management by Bureau of Labor Funds, Ministry of Labor. However, the rate of
return on assets shall not be less than the average interest rate on a two-year time deposit published by the local banks.

B. Interest rate risk

A decrease in the government bond interest rate will increase the present value of the defined benefit obligation, however, the return on
the debt investments of the plan assets will also increase. Those two will partially offset each other.

C. Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an
increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
(5) The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries.The principal
assumptions adopted on the measurement date were as follows:
assumptions adopted on the measurement date were as follows:
Item
Discount rate
Future salary increase rate
Average duration of defined benefit		 Measurement Date
December 31, 2016
1.25%
2.00%
10 years		 December 31, 2015
1.25%
2.50%
11 years

394

A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.		 A. Future mortality rate is estimated based on the 2012 Taiwan Standard
Ordinary Experience Mortality Table.
B. If a reasonable change in one of the principal assumptions for actuarial
valuation occurred and all other assumptions were held constant, the
increase (decrease) in the present value of defined benefit obligation would
be as follows:
Item December 31, 2016
December 31, 20
Discount rate
Increase of 0.25% (37,133) (38,616)
Decrease of 0.25% 38,611 40,217
Expected growth rate of salaries
Increase of 0.25% 38,226 39,618
Decrease of 0.25% (36,955) (38,246)
The sensitivity analysis presented above may not be representative of the
actual change in the defined benefit obligation as it is unlikely that the
change in assumptions would occur in isolation of one another as some of the
assumptions may be correlated.
(6) The Company expects to make contributions of NT$ 39,847 thousand to the
pension plans in the year ended December 31, 2017.
(XXII) Capital of common shares
1. Quantities and values of the Company’s outstanding common shares at the
beginning and ending of periods were as follows:
2016
Item shares (thousand shares) Amount
January 1 1,718,090 $17,180,905
Capital injection - -
Recapitalization of Retained Earnings - -
December 31 1,718,090 $17,180,905
2015
Item shares (thousand shares) Amount
January 1 1,668,049 $16,680,490
Capital injection - -
Recapitalization of Retained Earnings 50,041 500,415
December 31 1,718,090 $17,180,905

395 

2. As of December 31, 2016 and 2015, the Company had an authorized capital of NT$20,000,000
thousand with 2,000,000 thousand shares.

3. The Company's shareholders' meeting held on June 18, 2015 had resolved to capitalize earnings
of NT$ 500,415 thousand. The plan was approved by FSC on July 22, 2015 and 50,041 thousand
shares of common share at the par value of NT$ 10 were expected to be issued. The base date for
share capital increase is set on September 1, 2015.

(XXXIII) Capital surplus

(XXXIII) Capital surplus
December 31, 2016
Stock issuance premium
$4,060,366
Treasury stock transaction
557,739
Difference between the share price in the acquisition
81,311
or disposal of a subsidiary and its book value
8,665
Recognition from
29,050
investments in associates and joint ventures using equity method
Total
$4,737,131
Item
Recognized value of changes in equity of ownership
of subsidiaries		 December 31, 2015
$4,060,366
557,739
36,175
-
19,507
$4,673,787 
Under the Company Act, capital surplus arising from shares issued at premium or from donation
may be used for offsetting deficit. Furthermore, if the Company has no accumulated loss, capital
surplus may be used for issuing new shares or distributing cash in proportion to shareholders'
original holdings. In accordance with regulations in the Securities and Exchange Act, when the
above-mentioned capital surplus is used for capitalization, the total amount every year shall
not exceed 10% of the paid-in capital. The Company may use capital surplus to offset loss only
when the amount of earnings and reserves are insufficient to offset the loss. The capital
surplus generated from investment under equity method shall not be used for any purposes.

(XXIV) Appropriation of Earnings

1. Pursuant to the amendments to the Company Act in May 2015, dividends and bonus can only be
distributed to shareholders. Employees should not participate in earning appropriation. An
earnings distribution policy for employees was included in the Article of Incorporation that was
amended and resolved on June 22nd, 2016 in the Company’s shareholders’ meeting. Please refer
to Note 6(XXIX) for details on the accrual basis and actual payment of compensation to employees
and remuneration to directors and supervisors.

396 

Pursuant to the earnings distribution policy as stated in the amended Article of
Incorporation, a residual dividend distribution policy will be adopted in
accordance with the Company’s business expansion and profitability after
considering the the fact that the Company is currently in its growing phase. If
there shall be any net income after the annual final account, taxes and duties and
past deficits shall be primarily paid off. Then, any remaining net income shall be
arranged to pay in the following orders: (1) 10% as legal reserve; (2) set aside or
reverse a certain amount as or of special reserve according to relevant laws and
regulations and to actual operation circumstances; (3) the remained net income,
adding unappropriated earnings from prior years, shall be distributed as dividends
and bonus after the Board of Directors has offered a dividend distribution proposal
and such proposal has been resolved by the shareholders meeting.In principle,
earnings shall be distributed in the form of stock dividends in accordance with the
Company’s capital requirement for business expansion and profitability. Cash
dividends are distributed at between 20% to 100% of total dividends distributed in
accordance with the actual profitability while stock dividends are distributed at
between 0% to 80% of the total dividends distributed.

2. Legal reserves may only be used for offsetting deficits and issuing new shares
or distributing cash in proportion to shareholders’ original holdings. However,
when new shares are issued or cash is distributed, the amount shall be limited to
-
25% of the reserves in excess of the paidin capital.
3. Special reserve
Item December 31, 2016 December 31, 20
Provision for debit balance of other equity -
$		 -
$
Provision upon initial application of IAS 327,757 327,757
Total $327,757 $327,757
(1) The Company may allocate earnings only after providing special reserve for debt
balance in other equity on the date of balance sheet, and the reversal of debit
balance in other equity, if any, may be stated into allocable earnings.
(2) Upon first-time adoption of IFRSs, the special reseve provided pursuant to the
official letter under Jin-Guan-Jheng-Fa-Zih No. 1010012865 dated April 6, 2012 may
be reversed to allocable retained earnings in proportion to the special reseve as
provided originally, if the Company uses, disposes of or reclassifies the relevant
assets in the future.
4. A resolution to offset the 2015 deficits was approved in the shareholders
meeting on June 22, 2016. No bonus was distributed due to deficit incurred in 2015.
The shareholders' meetings held in June 2015 passed the earnings distribution and
dividends per share for 2014 as follows.
2014
Earnings
appropriati Dividend per share
on proposal
Legal Reserve $123,885
Cash dividends for common shares 333,610 0.2
Stock dividends for common shares 500,415 0.3
Total $957,910
3. Special reserve
Item December 31, 2016 December 31, 20
Provision for debit balance of other equity -
$		 -
$
Provision upon initial application of IAS 327,757 327,757
Total $327,757 $327,757
(1) The Company may allocate earnings only after providing special reserve for debt
balance in other equity on the date of balance sheet, and the reversal of debit
balance in other equity, if any, may be stated into allocable earnings.
(2) Upon first-time adoption of IFRSs, the special reseve provided pursuant to the
official letter under Jin-Guan-Jheng-Fa-Zih No. 1010012865 dated April 6, 2012 may
be reversed to allocable retained earnings in proportion to the special reseve as
provided originally, if the Company uses, disposes of or reclassifies the relevant
assets in the future.
4. A resolution to offset the 2015 deficits was approved in the shareholders
meeting on June 22, 2016. No bonus was distributed due to deficit incurred in 2015.
The shareholders' meetings held in June 2015 passed the earnings distribution and
dividends per share for 2014 as follows.
2014
Earnings
appropriati Dividend per share
on proposal
Legal Reserve $123,885
Cash dividends for common shares 333,610 0.2
Stock dividends for common shares 500,415 0.3
Total $957,910

397

5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.		 5. As of March 21, 2017, proposals on earning distribution and dividends per share had not been
passed by the Board of Directors.
6. For details of the earning distribution, either proposed by the Board of Directors, or resolved
by shareholders' meeting, please check at TWSE MOPS (Market Observation Post System).
(XXV) Other equity items
Exchange
differences
Foreign
Currency
Translations		 Unrealized
gain or
loss on
available-
for-sale		 Gain or loss
from the
effective
portion of
financial
Item Total
Balance as of January 1, 2016 $583,467 $54,642 $7,080 $645,189
Unrealizedgain or loss for - (5,850) - (5,850)
available-for-sell financial
assets
Shares of subsidiaries,
associates and joint ventures
accounted for using equity
method		 (809,765) (1,230) 4,305 (806,690)
Balance as of December 31, 2016 ($226,298) $47,562 $11,385 ($167,351)
Exchange
differences
Foreign
Currency
Translations
Exchange
differences		 Unrealized
gain or
loss on
available-
for-sale
financial
assets		 Gain or loss
from the
effective
portion of
financial
instruments
that are
designated as
cash flow
hedges
Item Total
Balance as of January 1, 2015 $625,476 ($235,257) ($9,217) $381,002
Unrealized gain or loss for - 223,374 - 223,374
available-for-sell financial
assets
Shares of subsidiaries,
associates and joint ventures
accounted for using equity
method		 (42,009) 66,525 16,297 40,813
Balance as of December 31, 2015 $583,467 $54,642 $7,080 $645,189
(XXVI) Operating Revenue
Item 2016 2015
Sales revenue $22,448,350 $21,292,504
Construction reven ue 1,652,434 1,373,120
Processing revenue 127,928 40,161
Realized (Unrealized) profits fro m
(52,192)		 (21,179)
Total sales revenues $24,176,520 $22,684,606
Less: Sales return (316) -
Sales discount (308,539) (461,008)
Net Revenue $23,867,665 $22,223,598

398

(XXVII) Other income

Item 2016 2015
Interest income
Interest from bank deposits $2,517 $1,941
Other interest income 1,179 484
Subtotal $3,696 $2,425
Rent revenue 13,432 14,281
Dividend income 7,906 11,948
Other revenue
Claims on fire insurance (Note ) - 157,425
Income from sales of scrap material 34,417 29,729
Guaranteed fee income 31,831 33,913
Others 22,522 26,511
Total $113,804 $276,232 
(Note) The Rolling Plant I was on fire in September 2012 which destroyed some equipment either
partially or completely. The Company has received claims of NT$ 157,425 thousand in September,
2015, totaling the claims received to NT$ 417,583 thousand.

(XXVIII) Other gains and losses
Item 2016 2015
Bargain purchase gain - associates
 $ -
 $466,277
Bargain purchase gain - subsidiaries - 34,428
Subtotal
 $ -
 $500,705
Net foreign currency exchange gain (loss) $23,039 $68,641
Reversal of gain from (impairment loss on)
property, plant and equipment		 (2,564) -
Gain (loss) on disposal of property, plant and
equipment		 (18,408) (26,479)
Gain or loss from financial (295) (3,358)
assets/liabilities at fair value through profit or loss
Profit (loss) from disposal of financial assets ( (1,823) 14,145
Profit (loss) from disposal of investment 150 17,764
Additional land value tax levied - (35,502)
Other expenses (20,148) (33,305)
Total ($20,049) $502,611

399

1. Please refer to Note 6(IX) for details on bargain purchase gains from investments in associates. 

2. The Company’s land for Pingnan plant was originally taxed for land value tax as industrial
land. After it has been idled for a certain period of time, it is now taxed as general land. An
additional land value tax of NT$ 35,502 thousand was levied in 2015.

(XXIX) Personnel, depreciation, depletion and amortization expenses
Nature
Employee Benefits
Salary costs
Labor and health
insurance premiums
Pension cost (Note 1)
Other employee benefits
Depreciation (Note 2)
Total
Nature
Employee Benefits
Salary costs
Labor and health
insurance premiums
Pension cost (Note 3)
Other employee benefits
Depreciation (Note 4)
Total		 2016
Operating Cost
$733,375
64,655
43,447
135,909
511,042
$1,488,428		 Operating Expense
$381,005
28,178
19,282
36,512
16,497
$481,474
2015		 Total
$1,114,380
92,833
62,729
172,421
527,539
$1,969,902
Operating Cost
$614,417
63,291
40,901
97,477
478,684
$1,294,770		 Operating Expense
$311,229
28,137
18,677
25,451
22,145
$405,639		 Total
$925,646
91,428
59,578
122,928
500,829
$1,700,409 
(Note 1) Excluding pension of NT$ 511 thousand listed as equipment prepayments.

(Note 2) Excluding depreciation of NT$ 848 thousand listed as other gains and losses.

(Note 3): Excluding pension of NT$ 1,116 thousand listed as equipment prepayments.

(Note 4): Excluding depreciation of NT$ 847 thousand listed as other gains and losses.

1. Numbers of employees were 1,380 and 1,371 persons for the years ended in December 31, 2016 and 2015, respectively. 

2. Pursuant to the amended Company Act  in May, 2015, and the Articles  of Incorporaiton amended
on June 22nd, 2016, compensation to employees and remuneration to directors and supervisors
shall be floored at 0.2 % and capped at 0.1% repectively to the net income before tax before
which the compensation to employees and remuneration to directors and supervisors are deducted
from. 2016 Compensation to employees and remuneration to directors and supervisors in 2016 were
distributed at 0.2% and 0.1% to the net income before tax.104 Compensation to employees and
remuneration to directors and supervisors in 2015 were NT$ 0 thousand as a result of a operation
deficit. Any changes in the amounts, if any, after the issuance date of the annual financial
statement shall be accounted for using changes in accounting estimates, and should be entered
the next year.

400 

3. There is no difference between the fact that no compensation to employees and remuneration to
directors and supervisors was distributed for 2014 in the resolution of the Board of Directors
on May 10, 2016, and the description in the 2015 consolidated financial statement that
compensation to employees and remuneration to directors and supervisors were NT$ 0 thousand.
Compensation to employees and remuneration to directors and supervisors for the year of 2016 was
resolved and passed by the Board of Directors on March 21, 2017, and the recognized amounts in
the financial statement are as follows:
the financial statement are as follows:
2016
Employee compensaion Directors/supervisors
remuneration
Resolved distributed amount $6,044 $3,022
Recognized amount in the annual financial statement 6,044 3,022
Amounts of difference
 $ - $ - 
(1) The aforesaid employee compensation was paid in cash.

(2) Compensation to employees and remuneration to directors and supervisors for the year of 2015
has been reported to the shareholders meeting after being resolved in June, 2016.

4. Compensation to employees and remuneration to directors and supervisors for the year of 2014
has been resolved and pssed in the shareholders’ meeting on June 18, 2015. Relevant amounts
recognized in the financial statement are as follows:
2014
Employee bonus Directors/supervisors
remuneration
Resolved distributed amount $3,377 $675
Recognized amount in the annual financial statement 1,688 338
Amounts of difference $1,689 $337 
The difference between the amount resolved and the amount recognized in the 2014 financial
report is mainly estimate difference and has been adjusted in profit or loss for 2015.

5. Information about employee compensation (bonus) and remuneration to directors and supervisors
approved by the Board of Directors and resolved in the shareholders' meeting is available at the
Taiwan Stock Exchange Market Observation Post System website.

(XXX)Financial costs

Interest expense
Less: Amount qualified for capitalization
Financing Cost
Item		 2016
2015
$369,018
$333,615
(13,222)
(14,515)
$355,796
$319,100

401

(XXXI) Income Tax

1.Income Tax Expense

(1)Components of income tax expense:

(1)Components of income tax expense:
2016
Current income tax expense
$319,409
140,680
10% tax on retained earnings
-
Adjustment to prior income taxes
50,657
$510,746
(2) Income tax expense (gain) related to other comprehensive income:
2016
Share of other comprehensive income of subsidiaries,
($142,336)
associates and joint ventures accounted for using equity method
Remeasurement of defined benefit plans
(11,383)
Total
($153,719)
Item
Deferred taxes related to temporary difference and
loss deduction
Income tax expense recognized in profit and loss
Item		 2015
$51,034
(151,917)
-
(9,989)
($110,872)
2015
($28,759)
(8,802)
($37,561) 
2. A reconciliation of income before income tax and income tax expense recognized in profit or
loss is as follows:
loss is as follows:
2016
Income before income tax
$3,012,751
Income tax expense at the statutory rate
$512,168
Tax effect of adjusting items:
Effect of items not included in the calculation of taxable income
(205,711)
Timing difference of revenue recognition
19,569
Book-tax difference for depreciation
1,671
Bargain purchase gain
-
Realized (unrealized) investment losses
-
Other adjustments
(8,288)
Adjustment to prior income taxes
50,657
10% tax on retained earnings
-
Net changes of deferred income tax
Difference in depreciation period
(1,671)
154,031
Temporary differences
(11,680)
Income tax expenses recognized in profit and loss
$510,746
Loss (gain) on investments accounted for using
equity method
Loss (gain) on investments accounted for using
equity method
Item		 2015
($1,064,658)
($180,992)
354,120
26,852
3,289
(85,120)
(57,793)
(9,322)
(9,989)
-
(2,324)
(125,814)
(23,779)
($110,872)

402

3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits: 3. Deferred income tax assets or liabilities from temporary difference, loss carry forwards and investment credits:
2016
Recognized in other
Beginning
balance		 recognized
in profit
or loss		 Comprehensive
(loss) benefit		 Effect of
Exchange		 Ending Balanc
Deferred income tax assets:
Temporary differences
Loss (gain) on investments
accounted for using equity method		 $53,801 ($53,801) -
$		 -
$		 -
$
Exchange differences arising from
translation of foreign operations		 - - 48,883 - 48,883
Provision for inventory valuation
loss		 5,788 (4,753) - - 1,035
Loss of investments under cost
method		 1,283 (510) - - 773
Property, plant and equipment 37,930 436 - - 38,366
Impairment loss
Provision for sales return &
discount		 6,805 (6,363) - - 442
Book-tax difference for
depreciation		 9,045 1,671 - - 10,716
Compensation to unused annual leave 6,089 315 - - 6,404
Net defined benefit liabilities 115,004 (3,852) 8,672 - 119,824
Remeasurement of defined benefit
plans		 1,674 - 2,711 - 4,385
Timing difference of recognition on
sales revenue and cost		 28,909 19,569 - - 48,478
Others 9,183 8,267 - - 17,450
Subtotal $275,511 ($39,021) $60,266 -
$		 $296,756
Deferred income tax liabilities
Temporary differences
Unrealized exchange gains ($1,524) ($1,429) -
$		 -
$		 ($2,953)
Exchange difference on translation
of foreign operations' financial
statements		 (96,419) - 93,453 - (2,966)
translation of foreign operations
Loss (gain) on investments accounted f
(2,721)		 (100,230) - - (102,951)
Subtotal ($100,664) ($101,659) $93,453 -
$		 ($108,870)
Total $174,847 ($140,680) $153,719 -
$		 $187,886

403

2015 2015 2015 2015 2015 2015 2015
Recognized in other
Beginning
balance		 recognized
in profit
or loss		 Comprehensive
(loss)
benefit		 Effect of
Exchange		 Ending Balance
Deferred income tax assets:
Temporary differences
Loss (gain) on investments accounted
for using equity method		 ($73,829) $127,630 -
$		 -
$		 $53,801
Provision for inventory valuation
loss		 8,518 (2,730) - - 5,788
Loss of investments under cost method 1,283 - - - 1,283
Property, plant and equipment 37,930 - - - 37,930
Impairment loss
Provision for sales return & discount 5,929 876 - - 6,805
Book-tax difference for depreciation 6,721 2,324 - - 9,045
Compensation to unused annual leave 6,060 29 - - 6,089
Net defined benefit liabilities 111,059 (4,715) 8,660 - 115,004
Remeasurement of defined benefit
plans		 1,532 - 142 - 1,674
Timing difference of recognition on
sales revenue and cost		 2,057 26,852 - - 28,909
Others 4,192 4,991 - - 9,183
Subtotal $111,452 $155,257 $8,802 -
$		 $275,511
Deferred income tax liabilities
Temporary differences
Unrealized exchange gains -
$		 ($1,524) -
$		 -
$		 ($1,524)
Exchange difference on translation of
foreign operations' financial
statements		 (125,178) - 28,759 - (96,419)
Loss (gain) on investments accounted
for using equity method		 (905) (1,816) - - (2,721)
Subtotal ($126,083) ($3,340) $28,759 -
$		 ($100,664)
Total ($14,631) $151,917 $37,561 -
$		 $174,847

404

4. Items not recognized as deferred income tax assets:

ItemDecember 31, 2016December 31, 2015
Loss from investment accounted for using equity method403,430416,745
Loss of investments under cost method40,45140,451
Others10,4136,437
5. Information regarding integrated income tax is as follows:
ItemDecember 31, 2016December 31, 2015
Balance of shareholders' imputation credit accounts$534,140$462,588
Unappropriated earnings generated before 1997-    50,733
Unappropriated earnings generated after 19983,010,948557,909
Item20162015
-
Tax creditable ratio for distribution of earnings25.16%
(Estimated)(Actual)
Income Tax Act states that when distribution earnings of the year 1998 or each ensuing
year thereafter, except for shareholders not residing in the territory of the Republic
of China, shareholders can calculate the imputation tax based on the creditable ratio
as of the date of the dividend distribution However, pursuant to Article 66-6 of the
revised Income Tax Act, the creditable ratio for individual shareholders residing in
the territory of the Republic of China is reduced by half. The amendment is effective
from January 1, 2015.

The tax credits allocated to shareholders is based on the balance of imputation credit
account as of the date of the dividend distribution. The estimated creditable ratio in
2015 may change because the actual tax credits may differ from the tax credit projected
by the Company in accordance with the Income Tax Act.
6. The tax authorities have examined income tax returns of the Company through 2014.

405

(XXXII) Other Comprehensive Income (XXXII) Other Comprehensive Income (XXXII) Other Comprehensive Income
2016
Item Before tax Income tax expense (gain) Net after tax
Items not reclassified subsequently
to profit or loss:
Remeasurement of defined benefit plans ($51,013) $8,672 ($42,341)
Shares of subsidiaries, associates
and joint ventures accounted for
using the equity method		 (37,215) 2,711 (34,504)
Sub-total ($88,228) $11,383 ($76,845)
Items that may be reclassified
subsequently to profit or loss:
Unrealized valuation gain (loss) of
available-for-sale financial assets		 ($5,850) -
$		 ($5,850)
Shares of subsidiaries, associates
and joint ventures accounted for
using the equity method
Exchange difference on translation
of foreign operations' financial
statements		 (952,101) 142,336 (809,765)
Unrealized valuation gain (loss) of
available-for-sale financial assets		 (1,230) - (1,230)
Gain of loss arising from the
effective portion of financial
instruments that are designated as
cash flow hedges		 4,305 - 4,305
Sub-total ($949,026) $142,336 ($812,540)
Recognized in other comprehensive income
($1,037,254)		 $153,719 ($889,385)
2015
Item Before tax Income tax expense (gain) Net after tax
Items not reclassified subsequently
to profit or loss:
Remeasurement of defined benefit plans ($50,938) $8,660 ($42,278)
Shares of subsidiaries, associates
and joint ventures accounted for
using the equity method		 (29,730) 142 (29,588)
Sub-total ($80,668) $8,802 ($71,866)
Items that may be reclassified
subsequently to profit or loss:
Unrealized valuation gain (loss) of avai
$223,374		 -
$		 $223,374
Shares of subsidiaries, associates
and joint ventures accounted for
using the equity method
Exchange difference on translation
of foreign operations' financial
statements		 (70,768) 28,759 (42,009)
Unrealized valuation gain (loss) of
available-for-sale financial assets		 66,525 - 66,525
Gain of loss arising from the
effective portion of financial
instruments that are designated as
cash flow hedges		 16,297 - 16,297
Sub-total $12,054 $28,759 $264,187
Recognized in other comprehensive income
($68,614)		 $37,561 $192,321

406

(XXXIII) EPS for common stocks
Item 2016 2015
Net profit of the period attributable to the parent company $2,502,005 ($953,786)
Less: Dividends for preferred shares - -
Net profit attributable to shareholders of the parent company(A) $2,502,005 ($953,786)
Weighted average number of outstanding shares (thousand shares) (B) 1,718,090 1,718,090
Basic earnings per share (after tax) (NT$)(A)/(B) $1.46 ($0.56)
VII. Related-party transactions
(I) Theparent company and ultimate controller:
The Company is the ultimate controller of the Group.
(II) Significant transactions with related parties:
The Group changed its accounting treatment for its investment in Yieh United Steel Corporation to investments
accounted for using equity method in March 2015. Consequently, profit and loss items were classified under other
related parties before March 2015 and associates after March 2015; and balance sheet items are recognized under
associates. Details of transactions between the Group and other related parties are as follows:
1. Operating revenue
Accounting subject
Type of related party		 2016 2015
(XXXIII) EPS for common stocks (XXXIII) EPS for common stocks (XXXIII) EPS for common stocks
Item 2016 2015
Net profit of the period attributable to the parent company $2,502,005 ($953,786)
Less: Dividends for preferred shares - -
Net profit attributable to shareholders of the parent company(A) $2,502,005 ($953,786)
Weighted average number of outstanding shares (thousand shares) (B ) 1,718,090 1,718,090
Basic earnings per share (after tax) (NT$)(A)/(B) $1.46 ($0.56)
VII. Related-party transactions
(I) Theparent company and ultimate controller:
The Company is the ultimate controller of the Group.
(II) Significant transactions with related parties:
The Group changed its accounting treatment for its investment in Yieh United Steel Corporation to investments
accounted for using equity method in March 2015. Consequently, profit and loss items were classified under other
related parties before March 2015 and associates after March 2015; and balance sheet items are recognized under
associates. Details of transactions between the Group and other related parties are as follows:
1. Operating revenue
Accounting subject Type of related party 2016 2015
Sales income Subsidiary $319,416 $274,636
Associates 1,702,018 2,151,652
Other related parties 238,651 340,725
Total $2,260,085 $2,767,013
Construction revenue Subsidiary $4,007 $150,388
Associates 272 358
Other related parties 820,412 343,372
Total $824,691 $494,118
(A) Selling price to the Company's related parties, including hot rolled coil, galvanized coils, scrap (bar), etc.
and trading terms are the same with those to other customers. Payment period was within one to two months.
(B) Selling price of carbon steel and steel scraps to related parties are set with reference to the purchase price
of a non-related party as a trading counterpart. Payment term is monthly, and closes in 15 days.
(C) The construction contracts between the Company and above-mentioned related parties were established at prices
negotiated by both parties. Contract proceeds were collected according to the collection clauses stated in these
contracts. Unless agreed on by both parties, payments cannot be delayed.

407 

2.Purchases
Subsidiary
Associates
Other related parties
Total
Type of related party		 2016
2015
$1,119
$202,911
108,892
38,377
1,602,912
1,158,677
$1,712,923
$1,399,965		 
Items purchased by the Group from above related parties were mainly stainless billets and carbon
steel billets. The purchase prices are similar to that offered to other suppliers. Payment term
is LC at sight or T/T before shipment (not significantly different than terms to other
suppliers).

3.Accounts receivable - related parties (excluding loans to related parties)

Accounting subject
Notes receivable
Accounts receivable
Construction contracts
receivable
Other receivables		 Type of related party
Other related parties
Less: Bad debt allowance
Net
Subsidiary
Associates
Other related parties
Total
Less: Bad debt allowance
Net
Subsidiary
Associates
Other related parties
Total
Less: Bad debt allowance
Net
Subsidiary
Associates
Other related parties
Total
Less: Bad debt allowance
Net		 December 31, 2016
$218
-
$218
$57,007
123,748
2,003
$182,758
(598)
$182,160
$1,473
301
344,114
$345,888
-
$345,888
$10,360
3,163
277
$13,800
-
$13,800		 December 31, 2015
$67
-
$67
$49,420
156,573
245,355
$451,348
(1,874)
$449,474
$16,657
120
167,747
$184,524
-
$184,524
$10,227
1,237
4,427
$15,891
-
$15,891

408

4.Accounts payable - related parties (excluding loans from related parties)

Accounting subject
Notes payable
Accounts payable
Construction amounts
payable
Other payables
5. Prepayments		 Type of related party
Associates
Other related parties
Total
Associates
Subsidiary
Other related parties
Total
Subsidiary
Associates
Other related parties
Total
Type of related party
Other related parties		 December 31, 2016
$2,174
1,538
$3,712
-
$
$63
-
$63
$1,095
890
2,179
$4,164
December 31, 2016
$70,444		 December 31, 2015
$2,106
935
$3,041
$334
-
$
1,437
$1,437
$520
42
2,129
$2,691
December 31, 2015
$41,753
  • 6.Asset transactions: 
(1) Property, plant and equipment acquired:
2016
Name of related party
Other related parties		 Transaction target
Computer equipment, etc.		 Transaction amount
$600 
The above-mentioned transaction price was agreed on by both parties upon negotiation with
reference to appraisal reports or market prices. As of December 31, 2016, the transaction prices
are fully paid.

2015
Type of related party
Subsidiaries
Other related parties		 Transaction target
Other equipment (Note 1)
Land and Building (Note 2)		 Transaction amount
$350
161,849		 
(Note 1) The above-mentioned transaction price was agreed on by both parties upon negotiation
with reference to appraisal reports or market prices. As of December 31, 2015, the transaction
prices are fully paid.

409 

(Note 2) The Company purchased from other related party an office located in Zhongzheng
District, Taipei City. The transaction price was agreed on by both parties upon negotiation with
reference to appraisal reports and market price. As of December 31, 2015, the transaction prices
were fully paid.

(2) Disposal of property, plant, and equipment:

(2) Disposal of property, plant, and equipment:
Name of related party
Transaction target
Other related parties
Transportation equipment		 Transaction amount
Gains or loss from disposa
$76
$38
$38 
The above-mentioned transaction price was agreed on by both parties upon negotiation. As of
December 31, 2016, all the transaction amount was fully collected.

2015: None

  • (3) Acquisition of investment property: None.

  • (4) Disposal of investment property: None.

  • (5) Acquisition of financial assets: 

2016
2016
Type of related party
Subsidiaries
Assoticates		 Transaction target
16,000 thousand shares of Hong Yuh Assets
Management Co.,Ltd.
23,000 thousand shares of United Brightening
Development Corp.		 Transaction amount
$128,000
279,335		 
The above-mentioned transaction price of shares was agreed on by both parties upon negotiation
with reference to the net worth per share of the investees. As of December 31, 2016, transaction
prices were fully paid.

2015
Type of related party
Other related parties
Assoticates		 Transaction amount
7,810 thousand shares of Kuo Chang Enterprise Co., Ltd.
$110,942
289,085
6,120 thousand shares of ASIAZONE Co., Limited
249,677
281,960
Transaction target
21,581 thousand shares of United Brightening
Development Corp.
13,300 thousand shares of Skylark International Hotel
Co., Ltd.		 Transaction amount 
The above-mentioned transaction price of shares was agreed on by both parties upon negotiation
with reference to the net worth per share of the investees. As of December 31, 2015, transaction
prices were fully paid.

410

  • (6) Disposal of financial instrument: None.

  • (7) Acquisition of other assets: None.

  • (8) Disposal of other assets: None.

7. Loan to related parties:

  • (1) Other receivables

2015: None

  • (2) Interest revenue
Type of related party
Subsidiaries
Type of relatedparty
Subsidiaries
Interest range		 2016 2016
Ending balance
$310,000
2016
$807
2.50%		 The highest balance
$310,000

2015: None

8. Loan from related parties: None.

9. Guarantee and endorsement:

  • (1) The Company borrowed for related parties from banks and details of endorsement are as follows:
Type of related party
Subsidiary
Type of relatedparty
Subsidiary		 December 31, 2016
Currency
Amount
USD
132,000
CNY
1,405,000
NTD
2,016,000
December 31, 2015
Currency
Amount
USD
95,000
CNY
1,645,000
NTD
1,560,000		 
(2) Subsidiaries provided land as collateral for bank loans of NT$ 1,529,510 thousand and NT$ 629,510
thousand for the years ended in December 31, 2016 and 2015, respectively.

10. Others

  • (1) Miscellaneous income
Type of relatedparty
Subsidiary
Associates
Other related parties
Total		 2016
$54,105
18,767
2,117
$74,989		 2015
$57,663
15,224
4,034
$76,921 
These are mainly interest income, technical service income, garantee proceeds, and rent income. The rent
price is determined by contract and received monthly or quarterly.
  • (2) Miscellaneous expenses
Type of relatedparty
Subsidiary
Associates
Other related parties
Total		 2016
2015
$16,959
$15,198
37,711
36,109
110,025
83,778
$164,695
$135,085

411 

These are mainly service charges, export expenses, and rent expense. The rent price is
determined by contract and paid monthly or quarterly.

(3) Construction contracts

(a) Unfinished construction contracts with related parties as of December 31, 2016 were as
follows:
follows:
Type of Related Parties
Subsidiary
Associates
Other related parties		 Name of construction
Installation of overhead
cranes
Cantilever crane service
The above-ground
structure construction
of E-Da Asia Plaza
etc.		 Total contract price
$3,875
770
1,820,723		 Construction contracts
receivables/Construction
amounts payable
$1,473
63
301
-
344,114
-

412 

(b). As of December 31, 2014, unfinished projects with related parties were set out below:
Type of Related Parties
Subsidiary
Associates
Other related parties		 Name of construction
Total contract price
Installation of overhead
cranes
$190,258
$16,657
-
Cantilever crane service
813
120
-
The above-ground
structure construction
2,409,712
167,747
of E-Da Asia Plaza
1,437
and construction of a hospital for cancer
etc.
Construction contracts
receivables/Construction
amounts payable		 
11. To expand the plants, The Company signed a contract with Shin Phui Steel Corporation and
acquired right of use on the lands. Contract content is as follows:

(1) Leased object: Land No. 163, Sinping section, Pingtung City.

(2) Contracted period: 50 years from June 15, 2001 to June 14, 2051.

(3) Rental and payment: monthly rental of NT$ 500 thousand closing at the beginning of each
month.

(4) Royalty payment method: A lump-sum payment of NT$120,000 thousand, amortized over 50 years.

(5) Until December 31, 2016, a total of NT$ 37,300 thousand has been amortized.

(6) As of December 31, 2016 and 2015, the current portion of lease payments prepaid to Shin Phui
Steel Corporation for the Pingtung factory site totaled NT$ 2,400 thousand for both respective
years and were recognized in prepayments; Lease payments for periods beyond 12 months totaled
NT$ 80,300 thousand and NT$ 82,700 thousand, respectively and were included in long-term rental
prepayments.

12. Shin Yang Steel Co., Ltd. entered into an agreement with the Company to obtain the right to
use the Company’s steel pipe plant for plant expansion. Details of the agreement were as
follows:

(1) Leased object: lands located at Yuliao Rd., Qiaotou Dist and Ding-Yen-Tien Section in
Kaohsiung City, with a total area of 20,741 Pings , which were revised to 13,849 on April 1,
2015 upon negotiations by both parties.

(2) Contracted period: 10 years from April 1, 2015 to March 31, 2025.

(3) Rental collection:The two parties originally agreed on a monthly collection of NT$ 1,262
thousand. The rental was revised to NT$ 983 thousand to be collected at the beginning of each
month, upon negotiations from both parties on April 1, 2015.

(4) The recognized rental revenue were NT$ 11,796 thousand and NT$ 12,633 thousand for 2016 and
2015, respectively.

413

13. The Company's participation in the cash offering of related parties 13. The Company's participation in the cash offering of related parties 13. The Company's participation in the cash offering of related parties 13. The Company's participation in the cash offering of related parties 13. The Company's participation in the cash offering of related parties 13. The Company's participation in the cash offering of related parties with an increase in investment are with an increase in investment are with an increase in investment are
as follows:
2016
Investment Increment Shareholding Percentage
Number of
Investee shares
(thousand		 Amount Before
Offering		 After
Offering
shares)
Subsidiary 15,000 $150,000 15.00% 38.18%
Subsidiary 2,162 21,616 54.04% 54.04%
Subsidiary 1,400 13,995 85.29% 77.54%
Subsidiary 5,876 58,759 61.38% 62.59%
Associates 21,893 218,928 32.57% 32.84%
Associates 17,065 170,654 (Note) (Note)
(Note) Preferred shares of associates were purchased and recognized as debt instrument with no active
market.
2015
Investment Increment Shareholding Percentage
Number of
Investee shares
(thousand		 Amount Before
Offering		 After
Offering
shares)
13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:		 13. The Company's participation in the cash offering of related parties with an increase in investment are
as follows:
2016
Investment Increment Shareholding Percentage
Investee Number of
shares
(thousand
shares)		 Amount Before
Offering		 After
Offering
Subsidiary 15,000 $150,000 15.00% 38.18%
Subsidiary 2,162 21,616 54.04% 54.04%
Subsidiary 1,400 13,995 85.29% 77.54%
Subsidiary 5,876 58,759 61.38% 62.59%
Associates 21,893 218,928 32.57% 32.84%
Associates 17,065 170,654 (Note) (Note)
(Note) Preferred shares of associates were purchased and recognized as debt instrument with no active
market.
2015
Investment Increment Shareholding Percentage
Investee Number of
shares
(thousand
shares)		 Amount Before
Offering		 After
Offering
Subsidiary 28,180 $871,527 100.00% 100.00%
Subsidiary 17,901 179,006 100.00% 100.00%
Subsidiary 2,200 30,800 100.00% 100.00%
Subsidiary 6,000 60,000 - 15.00% (Note 1)
Subsidiary 1,020 10,200 44.56% 61.38%
Subsidiary 540 5,404 45.00% 54.00%
Subsidiary 480 15,765 - 80.00%
Associates 5,771 57,708 44.56% 44.56%
Associates 7,410 74,100 - 19% (Note 2)
Associates 28,442 284,425 28.44% 28.44%
Associates 1,709 17,086 17.09% 17.09% (Note 2)
Associates 157,200 1,100,400 19.97% 23.86%
(Note 1): Having control over which, please refer to Note 6 (IX) 2. (10).
(Note 2): Having significant influence over which, please refer to Note 6 (IX) 2. (5).

414 

(III) Information about remunerations to the management:
Item 2016 2015
Salary and other short-term employees’ benefits $35,241 $26,563
Benefits after retirement 616 469
Other long-term employees’ benefits - -
Benefits after resignation - -
Share-based payments - -
Total $35,857 $27,032

VIII. Pledged Assets

Assets below were put up as collateral for bank loans and performance guarantees:
Item December 31, 2016 December 31, 2015
Pledged demand deposits $55,117 $55,066
Pledged time deposits 38,700 -
Sub-total of other financial assets - curren $93,817 $55,066
Pledged time deposits $40,857 $47,422
Sub-total of other financial assets - non-curren $40,857 $47,422
Property, plant and equipment (net) $8,004,351 $7,661,167
Investment property 1,287,158 1,287,363
Total $9,426,183 $9,051,018 
IX. Important Contingent Liabilities and Unrecognized Contractual Commitments

(I) Guarantee notes issued to banks for loans, purchases, contract performance,
and waranty totaled NT$ 25,043,617 thousand and NT$ 20,111,571 thousand as at
December 31, 2016 and 2015 respectively.

(II) Guarantee notes received for contract performance bond and purchase promise
totaled NT$ 375,382 thousand and NT$ 343,997 thousand at December 31, 2016 and
December 31,2015 respectively.

(III) Unused letters of credits as of December 31, 2016 and 2015 , were as follows:
L/C Amount
Security Deposit
NTD 467,644
-
USD 13,052
-
JPY 7,979
-
December 31, 2016		 Unit: Thousand NTD
December 31, 2015
L/C Amount
NTD 467,644
USD 13,052
JPY 7,979		 L/C Amount
Security Deposit
NTD 251,692
-
USD 6,213
-
JPY 896
-
AUD 64
-

415 

(IV) For the Company’s endorsement and garantees for others as of the years ended December 31, 2016 and
2015, please refer to Note 7 (II) 9..

(V) As of December 31, 2016 and 2015, guarantee provided by banks for performance and warranty of the Company
amounted to NT$ 194,543 thousand and NT$ 171,494 thousand, respectively.

(VI)Material capital expenditure committed but not inccurred:

December 31, 2016: None
Item December 31, 2015
Property, plant and
equipment		 $27,680 
(VII)Establishment of important construction contracts

1. As of December 31, 2016, estimated total contract costs, contract costs paid, and expected completion
dates for contracts of an amount over NT$150,000 thousand signed but not completed are summarized below:
Type of construction Contract price
Total estimated
construction cost		 Construction cost paid
Completion %		 Expected year of completio
Accumulated profit or
loss recognized
The above-ground structure construction
of commercial buildings
of E-Da Asia Plaza		 1,820,539
1,739,116		 1,107,599
63.69%
2018
51,856
Construction of Condominium with Tunwei
Chin Pin
(Note 1)		 159,348
171,286		 168,679
98.48%		 2017
(11,938)
Construction of international multi-
purpose business building with Hwa Xung
Kee Tai
(Note 2)		 213,778
216,600		 207,855
95.96%		 2017
(2,822)
Construction of plant No. 3 for Taiwan
YKK Co., Ltd. in Jhongli Dist., Taoyuan
Chung-Lu Construction Co., Ltd.		 253,773
252,602		 210,083
83.17%		 2017
974
Main structure of the commercial
building at Banciao by Sun Pao Tsun		 154,469
169,101		 158,101
93.50%		 2017
(14,632)
6 40T-gantry cranes for
storage in the rear area at
Wharf No. 120 of
Kaohsiung Harbor (Note 4)		 311,100
303,571		 230,071
75.79%		 2017
5,706

416 

(Note 1): Contract amount increased by NT$ 1,133 thousand and total cost increased by NT$ 3,072 thousand
during the period.

(Note 2): Contract amount increased by NT$ 20,808 thousand and total cost increased by NT$ 23,867 thousand
during the period.

(Note 3): Contract amount increased by NT$ 8,184 thousand and total cost increased by NT$ 6,381 thousand
during the period.

(Note 4): Construction cost decreased by NT$ 12,839 thousand during the period.

2. As of December 31, 2015, estimated total contract costs, contract costs paid, and expected completion
dates for contracts of an amount over NT$150,000 thousand signed but not completed are summarized below:
Type of construction Contract price
Total estimated
construction cost		 Construction cost paid
Completion %		 Expected year of completio
Accumulated profit or
loss recognized
The above-ground
structure construction
of commercial buildings
of E-Da Asia Plaza		 1,820,539
1,739,116		 330,791
19.02%		 2017
15,487
Construction of
Condominium with Tunwei
Chin Pin
(Note 1)		 158,215
168,214		 162,553
96.63%		 2016
(9,999)
Construction of
international multi-
purpose business
building with Hwa Xung
Kee Tai		 192,970
192,733		 156,011
80.95%		 2016
192
Construction of E-Da
Cancer Hospital,
~~E Da Medical Foundation~~		 583,860
~~583 920~~		 576,813
~~98 78%~~		 2016
~~(60)~~
Top-down steel
construction of
commercial buildings for
E-Da Asia Plaza
(Note 3)		 186,383
164,247		 161,577
98.37%		 2016
21,776
Construction of JTI
plants in
Tainan Technology
Industrial Park by
Chung-Lu Construction
(Note 4)		 152,500
152,676		 149,856
98.15%		 2016
(176)
Main structure of the
commercial building at
Banciao by Sun Pao Tsun
Construction Co., Ltd.
(Note 3)
(Note 5)		 146,285
162,720		 157,727
96.93%		 2016
(16,435)
6 40T-gantry cranes for
storage in the rear area at
Wharf No. 120 of		 311,100

316,410		 6,677
2.11%		 2016
(5,310)		 
(Note 1): Contract amount increased by NT$ 6,786 thousand and construction cost increased by 10,220
thousand during the period.

(Note 2): Contract amount decreased by NT$ 2,660 thousand and construction cost increased by NT$ 6,020
thousand during the period.

(Note 3): Contract amount decreased by NT$ 4,490 thousand and total cost decreased by NT$ 18,036 thousand
during the period.
(Note 4): Contract amount increased by NT$ 2,500 thousand and total cost increased by NT$ 2,686 thousand
during the period.

(Note 5): Construction cost increased by NT$ 6,635 thousand during the period.

417

(VIII) Operating lease contracts:

As a lessee:

The Company has leased assets including Yulin Section (Qiaotou plant) under an operation lease
agreement with a term from 1996 to 2050. The Company has the right to renew the lease upon
expiration. Lease expense amounted to NT$ 33,724 thousand and NT$ 29,832 thousand was recognized
for the years ended December 31, 2016 and 2015, respectively. Moreover, total future minimum
lease payment payable due to un-cancellable contracts is as follows:
Item December 31, 2016 December 31, 2015
No more than 1 year $24,587 $22,234
More than 1 year but no more than 5 years 81,490 60,816
More than 5 years 320,985 321,741
Total $427,062 $404,791 
(IX) Yieh Mau Corp. entered syndicated loan agreements with First Commercial Bank and Mega
International Commercial Bank in June 2013. According to the contract, the Group and its related
parties shall jointly hold more than 50% of Yieh Mau Corp.'s issued shares at all times. There
has been no breach of contract from The Company and related parties  as of December 31, 2016.

(X) Great Emperor Hotel CO., LTD. ( the former E-Da Royal Skylark Hotel Co., Ltd.) and
Kingsgarden International CO., LTD. ( the former Kaohsiung E-Da Metropolis Co., Ltd.), two
subsidiaries, entered syndicated loan agreements with Land Bank of Taiwan and First Commercial
Bank in August 2014. According to the contract, the Company and its related parties shall
jointly hold more than 50% of Kingsgarden International CO., LTD. and Great Emperor Hotel CO.,
LTD.’s issued shares and gain the majority of directors' seats at all times.Yieh Hsing
Enterprise Co., Ltd., a subsidiary, held 100% of Kingsgarden International CO., LTD.and Great
Emperor Hotel CO., LTD., and acquire all directors' seats of both companies as of December 31,
2016.

(XI) E-Da Royal Hotel Co., Ltd. entered a joint liability agreement under a carveout with Land
Bank of Taiwan and other banks in September 2015. According to the agreement, the Company and
its related parties shall jointly hold more than 50% of E-Da Royal Hotel Co., Ltd.'s issued
shares at all times. There has been no breach of contract from the Company or related parties as
of December 31, 2016.

X. Significant Disaster Losses: None

XI. Significant Subsequent Events: None.

XII. Others

418

(I) Capital risk management

As the Company needs to maintain sufficient capital to meet the needs
for expansion and plant and equipment improvement, capital management
of the Company focuses on ensuring there are sufficient financial
resources and operating plans to meet the demands for operating
capital, capital expenditure, research and development expense, loan
repayment and dividend distribution in the next 12 months.

(II) Financial instruments

1. Fair value information about financial instruments

(1) Financial instruments not measured at fair value:

Management of the Company thinks that the carrying amount of financial
instruments not measured at fair value, including cash and cash
equivalents, accounts receivables, other financial assets, refundable
deposits, short-term loans, short-term bills payable, accounts payable,
long-term loans (including current portion), deposits received and
longterm payables, approximate their fair value or their fair value
cannot be reliably measured (financial assets carried at cost and
investment in debt instrument with no active markets).

(2) Financial assets measured at fair value: Please refer to Note 12 (IV).

( III.) Financial risk management policies:

The Company’s daily operations are affected by various financial
risks, e.g. market risk (including exchange rate, interest rate and
price risks), credit risk and liquidity risk.The Company is devoted to
identify, assess and avoid market uncertainties in order to eliminate
the potential adverse effects of market changes on the financial
performance. Before engaging in significant transactions, due approval
process by the Board of Directors must be carried out based on related
protocols and internal control procedures.While the financial plan is
underway, the Company shall comply with relevant financial operation
procedures on the overall financial risk management and segregation of
duties at all times.

1. The nature and degree of significant financial risks

(1) Market risk

A. Foreign exchange rate risk:

(A) The Company is exposed to exchange rate risk arising from the
sales, purchases and borrowings in currencies other than the Company’s
functional currency. The functional currency for entities within the
Company is mainly New Taiwan Dollars.Such transactions are denominated
mainly in US Dollars. To avoid a decrease in the value of assets
dominated in foreign currency and volatility in future cash flows due
to changes in exchange rates, the Company hedges the exchange rate risk
with foreign-currency borrowings and derivative financial instruments .
Those derivative financial instruments can diminish but not completely
eliminate the impacts of changes in exchange rate.

As net investments in foreign operations are strategic investments, the
Company does not hedge for those activities.

419

(B)Exchange rate exposure and sensitivity analysis: (B)Exchange rate exposure and sensitivity analysis: (B)Exchange rate exposure and sensitivity analysis:
December 31,2016
Carrying Amount Sensitivity Analysis
Foreign currency
Exchange rates		 (New Taiwan
Dollars)		 Range of
change		 Effect on gain
or loss		 Effect on equity
(Foreign currency : Functional
currency)
Financial assets
Monetary items
USD:NTD 47,634 32.25 1,536,188 Up 1% 15,362 -
Long-term investment accounted for
using equity method
USD:NTD 382,730 32.25 12,343,034 Up 1% - 123,430
Financial liabilities
Monetary items
USD:NTD 2,149 32.25 69,306 Up 1% (693) -
December 31, 2015
Carrying Amount Sensitivity Analysis
Foreign currency
Exchange rates		 (New Taiwan
Dollars)		 Range of
change		 Effect on gain
or loss		 Effect on equity
(Foreign currency : Functional
currency)
Financial assets
Monetary items
USD:NTD 56,676 32.825 1,860,399 Up 1% 18,604 -
Long-term investment accounted for
using equity method
USD:NTD 367,958 32.825 12,078,208 Up 1% - 120,782
Financial liabilities
Monetary items
USD:NTD 34,732 32.825 1,140,088 Up 1% (11,401) -
If NTD appreciated against the currencies above and all other variation factors hold constant, the impact generated as of December 31,
2015, and 2014 would stay the same with reverse result.
(C) The monetary items of the Company are deemed to be significant due to the fluctuation of exchange rates. All exchange gains or losses
(realized and unrealized) recognized are NT$ 23,039 thousand and NT$ 68,641 thousand for 2016 and 2015, respectively.
B. Price risk
As investments held by the Company are classified in this standalone financial statement as financial assets available-for-sale, or as
financial assets at FVTPL, the Company is exposed to price risks arising from equity instruments, bond funds and financial bonds.
The Company primarily invests in domestic listed equity instruments and the
price of which were impacted by the uncertainty of future prices. For the years ended December 31, 2016 and 2015, if the prices of those
financial net income from financial instruments at fair value through profit or loss would increase or decrease by NT$ 1,018 thousand and
NT$ 1,100 thousand, respectively; and contribution from gains or losses on available-for-sale equity instruments to shareholders' equity
would increase or decrease by NT$ 466 thousand and NT$ 524 thousand, respectively.

420

C. Interest rate risk C. Interest rate risk C. Interest rate risk
Interest rates of interest-bearing financial instruments held by the Company as
of the reporting date are summarized as follows:
Carrying Amount
Item 105.12.31 104.12.31
Fixed-rate instruments:
Financial assets $314,711 $115,629
Financial liabilities (339,777) (439,587)
Net ($25,066) ($323,958)
Floating-rate instruments:
Financial assets $1,304,457 $1,548,610
Financial liabilities (15,776,228) (16,186,539)
Net ($14,471,771) ($14,637,929)
(A) Sensitivity analysis of fixed-interest instruments:
The Company possessed no material fixed-interest assets or liabilities at fair
value through profit and loss or available for sale. No derivative instruments
(interest swap) qualifying as hedging tools under hedge accounting, was engaged
to hedge fair value. Therefore, the fluctuation in interest rate on reporting
date will not affect the income and other comprehensive income.
(B) Sensitivity analysis of interest-fluctuate instruments:
The interest-fluctuate instruments possessed by the Company were floating-
interest assets (liabilities). Therefore the effective interest rate, as well as
the future cash flows, changes along with the market movement. Every one percent
increase (decrease) in the interest will increase (reduce) the net profit by
(NT$ 144,718 ) thousand and (NT$ 146,379 ) thousand, respectively, for 2016 and
2015.
(2) Credit risk
Credit risk refers to the risk of financial loss to the Company arising from
default by counterparties of financial instruments on the contract
obligations.Credit risk of the Company mainly comes from receivables under
operating activities and bank deposits and other financial instruments under
investing activities. Operational credit risk and financial credit risk are
managed seperately.
A.Credit risk related to operations:
To maintain the quality of accounts receivable, the Company has established the
procedures for credit risk management with regards to its operations.
Risk assessment on individual customer includes factors,risk assessment on
individual customer includes factors that could affect the customer's ability to
pay, such as the customer's financial status, the Company’s internal credit
ratings, historical transactions and current economic conditions.

421

As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.		 As of the years ended in December 31, 2016 and 2015, the balance of accounts receivables from the top 10
customers accounts for 69.41% and 71.54% to that of the Company. Other receivables have relevant insignificant
concentration of credit risks.
B. Financial credit risk:
Credit risks from bank deposits and other financial instruments are evaluated
and monitored by the Company's financial department. The Company does not expect significant credit risk
because the counterparties are creditworthy and investment-graded financial institutions, companies and
government agencies.
C. The company evades credit risks from financial assets by holding collateral and other credit enhancements:
Information about financial assets recognized in the standalone balance sheet and the financial impacts of
collateral, master netting arrangements and other credit enhancement held by the Company on maximum exposure to
credit risk is as follows:
Decrease in the Maximum Exposure to Credit Risk
December 31, 2016 Collateral Master
Netting
Arrangements		 Other
Credit
Enhancement		 Total
Receivables
(including
related
parties)		 -
$		 -
$		 $952,532 $952,532
Decrease in the Maximum Exposure to Credit Risk
Dec. 31, 2015 Collateral Master
Netting
Arrangements		 Other
Credit
Enhancement		 Total
Receivables
(including
related
parties)		 -
$		 -
$		 $728,267 $728,267
(3) Liquidity Risk
A. Liquidity risk management policies:
The Company's objective in managing liquidity risk is to maintain a sufficient level of cash and cash
equivalents, highly-liquid marketable in order to ensure the financial flexibility of the Company.

422

B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity		 B. The table below shows an analysis of the financial liabilities held by the Company with defined repayment terms based on
maturity dates and undiscounted payment at maturity
December 31,2016
Non-
derivative
financial
liabilities		 Less than 6
months		 6-12 months 1--2 years 2--5 years Over 5
years		 Contractual
cash flows		 Carrying
amount
Short-term loan $5,555,868 $630,000 -
$		 -
$		 -
$		 6,185,868 $6,185,868
Short-term notes
and bills
payable		 340,000 - - - - 340,000 339,777
Notes payable 642,048 - - - - 642,048 642,048
Accounts payable 700,059 - - - - 700,059 700,059
Other payables 558,691 9,066 - - - 567,757 567,757
Long-term loans 306,570 481,570 1,179,640 6,907,920 729,100 9,604,800 9,590,360
(including the
current portion)
Deposits received - - - - 2,000 2,000 2,000
Total $8,103,236 $1,120,636 $1,179,640 $6,907,920 $731,100 $18,042,532 $18,027,869
December 31, 2015
Non-
derivative
financial
liabilities		 Less than 6
months		 6-12 months 1--2 years 2--5 years Over 5
years		 Contractual
cash flows		 Carrying
amount
Short-term loan $7,709,065 $200,000 -
$		 -
$		 -
$		 $7,909,065 $7,909,065
Short-term notes
and bills
payable		 440,000 - - - - 440,000 439,587
Notes payable 604,413 420 - - - 604,833 604,833
Accounts payable 515,536 - - - - 515,536 515,536
Other payables 451,782 - - - - 451,782 451,782
Long-term loans 117,630 173,570 1,861,651 6,014,049 129,100 8,296,000 8,277,474
(including the
current portion)		 -
Deposits received - - - - 2,000 2,000 2,000
Total $9,838,426 $373,990 $1,861,651 $6,014,049 $131,100 $18,219,216 $18,200,277
The Company does not expect a significant difference in the cash flows timing o
analysis.		 r the actual amount from the maturity
(IV) Information on fair value:
1. For information on fair value of financial assets and financial liabilities not measured at fair value, please refer to
Note 12, (II), 1. For fair value of investment property measured at cost, please refer to Note 6 (XIV). For fair value of
investments in associates with quoted prices in an open market, please refer to Note 6(IX)
2. Definition of the three levels in fair value:
Level 1:
Level 1 inputs are quoted prices in active markets for identical instruments. An active market is a market that meets all
of the conditions set below: the items traded in the market are homogeneous, willing buyers and sellers can normally be
found at any time and prices are available to the public. The fair value of the Company's investments in listed stocks,
beneficiary certificates, on the-run Taiwan government bonds and derivatives with quoted prices in an active market are all
level 1 inputs.

423

Level 2:
Level 2 Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly in an active market. The fair value of the Company's investments in off the-run government bonds, corporate
bonds, bank debentures, convertible corporate bones and the majority of derivative instruments are all level 2 inputs.
Level 3:
Level 3 inputs refer to inputs used in the fair value measurement that are not observable from the market. Some derivative
instruments and equity instruments with no active market held by the Company are all level 3 assets.
3. Information about fair value hierarchy:
The fair value hierarchy of the Company's financial instrument measured at fair value on a recurring basis is disclosed as follows:
December 31,2016
Item Level 1 Level 2 Level 3 Total
assets:
Recurring fair value
Financial assets at fair value
through profit or loss
Non-derivative financial assets
held for trade
 $91,783 $9,999 -
$		 $101,782
Available-for-sale financial
assets
Equity securities
 46,575 - - 46,575
Total $138,358 $9,999 -
$		 $148,357
December 31, 2015
Item Level 1 Level 2 Level 3 Total
assets:
Recurring fair value
Financial assets at fair value
through profit or loss
Non-derivative financial assets
held for trade		 $99,958 $9,999 -
$		 $109,957
Derivative financial instruments - 149 - 149
Available- for-sale financial assets
Equity securities 52,425 - - 52,425
Total $152,383 $10,148 -
$		 $162,531

424 

4. Fair value valuation technique for instruments measured at fair value:

(1) The fair value of financial instruments with quoted prices in
active markets is the quoted market prices. Market prices published by
major trading centers and exchanges for on-the-run government bonds are
the basis for the fair value of listed equity instruments and debt
instruments with quoted prices in active markets. A market is regarded
as active if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service or regulatory
agency, and those prices represent actual and regularly occurring
market transactions on an arm's length basis. If one of the conditions
fails, the market is not deemed active.In general, indications of an
inactive market include a wide bid-ask spread, a significant increase
in the bid-ask spread and low level of trading volume.

The fair value of financial instruments with active markets held by the
Company are stated by their types and natures as follows:

A. Listed stocks: closing prices

B. Open-end funds: net worth

(2) When evaluating financial instruments that are non-standard and
with lower complexity, e.g. debt instruments with no active markets,
interest rate swaps, foreign exchange swaps and options, the Company
adopts valuation techniques that are commonly used by market
participants. The parameters used in the valuation models for those
financial instruments are normally observable data in the market.

(3) Valuation of derivative financial instruments adopts valuation
models that are commonly used by market participants, e.g. discounted
cash flows method and option pricing model.

(4) Outputs from the valuation models are estimates and valuation
techniques may not be able to reflect all relevant factors of the
financial and non-financial instruments held by the Company. Therefore,
when needed, estimates from the valuation model would be adjusted based
on additional parameters, e.g. model risk or liquidity risk. According
to the Company’s policies of fair value valuation management and
relevant control procedures, the Company’s management considers that
valuation adjustments are necessary and appropriate for a fair and just
presentation of financial and non-financial instruments on the
consolidated balance sheet. Every price data and parameters used in the
valuation is reviewed thoroughly and adjusted for current market
conditions.

(5) The Company incorporates the adjustment of credit risk assessment
into the fair value calculation of financial and non-financial
instruments to reflect the credit risk of counterparty and the credit
quality of the Company.

5. Transfers between Level 1 and Level 2  fair value hierarchy: None

6. Statement of changes in Level 3 fair value hierarchy: None.

7.  Quantitative information about the significant unobservable inputs
(level 3) used in the fair value measurement : None.

8. Valuation process for Level 3 fair value measurement: Not applicable.

9. For measurement of Level 3 fair value, the sensitivity analysis of
reasonably possible alternative assumptions on fair value: Not
applicable.

425

(V) Transfer of financial assets: None. (V) Transfer of financial assets: None. (V) Transfer of financial assets: None. (V) Transfer of financial assets: None.
(VI) Offsetting financial assets and financial liabilities: None.
(VII) Disaster Losses:
Due to strikes from Typhoon Nepartak and Typhoon Meranti, part of the
production equipment and inventories were immersed in water. Estimates on
incurred losses are as follows:
Item Inventory Property, plant and equipment Total
Estimated amount of loss $5,252 $7,914 $13,166
Estimated amount of claims (2,668) (5,350) (8,018)
Amount of
deductible
by the
Company		 $2,584 $2,564 $5,148
1. The flood impaired inventory of NT$ 5,252 thousand was sold at a lower
price because of its irreparable condition, and the estimated amount of
claims receivables were NT$ 2,668 thousand (recognized under other
receivables).
2. The flood impaired property, plant and equipment of NT$ 7,914 thousand
is recognized under property, plant and equipment - accumulated
impairment. The Company had to assume the minimum deductible of NT$ 2,564
thousand (recognized in other gains and losses). The rest of NT$ 5,350
thousand was claimable from the insurance company. (recognized under other
receivables). The Company repaired the various equipment in an active
manner after the flood. For the current period, repairment expense of NT$
535 thousand had been written down to accumulated impairment.
XIII. Additional Disclosures
(I) Related information on material transactions
1. Loans to others: Appendix 1
2. Endorsements and Guarantees: Appendix 2.
3. Marketable securities held: Appendix 3.
4. Aggregate trading value on the same securities (including purchase and
sales) reaching NT$300 million or 20 percent of the paid-in capital or
more: Appendix 4.
5. Property acquired reaching NT$300 million or 20% of the paid-in capital or more: Appendix 5.
6. Property disposed of reaching NT$300 million or 20% of thepaid-in capital or more: None.
7. Purchases and sales with related parties reaching NT$100 million or 20%
of the paid-in capital or more: Appendix 6.
8. Receivables from Related Parties Exceeding $100 Million or 20% of the
paid-in capital: Appendix 7.
9. Trading activities in financial derivatives: Please refer to Note 6(II) for details.
(II) Reinvestment Information(before elimination in consolidation): Appendix 8.
(III) Investments in Mainland China: Appendix 9.

426

Appendix I

Yieh Phui Enterprise Co., Ltd.

Loans to Others

December 31, 2016

Unit: Thousands of NT Dollars/ Foreign Currencies

No. Name of Creditor Name of Borrower Financial
Statement
Accounts		 Whether a
Related
Party		 Highest balance
for the current
period
Ending Balance		 Actual amount
used		 Interest
rate
range		 Nature of
loan
Amount
arising
from
ordinary
course of
business		 Reason for
Short-Term
Financing		 Amou
nt of
Allow
ance
for
Doubt
ful
Accou
nt		 Collate ral
Name Value
Limit on loans
Limit of total
granted to
loans
single party
0 Yieh Phui Enterprise Co., Ltd. Great Emperor Hotel CO., LTD. Other
Receivables -
Related Parties		 Y 350,000 350,000 110,000 2.50% 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 2)		 11,015,060
(Note 1)
0 Yieh Phui Enterprise Co., Ltd. Kingsgarden International CO.,
LTD.		 Other
Receivables -
Related Parties		 Y 400,000 400,000 200,000 2.50% 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 2)		 11,015,060
(Note 1)
1 EMMT Systems Corporation AWID Asia Co., Ltd. Other
receivables		 Y 19,000 8,000 8,000 2.955% 2 － Operating
capital
requirement		 － － －
148,176 148,176
(Note 2) (Note 1)
2 Yieh Phui (Hong Kong) Holdings
Limited		 Yieh Phui (China)
Technomaterial Co., Ltd.		 Long-Term
Receivables -
Related Parties		 Y 4,988,775
(RMB 42,000)
(USD 148,500)		 3,554,073
(RMB 102,000)
(USD 95,500)
3,554,073
(RMB 102,000)
(USD 95,500)
3.7171%
-10.2055%		 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 3)		 11,015,060
(Note 3)
3 Golden Developments Holdings Ltd. Yieh Phui (Hong Kong)
Holdings Limited		 Other
Receivables -
Related Parties		 Y 1,505,621
(RMB 295,000)
241,748
(RMB 52,000)		 241,748
(RMB 52,000)		 5.43%
-5.85%		 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 3)		 11,015,060
(Note 3)
4 Good Honor Holdings Ltd. Yieh Phui (Hong Kong)
Holdings Limited		 Long-Term
Receivables -
Related Parties		 Y 150,525
(USD 4,500)		 145,125
(USD 4,500)		 145,125
(USD 4,500)		 1.58%
-2.70%		 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 3)		 11,015,060
(Note 3)

427

5 Yieh Phui (China) Technomaterial Co.,
Ltd.		 Tianjin Lianfa Precision Steel
Co., Ltd		 Long-Term
Receivables -
Related Parties		 Y 387,540
(RMB 75,000)		 204,556
(RMB 44,000)		 204,556
(RMB 44,000)		 4.75% 2 － Operating
capital
requirement		 － － － 11,015,060
(Note 3)		 11,015,060
(Note 3)
6 Applied Wireless Identifications Group,
Inc.		 EMMT Systems Corporation Other
Receivables -
Related Parties		 Y 26,092 － － 2% 2 － Operating
capital
requirement		 － － － 50,530
(Note 2)		 50,530
(Note 1)
7 Shin Phui Steel Corporation EMMT Systems Corporation Other
Receivables -
Related Parties		 Y 15,000 15,000 － 2.25% 2 － Operating
capital
requirement		 － － － 15,797
(Note 4)		 126,375
(Note 4)
8 Shin Yang Steel Co., Ltd. EMMT Systems Corporation Other
Receivables -
Related Parties		 Y 80,000 80,000 － - 2 － Operating
capital
requirement		 － － － 152,727
(Note 4)		 305,453
(Note 4)

(Note 1) The aggregate amount of loan shall not exceed 40% of the net value of the creditor.

(Note 2) The maximum amount of loans granted to a single entity shall not exceed 40% of the creditor's net worth.

(Note 3): The total amount of loans between foreign companies that are 100% owned, directly or indirectly by the Company, shall not exceed 40% of the Company’ s net worth and the maximum amount of loans granted to a single entity shall not exceed 40% of the Company's net worth.

(Note 4) The total amount of loans granted to parties in need of short-term financing shall not exceed 40% of the Company's net value; the amount of loans granted to a single party in need of short-term financing shall not exceed, (1) 20% for Shin Yang Steel Co., Ltd. , and (2) 5% for other parties, of the Company's net value.

(Note 5) Please fill out the nature of loan according to the following instructions: For those who we have business contacts with please mark "1"; for those have short-term financing needs please mark "2".

428

Appendix II

Yieh Phui Enterprise Co., Ltd. Endorsements and Guarantees December 31, 2016

Unit: Thousands of NT Dollars/ Foreign Currencies

No. Name of the company providing
guarantee		 Parties being guaranteed Parties being guaranteed Limits on
Endorsement/Guar
antee Amount
Provided to Each
Party		 Maximum guarantee
amount
for the current period		 Outstanding
guarantee amount
- ending		 Actual amount
borrowed		 Guarantee
amount
with
collateral
placed
Ratio of
accumulated
guarantee
amount to
latest net
worth of the
Company		 Limit of
guarantee		 Endorse
ment/Gu
arantee
Made by
a Parent
Compan
y for a
Subsidia
ry
Endorse
ment/Gu
arantee
Made by
a
Subsidiar
y for a
Parent
Compan
y		 Endorsem
ent/Guara
ntee Made
for Parties
in China

Company name		 Relationship
0 Yieh Phui Enterprise Co., Ltd.
(Note 1)		 Yieh Phui (China) Technomaterial
Co., Ltd.		 Subsidiary of the
Company's
subsidiary		 27,537,651 6,864,611
(RMB 1,345,000)		 6,252,905
(RMB 1,345,000)		 5,963,458
(RMB 1,282,740)		 － 22.71% 27,537,651 Y － Y
EMMT Systems Corporation The Company's
subsidiary		 27,537,651 130,000 130,000 41,433 － 0.47% 27,537,651 Y － －
Shin Yang Steel Co., Ltd. The Company's
subsidiary		 27,537,651 1,886,000 1,886,000 905,227 336,000 6.85% 27,537,651 Y － －
Yieh Phui (Hong Kong) Holdings
Limited		 The Company's
subsidiary		 27,537,651 4,257,000
(USD 132,000)		 4,257,000
(USD 132,000)		 3,962,058
(USD 116,800)
(RMB 42,000)		 － 15.46% 27,537,651 Y － －
Golden Developments Holdings
Ltd.		 The Company's
subsidiary		 27,537,651 1,531,140
(RMB 300,000)		 278,940
(RMB 60,000)		 278,940
(RMB 60,000)		 － 1.01% 27,537,651 Y － －
1 Shin Phui Steel Corporation
(Note 2)		 Yieh Phui Enterprise Co., Ltd. The Company's
Parent Company		 1,579,693 629,510 629,510 363,619 629,510 199.25% 1,579,693 － Y －
2 EMMT Systems Corporation
(Note 3)		 Awid China Co., Ltd. Subsidiary of the
Company's
subsidiary		 370,440 6,021 － － － － 370,440 Y － Y
3 Kingsgarden International CO.,
LTD. (Note 4)		 Great Emperor Hotel CO., LTD. (Note 9) 14,715,928 7,186,000 7,186,000 3,385,000 7,186,000 341.82% 14,715,928 － － －
4 Great Emperor Hotel CO., LTD.
(Note 5)		 Kingsgarden International CO.,
LTD.		 (Note 9) 14,389,054 7,413,000 7,413,000 3,441,000 7,413,000 360.63% 14,389,054 － － －
5 Yieh Phui (China)
Technomaterial Co., Ltd.
(Note 6)		 Tianjin Lianfa Precision Steel Co.,
Ltd		 The Company's
subsidiary		 9,802,749 79,835
(RMB 17,000)		 79,033
(RMB 17,000)		 79,033
(RMB 17,000)		 － 0.81% 9,802,749 Y － Y

429

6 Shin Yang Steel Co., Ltd. (Note
7)		 Yieh Phui Enterprise Co., Ltd. The Company's
Parent Company		 2,290,894 900,000 900,000 700,000 900,000 117.86% 2,290,894 － Y －

  • (Note 1): The aggregate amount of endorsement/guarantee made by the Company shall not exceed the net worth of the Company; the amount of endorsement/guarantee provided to a single subsidiary shall not exceed the net worth of the Company.

  • (Note 2): The aggregate amount of endorsement/guarantee made by Shin Phui Steel Corporation shall not exceed 5 times of the net worth of Shin Phui Steel Corporation; the amount of endorsement/guarantee provided to a single enterprise shall not exceed 5 times of the net worth of Shin Phui Steel Corporation.

  • (Note 3): The aggregate amount of endorsement/guarantee made by EMMT Systems Corporation shall not exceed 1 time of the net worth of EMMT Systems Corporation; the amount of endorsement/guarantee provided to a single subsidiary shall not exceed 1 time of the net worth of EMMT Systems Corporation.

  • (Note 4): The aggregate amount of endorsement/guarantee made by Kingsgarden International CO., LTD. shall not exceed 7 times of the net worth of Kingsgarden International CO., LTD.; the amount of endorsement/guarantee provided to a single enterprise shall not exceed 7 times of the net worth of Kingsgarden International CO., LTD..

  • (Note 5): The aggregate amount of endorsement/guarantee made by Great Emperor Hotel CO., LTD. shall not exceed 7 times of the net worth of Great Emperor Hotel CO., LTD.; the amount of endorsement/guarantee provided to a single enterprise shall not exceed 7 times of the net worth of Great Emperor Hotel CO., LTD..

  • (Note 6): The aggregate amount of endorsement/guarantee made by Yieh Phui (China) shall not exceed the net worth of Yieh Phui (China); the amount of endorsement/guarantee provided to a single subsidiary shall not exceed the net worth of Yieh Phui (China).

  • (Note 7): The aggregate amount of endorsement/guarantee made by Shin Yang Steel Co., Ltd shall not exceed 3 times of the net worth of Shin Yang Steel Co., Ltd; the amount of endorsement/guarantee provided to a single enterprise shall not exceed 3 times of the net worth of Shin Yang Steel Co., Ltd..

  • (Note 8): The net worth referred to above is based on the latest financial statements audited or reviewed by independent auditors.

(Note 9): Mutually guaranteed companies based on the need of construction contract.

430

Appendix III

Yieh Phui Enterprise Co., Ltd.

Marketable Securities Held (excluding investee subsidiaries, associates, and joint ventures)

December 31, 2016

Unit: Thousands of Shares; Thousands of NTD/Foreign currency

Held by Type and name of marketable securities Relationship with
the
issuers		 Financial statement account Ending Balance Ending Balance Note
Number of
shares or
units
(thousand
shares)		 Carrying
amount		 Shareholding
Percentage		 Fair value
Yieh Phui
Enterprise
Co., Ltd.		 Beneficial Certificate/ Asia Pacific (ex-Japan) Investment Grade Government
Bond Index Fund		 None Financial asset measured at fair value through profit and
loss-curent		 500 4,406 － 4,406
Beneficiary certificates / Eastspring Investments South Africa Fixed Income
Fund		 None Financial asset measured at fair value through profit and
loss-curent		 300 8,203 － 8,203
Beneficiary certificates /Paradigm Global Oil Resources Securities Investment
Trust Fund		 None Financial asset measured at fair value through profit and
loss-curent		 516 3,268 － 3,268


Beneficiary certificates / Sino Pacific RMB Bond-Accu (TWD)		 None Financial asset measured at fair value through profit and
loss-curent		 300 2,720 － 2,720
Beneficiary certificates / Fu Hua China New Economy Balanced Fund None Financial asset measured at fair value through profit and
loss-curent		 600 5,052 － 5,052
Beneficiary certificates / Fuh Hwa China New Economy A Shares Equity Fund None Financial asset measured at fair value through profit and
loss-curent		 1,000 5,950 － 5,950
Beneficiary certificates / Paradigm Pion Money Market Fund None Financial asset measured at fair value through profit and
loss-curent		 876 10,034 － 10,034

431

Beneficiary certificates / Mega Greater China Balanced Fund None Financial asset measured at fair value through profit and
loss-curent		 1,000 9,120 － 9,120
Beneficiary certificates / Franklin Templeton SinoAm Multi-Asset Income
Balanced Fund		 None Financial asset measured at fair value through profit and
loss-curent		 1,000 9,910 － 9,910
Beneficiary certificates / Prudential Financial Multi-Income Fund of Funds None Financial asset measured at fair value through profit and
loss-curent		 300 2,959 － 2,959
Beneficiary certificates / HSBC China Multi-Asset Income Balance Fund None Financial asset measured at fair value through profit and
loss-curent		 500 4,995 － 4,995
Beneficiary certificates / Union Global Balanced Fund None Financial asset measured at fair value through profit and
loss-curent		 500 5,029 － 5,029
Beneficiary certificates / FSITC Global Financial Technology Trust None Financial asset measured at fair value through profit and
loss-curent		 500 4,985 － 4,985
Beneficiary certificates / CTBC Global Silver Age Blanced Income Fund None Financial asset measured at fair value through profit and
loss-curent		 500 5,050 － 5,050
Beneficiary certificates / Taishin RMB & USD Money Market Fund None Financial asset measured at fair value through profit and
loss-curent		 500 5,038 － 5,038
Beneficiary certificates / AB FCP I Global High Yield AT Income Bond None Financial asset measured at fair value through profit and
loss-curent		 493 5,064 － 5,064
Total 91,783 91,783

432

Holder Type and Name of Securities Relationship with
the Issuer of
Securities		 Category The End of the Period The End of the Period The End of the Period The End of the Period Note
Number of
Shares
(thousand
shares)		 Carrying
amount		 Shareholdin
g Ratio		 Fair value
Financial bonds / Bank of Panshin's first issue of secondary financial
bonds of 2014		 None Financial asset measured at fair value through
profit and loss		 10,000
9,999
－		 9,999
Stock / Taiwan Vespa Co., Ltd. Related party Financial Assets Carried at Cost 1,800
55,899
3.60%
－		 Notes
Stock / New Spring Construction Corp. Related party Financial Assets Carried at Cost 7,640
41,833
15.49%
－		 Notes
Stock / Shang Yang Venture Capital Co., Ltd. None Financial Assets Carried at Cost 2,352
23,520
6.42%
－		 Notes
Stock / Taiwan Implant Technology Company None Financial Assets Carried at Cost-None Current 1,891
18,913
4.20%
－		 Notes
Stock / Yangxin Commercial Bank Co., Ltd. None Financial Assets Carried at Cost 3,736
35,482
0.19%
－		 Notes
Stock / Global Venture Capital co., Ltd. None Financial Assets Carried at Cost 1,100
9,130
0.91%
－		 Notes
Stock / Yieh Corporation Limited Related party Financial Assets Carried at Cost 200
2,002
5.60%
－		 Notes
Stock / Pacific Shipment Co., Ltd. Common
director(s)		 Financial Assets Carried at Cost 150
1,650
3.00%
－		 Notes
Stock / Neoflex Technology Co., Ltd. None Financial Assets Carried at Cost 104
1,060
0.27%
－		 Notes
Stock / Carpenter Code Information Co., Ltd. None Financial Assets Carried at Cost 24
535
0.96%
－		 Notes
Stock / Mega growing venture capital Co., Ltd. None Financial Assets Carried at Cost 1,000
10,000
0.79%
－		 Notes
Stock /EDA Skylark Hotel Corporation Related party Financial Assets Carried at Cost 13,688
281,960
13.68%
－		 Notes
Total 481,984 －
Stock / Asia-Pacific Telecom Co., Ltd None Available- for-sale Financial Assets - non-current 4,500
46,575
－		 46,575
Special Unit /E-Da Development Corp. Investee
evaluated by
equity method		 Debt Instrument in Non-Active Market - Non
Current		 17,065
170,654
－		 － Notes

Note: Financial assets carried at cost, as well as investments in debt instrument with no active market, have no quotes in the active markets and their fair value cannot be reliably measured.

433

Held
by		 Type and name of marketable securities Relationship with
the
issuers		 Financial statement account Ending Balance Ending Balance Note
Number of
Shares
(thousand
shares)		 Carrying amount Shareholding
Percentage		 Market price
Good Honor Holdings Ltd. Share / Luxey International (Holdings) Ltd. None Financial asset measured at fair value through profit and
loss-curent		 2,951 1,424
(USD 44)		 － 1,424
(USD 44)
Worthing Honor Holdings
Ltd.		 Stock / SEE CORPORATION None Financial asset measured at fair value through profit and
loss-curent		 1 － － －
EMMT Systems
Corporation		 Stock / RODAN (TAIWAN) LTD. None Financial Assets Carried at Cost -non-current 86 492 0.73% － Note
Yieh Hsing Enterprise Co.,
Ltd.
Fund / Taishin Emerging Markets Opportunities Equity
Fund
None		 Financial asset measured at fair value through profit and
loss-curent		 500 2,570 － 2,570
Fund / Allianz Global Investors All Seasons Return
Funds of Bond Funds.
None		 Financial asset measured at fair value through profit and
loss-curent		 300 3,017 － 3,017
Fund / Union Global Balanced Fund. None Financial asset measured at fair value through profit and
loss-curent		 133 2,004 － 2,004
Total 933 7,591 7,591
Stock / Pacific Shipment Co., Ltd. Its director is the
chairman of the
Company		 Financial Assets Carried at Cost -non-current 150 1,650 3.00% － Note
Stock / Qiaotoubao Co., Ltd. None Financial Assets Carried at Cost -non-current 2,500 － 5.00% － Note
Special Unit / E-Da Development Corp. Investee evaluated
by equity method		 Debt Instrument in Non-Active Market - Non Current 3,565 35,651 － － Remar
k
Kingsgarden International
CO., LTD.		 Fund / HSBC China Multi-Asset Income Balance Fund None Financial asset measured at fair value through profit and
loss-curent		 300 2,997 － 2,997

Note: Financial assets carried at cost, as well as investments in debt instrument with no active market, have no quotes in the active markets and their fair value cannot be reliably measured.

434

Appendix IV

Yieh Phui Enterprise Co., Ltd.

Buying or Selling the Same Marketable Securities Cumulatively Amounting to At Least NT$ 300 Million or Exceeding 20% of Paid-in Capital

December 31, 2016

Unit: Thousand shares; Thousand New Taiwan Dollars

Company
name		 Type and name of
marketable
securities		 Financial statement
account		 Name of related
party		 Relationshi
p		 Beginning Balance Beginning Balance Acquisition Acquisition Disposal Ending Balance Ending Balance
Number of
shares		 Amount Number of
shares		 Amount Number of
shares		 Selling
price		 Carrying Cost Gain (Loss) on
Disposal		 Number of
shares		 Amount
Yieh Hsing
Enterprise
Co., Ltd.		 Great Emperor
Hotel CO., LTD.		 Other non-current
liabilities - other
(balance of
investment measured
by the equity
method)
Cash offering		 The
Company's
subsidiary		 180,000
(735,885)
(Note 2)		 30,000 281,657
(Note 1)		 － － － － 210,000
(454,228)
(Note 2)
Yieh Phui
Enterprise
Co., Ltd.		 United
Brightening
Development
Corp.		 Investment using
equity method		 Yieh Lian
Steel's capital
injection		 Assiciates
and the
Company's
subsidiary		 79,235
1,119,078
28,876		 413,301
(Note 3)
－		 － － － 108,111
1,532,379

(Note 1): Inclusive of the increased amount of purchase of NTD 300,000 thousand and the recognized investment (losses) gains of (NTD18,343) thousand using the equity method.

(Note 2): The company sold land no. 16,17 and 18 at Area Eastern Dragon, District Gushan, Kaohsiung to Great Emperor Hotel CO., LTD. in December 2012. The unrealized gain of disposal of

such pieces of land is NTD 2,445,476 thousand. Such balance after offsetting the investment using the equity method has been recorded as other non-current liabilities-other.

(Note 3): Inclusive of the amount of increased purchase of NTD279,335 thousand, capital injection of NTD58,759 thousand, NTD 26,940,thousand of the gains (losses) of investment recognized by the equity method and other comprehensive profit and loss, NTD (96)thousand of gains (losses) recognized by shareholding ratio, NTD 104 thousand of additional paid-in capital and NTD 48,259 thousand of additional paid-in capital due to transactions of non-controlling interests and shares subscribed for without abiding by shareholding ratio.

435

Appendix V

Yieh Phui Enterprise Co., Ltd.

Acquisition of Property Amounting to At Least NT$ 300 Million or Exceeding 20% of Paid-in Capital

1 January to 31 December 2016

Unit: Thousands of New Taiwan Dollars

Company that
Acquired the
Property		 Name of
Property		 Fact
Transaction Date		 Transaction
Amount		 Payment
Status		 Counter-party Relation Prior Transaction of Prior Transaction of Related Counter-party Related Counter-party Price
Reference		 Purpose of
Acquisition
and Status of
Usage		 Other
Terms
Owner Relationship
with the issuer		 Date of transfer Amount
Kingsgarden
International
CO., LTD.		 New
construction
project of the
commercial
building of
E-da Asia
plaza
 103. 1.28~
105. 5.10		 2,599,238 1,335,296 New Spring
Construction Corp.,
Taiwan Cement
Co., Ltd., Yieh
Hsing Enterprise
Co., Ltd. and YIEH
PHUI
ENTERPRISE
CO.,LTD.
Related
party,
parent
company,
ultimate
parent
company		 － － － － Decision made after
taken into account the
appraisal report(s) of
professional and
agreed mutually after
discussion or by price
enquiring, comparing
and/or negotiating.		 To build a boutique
shopping mall
None
Great Emperor
Hotel CO.,
LTD.		 2,519,404 1,295,794 Developing an
International
Tourism Hotel
Yieh Phui
(China)
Technomateria
l Co., Ltd.		 Plant 102.6.8~
103.8.13		 RMB 217,850 RMB 217,427 Shanghai Baoye
Group Corp., Ltd.,
Shanghai wenyu
construction and
development Co.,
Ltd. etc.		 Non-relate
d parties		 － － － － Agreed after mutual
discussion		 Production
Expansion		 None

436

Appendix VI

Yieh Phui Enterprise Co., Ltd.

Purchases from and Sales to Related Parties Amounting to At Least NT$ 100 Million or Exceeding 20% of Paid-in Capital For the Year Ended December 31, 2016

Unit: Thousands of NT Dollars/ Foreign Currencies

Purchaser/ Seller
Counterparty		 Relationship with
counterparty		 Transaction status Transaction status Unusual trade conditions and its
reasons		 Unusual trade conditions and its
reasons		 Notes and accounts receivable (payable) Notes and accounts receivable (payable)
Note
Percentage among
The ratio of
total notes and
Purchase total Credit
Amount Unit price Credit period Balance accounts
(sales) purchase Period
receivable
(sales)
(payable)
Yieh Phui
Enterprise Co.,
Ltd.		 Yieh Hong Enterprise co.,
Ltd.		 Related party in
substance		 Purchase 1,602,814 8.85% T / T before receipt － － － － －
Yieh United Steel
Corporation(Note)		 Investee evaluated by
equitymethod		 Purchase 108,892 0.60% Issuance of sight credit － － － － －
or T / T before receipt
Yieh United Steel
Corporation		 Investee evaluated by
equitymethod		 Sales 205,214 0.86% Payment term of 15 days 20,326 1.42% Accounts

－		 －
(once a month) receivable
Yieh Corp. Related party in
substance		 Sales 237,902 1.00% 1-2 months － － 2,003 0.14% Accounts
receivable
Shin Phui Steel
Corporation		 The Company's
subsidiary		 Sales 237,769 1.00% 1-2 months － － 48,388 3.37% Accounts
receivable
ASIAZONE CO.,
LIMITED		 Investee evaluated by
equitymethod		 Sales 1,495,876 6.27% 1-2 months 103,422 7.21% Accounts
－ －
receivable
New Spring Construction
Corp.		 Related party in
substance		 Sales 820,433 3.44% subject to the contract － － － － －
Yieh Phui (Hong
Kong) Holdings
Limited
Yieh United Steel
Corporation (Note)		 Investees of the Parent
Company under equity
method.
Sales		 1,622,308
(USD 50,270)		 100% 3 months － － 769,969
(USD 23,875)		 100% Accounts
receivable
Angang Lianzhong
(Guangzhou) Stainless
Steel Co.,Ltd.		 Related party in
substance		 Purchase 501,077
(USD 15,527)		 31.29% T / T before receipt － － － － －

437

Yieh Phui
(China)
Technomaterial
Co.,Ltd.		 Tianjin Lianfa Precision
Steel Co., Ltd		 Parent company Sales 858,863
(RMB 176,737)		 4.75% 1-2 months － － 70,459
(RMB 15,156)		 13.06% Accounts
receivable
Yieh Hsing
Enterprise Co.,
Ltd.		 Yieh United Steel
Corporation (Note)		 Investee evaluated by
equity method		 Purchase 5,057,974 86.08% Issuance of sight credit
or T / T before receipt		 － － － － －
Shin Yang Steel
Co.,Ltd.		 Yieh Hong Enterprise co.,
Ltd.		 Related party in
substance		 Purchase 118,228 8.46% T / T before receipt － － 6,561 6.26% Accounts
payable

438

Appendix VII

Yieh Phui Enterprise Co., Ltd.

Receivables from Related Parties Amounting to At Least NT$ 100 Million or Exceeding 20% of Paid-in Capital

December 31, 2016

Unit: Thousands of NT Dollars/ Foreign Unit: Thousands of NT Dollars/ Foreign Unit: Thousands of NT Dollars/ Foreign Currencies

Amount of
Allowance
for
Doubtful
Account
－
－
－
－
－
－
－
－
Companies of account receivable Counterparty Relationship Ending
Balance		 Turnover
Days		 Overdue Amounts Received
in Subsequent Period
(Note 2)
Amount of
Allowance
for
Doubtful
Account
Amount
Actions taken
Yieh Phui Enterprise Co., Ltd. Asiazone Co., Limited Investee evaluated by equity method 103,422 12.08 － － 103,422 －
Great Emperor Hotel CO., LTD. Parent company 110,000 (Note 1) － － － －
Kingsgarden International CO., LTD. Parent company 200,000 (Note 1) － － － －
Yieh Phui (Hong Kong) Holdings
Limited		 Yieh Phui (China) Technomaterial Co., Ltd. Parent company 3,554,073
(RMB 102,000)
(USD 95,500)		 －
(Note 1)		 － － USD 28,000 －
Golden Developments Holdings Ltd. Yieh Phui (Hong Kong) Holdings Limited Same ultimate parent company as the
Company		 241,748
(RMB 52,000)		 (Note 1) － － － －
Good Honor Holdings Ltd. Yieh Phui (Hong Kong) Holdings Limited Same ultimate parent company as the
Company		 145,125
(USD 4,500)		 －
(Note 1)		 － － － －
Yieh Phui (China) Technomaterial Co.,
Ltd.
Tianjin Lianfa Precision Steel Co., Ltd		 Parent company 204,556
(RMB 44,000)		 －
(Note 1)		 － － RMB 4,000 －
Yieh Phui (Hong Kong) Holdings
Limited		 Yieh United Steel Corporation (Note) Investee where its patent company
evaluated usingthe equitymethod		 769,969
(USD 23,875)		 2.93 － － USD 23,875 －

(Note 1): Classified as financing accounts receivable where the turnover is not applicable.

(Note 2): Amount collected as of 21 March 2017.

439

Appendix VIII

Yieh Phui Enterprise Co., Ltd.

Information about Reinvestment

December 31, 2016

Unit: Thousands of NT Dollars/ Foreign Currencies

Investor
Name		 Name of investee Location Primary
Business Activities		 Original amount of investment Balance-ending Balance-ending Balance-ending Net Income (Losses)
of Investee
Investment
gain(loss)
recognized in
current period		 Remark
December 31,
2016		 December 31,
2015		 Number of shares
(thousand shares)		 ratio Carrying
amount
Yieh Phui
Enterprise
Co., Ltd.		 Yieh Phui (Hong Kong) Holdings Limited Hong Kong Investment 7,455,887 7,455,887 233,500 100% 9,818,285 1,129,223 1,129,223
Champion Logistic Inc. Samoa Investment 1,913,111 1,913,111 57,000 97.44% 1,697,847 (1,050) (1,023)
Eliter Internaional Corp Kaohsiung City Construction and
disposal of buildings		 2,833,595 2,614,667 283,584 32.84% 2,826,191 (126,830) (41,739)
Yieh Hsing Enterprise Co., Ltd. Kaohsiung City Wires industry 2,237,751 2,221,432 355,647 56.39% 1,596,329 (256,004) (135,723)
Tangeng Iron Works Co., Ltd. Kaohsiung City Purchase and sale related
to iron and steel		 1,453,572 1,453,572 39,553 11.30% 1,357,233 503,350 56,883
E-Da Development Corp. Kaohsiung City Recreational
development industry		 1,868,658 1,868,658 186,866 28.44% 1,201,890 (249,488) (70,960)
United Brightening Development Corp. Kaohsiung City Consultation of
manufacturing
technology of iron and
steel		 1,561,166 1,223,072 108,111 79.50% 1,532,379 34,692 36,112
Shin Yang Steel Co., Ltd. Kaohsiung City Steel related business 870,000 870,000 87,000 100% 763,632 5,304 5,304
Synn Industrial Co., Ltd. Kaohsiung City Steel related business 294,000 294,000 45,975 30% 615,566 361,967 108,590
Yieh Mau Corp. Kaohsiung City Trading and
manufacturing business		 422,605 422,605 40,977 23% 535,129 378,632 87,067
Kuo Chang Enterprise Co., Ltd. Kaohsiung City Wholesale of hardware 777,259 755,643 51,548 54.04% 690,453 33,696 11,373
ASIAZONE CO., LIMITED Hong Kong Purchase and sale related
to iron and steel		 595,424 595,424 15,090 32.80% 625,840 (1,303) (428)

440

Shin Phui Steel Corporation Kaohsiung City Trading of steel goods 295,736 295,736 30,968 100% 318,370 3,167 2,379
Sin Bang Investment & Development Co.,
Ltd.		 Kaohsiung City Investment 295,809 295,809 22,313 100% 280,860 12,691 12,691
TYCOONS STEEL INTERNATIONAL
CO., LTD.		 Cayman Islands Investment 427,629 427,629 14,700 28.27% 21,423 (25,534) (7,218)
HSING JUI INVESTMENTS LIMITED Samoa Investment 4,603 4,603 5 100% 2,074 1 1
Name of
Investors		 Name of investee Location Primary
Business Activities		 Original amount of investment Balance-ending Investee
Net Income (Losses)
of Investee		 Investment
gain(loss)
recognized in
current period		 Note
December 31,
2016		 December 31,
2015		 Number of shares
(thousand shares)		 ratio Carrying
amount
Yieh Phui
Enterprise
Co., Ltd.		 EMMT Systems Corporation Taichung City Manufacture and
distribution of military
model of printed circuit
boards		 306,158 292,163 28,651 77.54% 287,237 39,681 31,687
Good Honor Holdings Ltd. British Virgin
Islands		 Investment 14,723 14,723 46 100% 160,109 1,335 1,335
Gen-Wan Technology Corp Kaohsiung City Telecommunication
subcontract		 148,609 148,609 2,392 86.99% 25,312 2,989 2,600
Cheng Hsin House Management Co. Kaohsiung City Security 14,000 14,000 1,400 35% 15,147 (1,464) (512)
Da Yao Engineering Consulting Co., Ltd. Kaohsiung City Business management
and service		 9,800 9,800 980 49% 10,822 160 78
E-Da Bus Transportation Co., Ltd. Kaohsiung City Automobile
transportation industry		 36,086 36,086 3,609 17.09% 17,107 (22,599) (3,861)
E-DA Tour Bus Co., Ltd. Kaohsiung City Automobile
transportation industry		 9,500 9,500 950 19% 4,672 (11,529) (2,190)
Golden Developments Holdings Ltd. Hong Kong Investment 2,928 2,928 100 100% 7,046 4,199 4,199
E-Da Cultural Creative Industry Co., Ltd. Kaohsiung City Cultural creativity 38,000 38,000 3,800 19% 15,615 (27,786) (592)

441

Worthing Honor Holdings Ltd. British Virgin
Islands		 Investment 6,672 6,672 100 100% 2,944 2 2
Cheng Hsin House Management Co Kaohsiung City Business management
and service		 3,915 3,915 320 32% 2,014 1 1
E United Japan Co., Ltd. Japan Purchase and sale related
to iron and steel		 8,027 8,027 - 47% 3,560 3,249 1,527
Skylark Hot Spring Resort Corp. Kaohsiung City Hotel industry 11,700 11,700 1,170 14.63% 407 (1,978) (289)
Eda Entertainment CO., LTD Kaohsiung City Entertainment industry 74,100 74,100 7,410 19% 51,989 (32,366) (6,150)
Li Hui Development CO., LTD Kaohsiung City Investment 321,216 321,216 56,468 44.56% 313,941 (2,778) (1,238) Note 1
Ji Chang Enterprise CO., LTD Kaohsiung City Investment 5,050 5,050 946 45% 4,977 (185) (83) Note 1
Yieh United Steel Corporation (Note) Kaohsiung City Iron and steel business 4,579,423 4,489,395 609,803 24.39% 3,969,169 163,352 34,400 Note 1
Hong Yu Asset Management Co., Ltd. Kaohsiung City Business management
and service		 338,000 60,000 37,000 67.27% 253,910 (88,103) (37,033)
E-Da Visual Effects Company Limited. Kaohsiung City Entertainment industry 10,393 10,393 1,470 49% 2,334 (10,751) (5,268)
LIAN SO(H.K)CO., LIMITED Hong Kong Investment 15,766 15,766 480 80% 14,512 (1,350) (1,080)
Total 29,260,871 28,283,891 - - 29,046,325 1,816,593 1,210,065

Note 1: Due to cross ownership and the adoption of equity method between the Company and Yieh United Steel Corporation and its subsidiaries, Li Hui Development Co., Ltd. and Ji Chang Enterprise Co., Ltd., investment gain/loss is accounted for using the treasury stock approach. Thus, the income/loss of investee for the period excludes gain/loss accounted for using equity method by Yieh United Steel Corporation in relation to the Company.

442

Name of
Investors		 Name of investee Location Primary
Business Activities		 Original amount of investment Balance-ending Balance-ending Balance-ending Investee
Net Income
(Losses) of
Investee		 Investment
gain(loss)
recognized in
currentperiod		 Note
December 31, 2016 December 31,
2015		 Number of
shares (thousand
shares)
ratio		 Carrying amount
Shin Phui Steel Corporation Groupco Technology Taichung
City		 Radio 37,492 37,492 3,830 42.53% 4,339 (2,124) (903)
Yieh United Steel Corporation
(Note)		 Kaohsiung
City		 Steel related business 24,562 24,562 3,178 0.13% 20,682 163,352 204 Note 2
Gen-Wan Technology Corp EMMT Systems Corporation Taichung
City		 Manufacture and
distribution of
military model of
printed circuit boards		 27,376 27,376 2,738 7.41% 27,448 39,681 3,078
EMMT Systems Corporation Groupco Technology Taichung
City		 RADIO 45,000 45,000 4,500 49.97% 5,098 (2,124) (1,061)
Applied Wireless Identifications
Group, Inc.		 San
Francisco,
U.S.A.		 RFID 242,545 242,545 40,488 91.47% 115,551 20,967 19,179
UniPattern Corporation Taipei City Computer and
peripheral equipment
manufacturing
industry		 39,960 - 3,700 41.11% 43,425 (2,443) 3,542
Applied Wireless
Identifications Group, Inc.		 AWID Asia Co., Ltd. Kaohsiung
City		 Wholesale of
telecommunication
equipment		 80,915
(USD 2,509)		 67,193
(USD 2,047)		 3,030 100% 18,810
(USD 583)		 (1,146)
(USD 36)		 (1,146)
(USD 36)
Champion Logistic Inc. Tycoons Steel International Co.,
Ltd.		 Cayman
Islands		 Investment 645,000
(USD 20,000)		 656,500
(USD 20,000)		 20,000 38.46% 29,146
(USD 904)		 (25,534)
(USD 791)		 (9,821)
(USD 304)
Tycoons Steel International
Co., Ltd.		 Guang Lian Steel (Vietnam) Co.,
Ltd.		 Vietnam Steel related business 1,415,775
(USD 43,900)		 1,418,040
(USD 43,200)		 43,900 100% 6,046
(USD 187)		 (20,863)
(USD 646)		 (20,863)
(USD 646)
Pre-payment for shares- Guang
Lian Steel(Vietnam)Co.,Ltd.		 Vietnam Steel related business - - - - - - - Note 1
Shin Yang Steel Co., Ltd. Hong Yu Asset Management Co.,
Ltd.		 Kaohsiung
City		 Business
management and
service		 - 160,000 - - - (88,103) (21,388)
Yieh United Steel Corporation
(Note)		 Kaohsiung
City		 Steel related business 17,385 17,385 2,195 0.09% 14,287 163,352 141 Note 2
Sin Bang Investment &
Development Co., Ltd		 Tangeng Iron Works Co., Ltd. Kaohsiung
City		 Purchase and sale
related to iron and
steel		 265,482 265,482 7,224 2.06% 247,887 503,350 10,389
Kuo Chang Enterprise Co.,
Ltd.		 Yieh United Steel Corporation
(Note)		 Kaohsiung
City		 Steel related business 439,197 439,197 56,817 2.27% 369,882 163,352 3,712 Note 2
Eliter Internaional Corp Kaohsiung
City		 Construction and
disposal of buildings		 219,977 206,400 21,558 2.50% 214,897 (126,830) (3,186)

Note 1: Impairment loss is fully recognized in the first quarter of 2015.

Note 2: Due to cross ownership and the adoption of equity method between the Company and Yieh United Steel Corporation, investment gain/loss is accounted for using the treasury stock approach. Thus, the income/loss of investee for the period excludes gain/loss accounted for using equity method by Yieh United Steel Corporation in relation to the Company.

443

Name of
Investors		 Name of investee Location Primary
Business Activities		 Original amou nt of investment Balance-ending Balance-ending Balance-ending Investee
Net Income
(losses) of
Investee		 Investment
gain(loss)
recognized in
currentperiod		 Note
December 31,
2016		 December 31,
2015		 Number of
shares (thousand
shares)
ratio		 Carrying
amount
Kuo Chang Enterprise Co., Ltd. Tangeng Iron Works Co., Ltd. Kaohsiung City Purchase and sale related to
iron and steel		 786,714 820,554 21,328 6.09% 1,030,225 503,350 31,571
United Brightening
Development Corp.		 Chao Ying Investment Development
Co.,,Ltd.		 Kaohsiung City Investment 341,992 288,992 30,400 100% 307,903 (1,229) (1,229)
Yieh United Steel Corporation
(Note)		 Kaohsiung City Steel related business 449,508 449,508 58,151 2.33% 378,502 163,352 3,735 Note
1
Champion Logistic Inc. Samoa Investment 49,376 49,376 1,500 2.56% 44,680 (1,050) (27)
Da Yao Engineering & Consulting
Co.,Ltd.		 Kaohsiung City Business management and
service		 199 199 20 1.00% 220 160 2
Tangeng Iron Works Co., Ltd. Kaohsiung City Purchase and sale related to
iron and steel		 1,177,838 1,177,838 32,050 9.16% 1,528,058 503,350 46,092
Tycoons Steel International Co.,
Ltd.		 Cayman Islands Investment 9,374 9,374 300 0.58% 437 (25,534) (147)
Eliter Internaional Corp Kaohsiung City Construction and disposal of
buildings		 70,393 66,048 6,898 0.8% 68,775 (126,830) (1,012)
Chao Ying Investment
Development Co.,,Ltd.		 Tangeng Iron Works Co., Ltd. Kaohsiung City Purchase and sale related to
iron and steel		 336,957 290,251 8,898 2.55% 305,329 503,350 11,898
Hong Yu Asset Management
Co., Ltd.		 PT. Yieh Ferro Oriental Indonesia Tradingbusiness 9,265 9,265 400 40% 3,896 (4,926) (1,970)
PT. E-United Ferro Indonesia Indonesia Metal manufacturing industry 93,462 79,830 250 100% 62,556 (13,821) (13,821)
PT. Yieh Ferro Indonesia Indonesia Metal manufacturing industry 1,633 - 50 10% 1,493 (1,411) (141)
PT. Genba MVLTI Mineral Indonesia Nickel miningbusiness 273,875 205,975 9,765 49% 263,869 (19,960) (10,006)
Prepayment of shares -. PT GENBA
INDO RESOURCES		 Indonesia Nickel mining business 9,371 9,371 - - 9,371 - -
LIAN SO(H.K)CO., LIMITED PT. YIEH FERRO INDONESIA Indonesia Metal manufacturing industry 14,112
(USD 450)		 - 450 90% 13,440 (1,411) (1,270)
Yieh Hsing Enterprise Co., Ltd. Great Emperor Hotel CO., LTD. Kaohsiung City Hotel industry 2,100,000 1,800,000 210,000 100% -(Note 2) (11,963) (18,343) Note
3
Kingsgarden International CO.,
LTD.		 Kaohsiung City Development and leasing of
residence and buildings and
operation of department stores.		 2,150,000 1,880,000 215,000 100% -(Note 2) (11,478) (17,906) Note
3
United Winner Metals L.P. Virginia,U.S.A. Steel recyclingindustry 109,371 110,469 - 33.75% 85,727 11,752 3,966
Cheng Hsin House Management
Co.		 Kaohsiung City Security system service
industry		 4,000 4,000 400 10% 4,328 (1,464) (146)

444

Cheng Hsin House Management Co Kaohsiung City Maintenance, management and
consultant of utilities,
air-conditioning, and parking
lots		 750 750 75 7.50% 472 2 -
Eliter Internaional Corp KaohsiungCity Buildingconstruction 639,772 639,772 64,043 7.42% 638,480 (126,830) (9,237)
E-Da Development Corp. Kaohsiung City Recreational development
industry		 390,380 390,380 39,038 5.94% 252,849 (249,488) (14,824)
Yieh United Steel Corporation
(Note)		 Kaohsiung City Steel-related 20,204 20,204 2,542 0.10% 16,548 163,352 163 Note
1
Kingsgarden International CO.,
LTD.
I-Hwa International Co., Ltd.		 Kaohsiung City Residence and building
development and rental industry		 4,200 4,200 420 70% 2,564 (2,305) (1,614)

Note 1: Due to cross ownership and the adoption of equity method between the Company and Yieh United Steel Corporation, investment gain/loss is accounted for using the treasury stock approach. Thus, the income/loss of investee for the period excludes gain/loss accounted for using equity method by Yieh United Steel Corporation in relation to the Company. Note 2: The company sold land no. 16,17 and 19 at Area Eastern Dragon, District Gushan, Kaohsiung to Kingsgarden International CO., LTD. and Great Emperor Hotel CO., LTD. in December 2012. The unrealized gains of disposal of such pieces of land is NTD 4,968,461 thousand. After offsetting the investment using the equity method, the balance of NTD 943,410 thousand has recorded as other non-current liabilities-other.

Note 3: The internal profits subject to the basis of the consolidated financial statements have been deducted.

445

Appendix IX

Yieh Phui Enterprise Co., Ltd.

Information on Investment in Mainland China

For the Year Ended December 31, 2015

Unit: Thousands of NT Dollars/ Foreign Currencies

Investor Investee company
in China		 Primary
Business
Activities		 Paid-in Capital Means of
Investment
(Note 1)		 Accumulated
investment balance
-beginning of current
period		 Wire-in or wire-out
amo		 amount investment
unt
Accumulated
investment
balance-end of
current period		 Net Income
(Losses) of
the Investee		 Direct and
indirect
percentage
of
ownership		 Investment
gain or loss
recognized in
the current
period
(Note 2)		 Carrying
amount at the
end of the
period		 Accumulat
ed
investment
income
received by
the end of
period

Remitted		 Received
Yieh Phui
Enterprise
Co., Ltd.		 Yieh Phui (China)
Technomaterial
Co., Ltd.		 Pickling steel
coils, cold
rolled coil,
manufacture
and
distribution
of galvanized
and
stoving-varni
shed steel
cois		 7,617,450
(USD 236,200)
(Note 6)		 (II) 1 7,530,375
(USD 233,500)		 － － 7,530,375
(USD 233,500)		 1,137,165 100% 1,137,165
(II.2)		 9,802,749 －
Changshu
Changhui Trading
Co.,Ltd.		 Trading of
steel goods		 46,490
(RMB 10,000)		 (II) 1
(Note 4)		 － － － － 369 100% 369
(II, 2)		 47,446 －
Tianjin Lianfa
Precision Steel Co.,
Ltd. (Note 5)
Manufacture
and
distribution
of upscale
special
alloy-steel
coils		 435,375
(USD 13,500)		 (II) 1
(Note 5)		 － － － － (113,460) 100% (113,460)
(II.2)		 11,448 －
AWID Asia
Co., Ltd.		 AWID Sanghai
Co., Ltd.		 Wholesale of
telecommuni
cation
equipment		 20,790
(RMB 4,472)		 (I) 15,983
(RMB 3,438)		 4,807
(RMB 1,034)		 － 20,790
(RMB 4,472)		 (3,335) 100% (3,335)
(II, 3)		 4,691 －
AWID Changshou
Co., Ltd. (note 7)		 Wholesale of
telecommuni
cation
equipment		 9,675
(USD 300)		 (I) － 9,675
(USD 300)		 － 9,675
(USD 300)		 (936) 100% (936)
(II, 3)		 8,379 －
Name of investor Name of investee in China Accumulated remitted investment balance -
end of current period		 Approval through Investment Committee of
the Ministry of Economic Affairs		 Ceiling on investment in Mainland China
imposed by the Investment Commission of
the Ministryof Economic Affairs
Yieh Phui Enterprise Co.,Ltd. Yieh Phui(China)Technomaterial Co.,Ltd. 7,530,375(USD 233,500) 7,617,450(USD 236,200) 16,522,591
AWID Asia Co., Ltd. AWID Sanghai Co., Ltd. 20,790 (RMB 4,472) 20,790 (RMB 4,472) 80,000

446

9,675 (USD 300) 9,675 (USD 300)

AWID Changshou Co., Ltd.

80,000

Note 1: Investment is handled in one of the three methods below, please specify the chosen investment method:

  • (1) Engaged in direct investment in Mainland China.

  • (2) Reinvested in China through a third area (please specify the investment companies in the third area).

  • Yieh Phui (Hong Kong) Holdings Limited

(3) Others

Note 2: Investment gain or loss recognized in the current period: 

     - (1) Please specify if it is in the preparation stage without any investment profit or loss generated.

     - (2) Recognition basis of investment profit or loss is categorized into three types, which shall be identified.

        1. Financial statements audited and certified by the international CPA firms that cooperates with ROC CPA firms.

        2. Financial statements reviewed, or audited and certified by the CPA firm of the parent company in Taiwan.

        3. 3. Others.

  - Note 3: For amounts stated in foreign currency in this appendix, the exchange rate as of the date of the Financial Statement is adopted for the carrying value of investment at the end of the period (USD:NTD=1:32.25 `；` RMB:NTD=1:4.649). The gains and losses recognized in the period adopted the average exchange rate during 1 January to 31 December 2016 (USD:NTD= 1:32.2719 `；` RMB:NTD=1:4.8629) for currency conversion.

  - Note 4: Yieh Phui (China) Technomaterial Co., Ltd. invests in Changshou ChangHuei Trading Co. with equity funds of RMB 10 million. As of December 31, 2015, accumulated investment amounted to RMB 10 million.

  - Note 6: The Company originally holds 100% of Tianjin Lianfa Precision Steel Corporation Beneficiary (paid-in capital equals USD 13,500 thousand) through its holding in Hsing Jui Investments Limited. It transfer its ownership to Yieh Phui (China) Technomaterial Co., Ltd.at RMB 20,000 thousand in July 2015. The said proceed, net of tax, of RMB 19,990 thousand (equivalent to USD 3,213 thousand) has been transferred back to the Company’s account in Taiwan.

  - Note 6: YIEH PHUI (CHINA) TECHNOMATERIAL CO., LTD has transferred earnings of USD 2,700 thousand into capital injection in April 2016.  e Hui (China) Technology Materials Co., Ltd. in April 2016 transferred the capital increase in earnings of $ 2,700 thousand dollars.

  - Note 7: AWID Changshou Co., Ltd. was established in September 2016 and was invested by AWID Asia Co., Ltd., where AWID Asia Co., Ltd. holds 100% of interests. Such information has been filed with the Investment Commission in accordance with regulations.

  - Note 8: The Company’s investment in Changshu QiYang Emerging Building Material Co., Ltd. was sold in February 2013. The investment proceeds and gains were remitted back to Taiwan. Jiangsu J & Y Engineering Co., Ltd. was liquidated in 2012. Thus:

     - (1) (1) Accumulated outflow of investment from Taiwan to subsidiaries in China disposed: NT$ 498,539 thousand

     - (2) (2) Accumulated inward remittance of earnings from subsidiaries in China disposed: NT$ 69,518 thousand

  • (II) Significant transactions between the Company and its investee companies in China, directly or indirectly through the third area, for the year ended December 31, 2016 are as follows:

  • Significant transactions with the investee companies in China: Please refer to Appendix VI to VII in Note 13.

  • Loans to the investee companies in China: Please refer to Appendix I in Note 13.

  • Endorsements and guarantees to the investee companies in China: Please refer to Appendix II in Table 13.

447

448

XIV. Segment information

Segment information, which had been disclosed in the consolidated financial statement, is not disclosed here within this standalone financial statement.

449

Statements of Significant Accounting Items

Table of Contents

Items Page / Index
Assets, Liabilities and Equities
Cash and Cash Equivalents 98
Financial Asset Measured at Fair Value Through Profit or Loss - Curent 99
Notes Receivables 100
Accounts Receivables 101
Accounts Receivables - Related Party 102
Construction Contract Receivables 103
Construction Contract Receivables - Related Party 104
Other Receivables 105
Other Receivables - Related Party 106
Inventory 107
Prepayment 108
Other Financial Assets - Current 109
Financial Asset Measured at Fair Value Through Profit or Loss 110
Changes in Available-for-sale Financial Assets - Non-current 111
Changes in Financial Assets Carried at Cost - Non-current 112
Changes in Bond Investment with No Active Markets - Non-current 113
Changes in Investment under Equity Method 114
Changes in Property, Plant and Equipmet Note 6 (XIII)
Changes in Accumulated Depreciation of Property, Plant and Eqiupment Note 6 (XIII)
Changes in Accumulated Impairment Loss of Property, Plant and
Eqiupment		 Note 6 (XIII)
Changes in Investment Property Note 6 (XIV)
Changes in Accumulated Depreciation of Investment Property Note 6 (XIV)
Changes in Accumulated Impairment Loss of Investment Property Note 6 (XIV)
Deffered Income Tax Assets Note 6 (XXXI)
Refundable Deposits 118
Other Financial Assets - Non-current 119
Short-term Loans 120
Short-term Bills Payables 122
Statements of Notes Payables 123
Accounts Payable 124

450

Construction Contract Payable 125
Other Payable Note 6 (XVIII)
Provisions - Current Note 6 (XIX)
Advance Receipts 126
Long-term Loans and the Current Portion of Long-term Liabilities 127
Deferred Income Tax Liabilities Note 6 (XXXI)
Deposits Recieved 130
Items under Profit or Gain
Operating Revenue 131
Operating Cost 132
Manufacturing Overheads 134
Selling Expenses 135
General & Administrative Expenses 136
Financial Costs Note 6 (XXX)
Summary Table of Personnel, Depreciation, Depletion and Amortization
Expenses for the Period		 Note (XXIX)

451

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Cash and Cash Equivalents
December 31, 2016
Unit: Thousands of NTD/Foreign Currency
Item Description Amount Note
Petty cash Petty cash $1,890
Subtotal of petty
cash		 $1,890
Bank deposits Checking
deposits		 $240,190
Demand
deposits -
NTD		 23,123
Demand
deposits -
foreign
currencies		 1,216,218 USD 37,603
CNY 758
JPY 2
Subtotal of bank
deposits		 $1,479,531
Cash equivalents Time
deposits
with
original
period		 $64,500 USD 2,000
of less
than 3
months
Subtotal of cash
equivalent		 $64,500
Total $1,545,921
Exchange rate as of December 31, 2016: USD:NTD 1:32.25
RMB:NTD 1:4.6490
JPY:NTD 1: 0.2756

452

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Financial Assets at Fair Value through Profit or Loss - Current
December 31, 2016
Unit: Thousand shares; Thousands of NTD
Fair Value
Name of Financial Instruments Description
Shares or Units		 Acquisition Cost Unit Price (NT$) Equity Note
Asia Pacific (ex-Japan) Investment
Grade Government Bond Index Fund		 Mutual
funds		 500 $5,000 8.81 $4,406
Eastspring Inv South Africa Fixed
Income Bond Fund		 Mutual
funds		 300 8,985 27.34 8,203
Paradigm Global Oil Resources
Securities Investment		 Mutual
funds		 516 5,030 6.33 3,268
SinoPac RMB Bond Fund - Accumulated
(NTD)		 Mutual
funds		 300 3,000 9.07 2,720
Fuh Hwa China New Economy Balanced
Fund		 Mutual
funds		 600 6,000 8.42 5,052
Fuh Hwa China New Economy A Share
Equity		 Mutual
funds		 1,000 10,000 5.95 5,950
Paradigm Pion Money Market Fund Mutual
funds		 876 10,000 11.45 10,034
Mega Greater China Balanced Fund Mutual
funds		 1,000 10,000 9.12 9,120
Franklin Templeton SinoAm Multi-
Asset Income Balanced Fund		 Mutual
funds		 1,000 10,011 9.91 9,910
Prudential Financial Multi-Inc FOF
USD C		 Mutual
funds		 300 3,018 9.86 2,959
HSBC As Pac ex Jpn Mt-ast Inc Ba
ACTWD		 Mutual
funds		 500 5,031 9.99 4,995
Union Global Balanced TWD Mutual
funds		 500 5,005 10.06 5,029
FSITC Global FinTech TWD Mutual
funds		 500 5,031 9.97 4,985
CTBC Global Silver Age Income TWD Mutual
funds		 500 5,010 10.10 5,050
Taishin China-US Money Market TWD Mutual
funds		 500 5,000 10.08 5,038
ABITL Global High Yield Mutual
funds		 493 5,038 10.27 5,064
Total $101,159 $91,783

453

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Notes Receivable
December 31, 2016
Unit:
Thousands
of NTD
Item Description Amount Note
Fong Sheng Construction
Co., Ltd.		 Notes receivable for
construction		 $300
I Shou University Co.,
Ltd.		 Notes receivable for
construction		 218
Wei Chih Steel Industry
Co., Ltd		 Notes receivable for
construction		 95
Others (5% and under) 256
Sub-total $869
Less: Bad debt allowance (4)
Total $865

454

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Accounts Receivable
December 31, 2016
Unit: Thousands of NTD/Foreign Currency
Parties Description Amount Note
Shang Shing Steel Industrial Co., Trades receivable $271,355
Eternal Steel Co. Ltd. Trades receivable 116,401
Hon Hai Precision Trades receivable 113,628 USD 3,523
Industry Co., Ltd.
Jia De Building Materials Co.,Ltd Trades receivable 102,413
Chung-Lu Construction Co., Ltd. Construction receivable 87,036
Others (5% and under) 561,171
Sub-total $1,252,004
Less: Bad debt allowance (5,955)
Total $1,246,049
Exchange rate as of December 31, 2016: USD:NTD 1:32.25

455

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Accounts Receivables - Related Party
December 31, 2016
Unit: Thousands of NTD/Foreign Currency
Parties Description Amount Note
Asiazone Co., Limited Trades receivable $103,422 USD 3,207
Shin Phui Steel Corporat Trades receivable 48,388
Yieh United
Steel
Corporation
(Note)		 Trades
receivable		 20,326
Others (5% and under) 10,622
Sub-total $182,758
Less: Bad debt allowance - related party (598)
Total $182,160
Exchange rate as of December 31, 2016: USD:NTD 1:32.25

456

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Construction Contract Receivable
December 31, 2016
Unit:
Thousands
of NTD
Item Description Amount Note
Taiwan
Internation
al Ports
Corporation
, Ltd.		 Constructio
n contract
receivable		 $111,337
Central
Freight
Terminal
Co., Ltd.		 Constructio
n contract
receivable		 61,111
Chung-Lu
Constructio
n Co., Ltd.		 Constructio
n contract
receivable		 52,571
Taiwan
Kumagai
Co., Ltd		 Constructio
n contract
receivable		 23,135
Others (5% and
under)		 52,954
Total $301,108

457

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Construction Contract Receivable – Related Parties
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
New Spring Construction Corp. Construction
contract
receivable		 $344,114
Others (5% and under) 1,774
Total $345,888

458

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Other Receivables
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Business tax refundable Business tax refund -
November and December		 $78,000
Purchase allowance receivable Purchase allowance receivable 47,999
Insurance claim receivable Insurance claim receivable 8,018
Interest receivable Interest receivable 192
Others Revenues from sales of used
paper		 41
Total $134,250

459

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Other Receivables - Related Party
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Loans receivable Loans receivable $310,000
Service fee receivable - guarantee Service fee
receivable -
guarantee		 8,042
Revenues from sale of scrap iron, etc. Revenues from sale
of scrap iron, etc.		 2,489
Interest receivable Interest receivable 391
Others Rent receivable 2,878
Total $323,800

460

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Inventory
December 31, 2016
Unit: Thousands of NTD
Amount
Item Description Cost Market
Price		 Note
Rolled
Steel
(Product)
Department:
Raw
materials		 Steel rolls $857,320 $1,061,211
Supplies LPG, LNG,
resin acid,		 14,575 14,522
thinner
Work-in-
process		 Cold
rolled,
galvanized
and pre-
painted		 610,016 774,282
steel coil,
etc.
Finished
goods		 Acid
pickling,
cold
rolling,		 1,953,614 2,451,208
galvanized
and pre-
painted
steel coil,
etc.
By-products
and scraps		 By-products
and scraps		 55,372 57,549
Subtotal $3,490,897 $4,358,772
Less:
Allowance
for for
inventory
valuation
and
obsolescenc
e loss		 (1,016) -
Net $3,489,881 $4,358,772
Heavy
Industry
Department:
Raw
materials		 Angle
steel,
section
steel		 $158,000 $183,650
Supplies Bolt, shear
concrete
stud		 3,456 3,389
Subtotal $161,456 $187,039
Less:
Allowance
for for
inventory
valuation
and
obsolescenc
e loss		 (1,322) -
Net $160,134 $187,039
Total $3,650,015 $4,545,811

461

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Prepayments
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Prepaid material purchases Prepaid material purchases $170,362
Prepaid expense Prepaid insurance premium 28,228
Prepaid expense Sea freight prepaid 57,342
Prepaid expense Prepaid rental 5,494
Prepaid expense Prepaid usage rights 2,906
Others Other prepayments 19,969
Total $284,301

462

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Other Financial Assets – Current
December 31, 2016
Unit: Thousands of NTD/Foreign Currency
Item Description Amount Note
Land Bank -
Kangshan		 Pledged
demand
deposits		 $55,117
Mega
Internation
al
Commercial
Bank -
(Kaohsiung
Metropolita
n Branch)		 Pledged
time
deposits		 38,700 USD 1,200
Total $93,817
Exchange rate as of December 31, 2016: USD:NTD 1:32.25

463

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Financial Assets at Fair Value through Profit or Loss – Non-current
December 31, 2016
(In Thousands of Shares/Thousands of New Taiwan Dollars)
Fair Value
Name of Financial Instruments Description Shares or Units
Acquisition Cost
Unit Price(NT$)		 Equity Note
Bank of Panhsin Sinsing Branch –
2014 First term subordinated		 Financial bonds 10,000 $10,000 0.9999 $9,999
Total $10,000 $9,999

464

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Changes in Available-for-sale Financial Assets – Non-current
January 1, 2016 to December 31, 2016
Unit: thousand shares; Thousands of NTD
Beginning balance Increase Decrease Ending balance
Name Shares Fair Value Shares Amount Shares Amount Shares Fair Value Collateral or Pledge Note
Asia Pacific 4,500 $52,425 - -
$		 - $5,850 4,500 $46,575 None
Total $52,425 -
$		 $5,850 $46,575
Note: The decrease amount of NT$ 5,850 thousand is due to unrealized valuation loss of financial assets.

465

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Changes in Financial Assets Measured at Cost - Non-Current
January 1, 2016 to December 31, 2016
Unit: Thousand shares; Thousands of NTD
Beginning Balance Increase Decrease Ending Balance Collateral or
Name Number of shares Carrying amount Number of shares Amount Number of shares Amount Shares Carrying amount Pledge Note
Taiwan Ves-Power Co., Ltd. 1,800 $55,899 - -
$		 - -
$		 1,800 $55,899 None
New Spring Construction Corp. 7,353 41,833 287 - - - 7,640 41,833 None
Shang Yang Ventures Capital Co. Ltd. 2,352 23,520 - - - - 2,352 23,520 None
Taiwan Implant Technology Company, Ltd. 1,700 17,000 191 1,913 - - 1,891 18,913 None
Sunny Bank 1,638 15,482 2,098 20,000 - - 3,736 35,482 None
Universal Venture Capital Investment
Co., Ltd.		 1,100 9,130 - - - - 1,100 9,130 None
Yieh Corporation Limited 200 2,002 - - - - 200 2,002 None
Pacific Harbour Stevedoring Corp. 150 1,650 - - - - 150 1,650 None
Neoflex Technology Co., Ltd. 104 1,060 - - - - 104 1,060 None
ImageDJ Software Co., Ltd. 24 535 - - - - 24 535 None
Chao-Feng Venture Capital Co., Ltd. 1,000 10,000 - - - - 1,000 10,000 None
SKYLARK INTERNATIONAL HOTEL CO.,LTD 13,526 281,960 162 - - - 13,688 281,960 None
Shuo Huang Enterprise Co., Ltd. 980 - - - - - 980 - None
Chateau Bridgetop Inc. 5,000 - - - - - 5,000 - None
Grand Fortune Special Steel Co., LTD. 3,558 - - - - - 3,558 - None
Strategic Advisory Investment Ltd. 100 - - - - - 100 - None
MicroLinks Technology Corp. 300 - - - 300 - - - None
Windance Co., Ltd. 18,469 - - - - - 18,469 - None
Total $460,071 $21,913 -
$		 $481,984
Note: 1. The increase of NT$ 21,913 thousand cam e from acquisition of stocks.

466

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Changes in Bond Investment with No Active Market - Non-current
January 1, 2016 to December 31, 2016
Unit: thousand shares; Thousands of NTD
Beginning Balance Increase Decrease Ending Balance Collateral or
Name Shares Carrying amount Shares Amount Shares Amount Shares Carrying amount Pledge Note
Preferred shares:
E-Da Development Corp. - - 17,065 $170,654 - -
$		 17,065 $170,654 None
Less: accumulated
impairment loss		 - - - -
Total - $170,654 -
$		 $170,654
Note: The increase of NT$ 170,654 thousand is a result of increase in investment.

467

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Changes in Long-term Equity Investments under Equity Method
January 1, 2016 to December 31, 2016
Beginning Balance Increase Decrease Ending Balance Market Value/ Net Equity Value Collateral or
Name Number of
shares		 Amount Number of
shares		 Amount Number of
shares		 Amount Number of
shares		 Shareholding
Percentage		 Amount Unit Price Total Pledge
Yieh Phui
(Hong Kong)
Holdings
Limited		 233,500 $9,499,935 - 1,129,223 - 810,873 233,500 100.00 $9,818,285 42.05 $9,818,285 None
Champion
Logistic Inc.		 57,000 1,729,225 - - - 31,378 57,000 97.44 1,697,847 29.79 1,697,847 None
Eliter
Internaional
Corp		 259,100 2,651,026 24,484 219,330 - 44,165 283,584 32.84 2,826,191 10.01 2,837,779 None
Yieh Hsing
Enterprise
Co., Ltd.		 352,144 1,773,887 3,503 27,978 - 205,536 355,647 56.39 1,596,329 4.73 1,681,580 None
Tangeng Iron
Works Co.,
Ltd.		 39,553 1,303,113 - 60,921 - 6,801 39,553 11.30 1,357,233 34.31 1,357,233 None
E-Da
Development
Corp.		 186,866 1,273,523 - 194 - 71,827 186,866 28.44 1,201,890 6.48 1,210,325 None
United
Brightening
Development
Corp.		 79,235 1,119,078 28,876 425,485 - 12,184 108,111 79.50 1,532,379 14.08 1,522,322 None
Shin Yang
Steel Co.,
Ltd.		 87,000 738,616 - 28,641 - 3,625 87,000 100.00 763,632 8.78 763,632 None
Synn
Industrial
Co., Ltd.		 45,975 524,676 - 108,590 - 17,700 45,975 30.00 615,566 13.39 615,566 None
Yieh Mau
Corp.		 40,977 456,725 - 87,067 - 8,663 40,977 23.00 535,129 13.06 535,129 None
Kuo Chang
Enterprise
Co., Ltd.		 49,386 662,823 2,162 34,313 - 6,683 51,548 54.04 690,453 13.53 697,289 None
Asiazone Co.,
Ltd.		 15,090 637,433 - - - 11,593 15,090 32.80 625,840 41.47 625,840 None
Shin Phui
Steel
Corporation		 30,692 316,384 276 3,182 - 1,196 30,968 100.00 318,370 10.20 315,939 None
Sin Bang
Investment &
Development
Co., Ltd.		 22,313 268,673 - 13,429 - 1,242 22,313 100.00 280,860 12.59 280,860 None
Tycoons Steel 14,700 29,196 - - - 7,773 14,700 28.27 21,423 1.46 21,423 None
International
Co., Ltd.

(continue on next page)

468

Limited
EMMT Systems
Corporation		 27,251 242,846 1,400 47,561 - 3,170 28,651 77.54 287,237 10.03 287,237 None
Goodhonour
Holdings Ltd.		 46 161,606 - 1,335 - 2,832 46 100.00 160,109 3,480.63 160,109 None
Gen-Wan
Technology
Corp		 2,392 22,736 - 2,892 - 316 2,392 86.99 25,312 10.58 25,312 None
Cheng Shin
Security Co.,
Ltd.		 1,400 15,659 - - - 512 1,400 35.00 15,147 10.82 15,147 None
Da Yao
Engineering
&amp;
Consulting
Co., Ltd.		 980 10,744 - 78 - - 980 49.00 10,822 11.04 10,822 None
E-Da Bus
Transportatio
n Co., Ltd.		 3,609 20,968 - - - 3,861 3,609 17.09 17,107 4.74 17,107 None
E-DA Tour Bus
Co., Ltd.		 950 6,863 - - - 2,191 950 19.00 4,672 4.92 4,672 None
Golden
Developments		 100 3,296 - 4,199 - 449 100 100.00 7,046 70.46 7,046 None
Holdings Ltd.
E-Da Cultural
Creative
Industry Co.,
Ltd.		 3,800 16,207 - 4,687 - 5,279 3,800 19.00 15,615 4.11 15,615 None
Worthing
Honor		 100 2,994 - 2 - 52 100 100.00 2,944 29.44 2,944 None
Holdings Ltd.
Cheng Hsin
House
Management
Co.		 320 2,015 - - - 1 320 32.00 2,014 6.29 2,014 None
E United
Japan Co.,
Ltd.		 - 2,107 - 1,527 - 74 - 47.00 3,560 - 3,560 None
Skylark Hot
Spring &
Resort Corp.		 1,170 696 - - - 289 1,170 14.63 407 0.35 407 None
Eda
Entertainment
CO., LTD		 7,410 58,139 - - - 6,150 7,410 19.00 51,989 7.02 51,989 None
Li Hui
Development
CO., LTD		 32,122 315,223 24,346 - - 1,282 56,468 44.56 313,941 5.56 313,941 None
Ji Chang
Enterprise
CO., LTD		 505 5,061 441 - - 84 946 45.00 4,977 5.26 4,977 None
Yieh United
Steel
Corporation
(Note)		 596,672 3,930,682 13,131 134,161 - 95,674 609,803 24.39 3,969,169 6.51 3,969,169 None
Hong Yu Asset
Management
Co., Ltd.		 6,000 47,346 31,000 265,188 - 58,624 37,000 67.27 253,910 6.86 253,910 None
E-Da Visual
Effects
Company
Limited.		 1,470 7,602 - - - 5,268 1,470 49.00 2,334 1.59 2,334 None
Lian So
(H.K.) Co.,
Limited		 480 15,709 - - - 1,197 480 80.00 14,512 30.23 14,512 None
Total $27,874,922 $2,599,984 $1,428,581 $29,046,325 $29,145,947

469

(1). Details of the increase amount
of NT$ 2,599,984 thousand are as
follows:		 (1). Details of the increase amount
of NT$ 2,599,984 thousand are as
follows:		 (1). Details of the increase amount
of NT$ 2,599,984 thousand are as
follows:		 (2). Details of the decrease amount
of NT$ 1,428,581 thousand are as
follows:		 (2). Details of the decrease amount
of NT$ 1,428,581 thousand are as
follows:		 (2). Details of the decrease amount
of NT$ 1,428,581 thousand are as
follows:
Increase $976,981 Cash Dividend 17,700
Accounted for using equity method 1,545,704 Accounted for using equity method 335,639
Exchange differences arising on translation of foreign 184 Exchange differences arising on translation of 952,285
Adjustment recognized according to shareholding percentage - 5,578 Adjustment recognized according to shareholding 6,808
Cash flow hedge 4,425 Cash flow hedge 120
Capital
surplus		 66,514 Actuarialgain/loss from defined benefitplan 37,215
Realizedgain/loss on investment(downstream) 598 Capital surplus 3,170
Cumulativegain or loss 22,854
Realizedgain/loss on investment(downstream) 52,790
Total $2,599,984 Total $1,428,581
(3) As of December 31, 2016, acquisition costs and carrying amounts using equity method for long-term equity investments are as follows:
Investee Acquisition Valuation Cumulative Others (Note) Total
Yieh Phui (Hong Kong) Holdings Limited $7,455,887 $2,874,883 ($361,588) ($150,897) $9,818,285
Champion Logistic Inc. 1,913,111 (377,864) 183,591 (20,991) 1,697,847
Eliter Internaional Corp 2,833,595 (22,336) - 14,932 2,826,191
Yieh Hsing Enterprise Co., Ltd. 2,237,751 (1,603,187) 2,589 959,176 1,596,329
Tangeng Iron Works Co., Ltd. 1,453,572 (75,970) - (20,369) 1,357,233
E-Da Development Corp. 1,868,658 (667,446) - 678 1,201,890
United Brightening Development Corp. 1,561,166 (94,484) (3,626) 69,323 1,532,379
Shin Yang Steel Co., Ltd. 870,000 (133,020) (221) 26,873 763,632
Synn Industrial Co., Ltd. 294,000 339,266 - (17,700) 615,566
Yieh Mau Corp. 422,605 91,320 5,144 16,060 535,129
Kuo Chang Enterprise Co., Ltd. 777,259 (90,356) (3,064) 6,614 690,453
Asiazone Co., Limited 595,424 15,577 17,448 (2,609) 625,840
Shin Phui Steel Corporation 295,736 28,860 (266) (5,960) 318,370
Sin Bang Investment & Development Co., Ltd. 295,809 (11,229) - (3,720) 280,860
Tycoons Steel International Co., Ltd. 427,629 (463,261) 2,526 54,529 21,423
Hsing Jui Invesments Limited 4,603 (94,989) (58,437) 150,897 2,074
EMMT Systems Corporation 306,158 (13,936) 3,207 (8,192) 287,237
Goodhonour Holdings Ltd. 14,723 25,158 6,846 113,382 160,109
Gen-Wan Technology Corp 148,609 (125,755) 243 2,215 25,312

470

Cheng Shin Security Co., Ltd. Cheng Shin Security Co., Ltd. Cheng Shin Security Co., Ltd. Cheng Shin Security Co., Ltd. 14,000 1,147 - - 15,147
Da Yao Engineering &amp; Consulting Co., Ltd. 9,800 1,022 - - 10,822
E-Da Bus Transportation Co., Ltd. 36,086 (18,979) - - 17,107
E-DA Tour Bus Co., Ltd. 9,500 (4,828) - - 4,672
Golden Developments Holdings Ltd. 2,928 4,287 (169) - 7,046
E-Da Cultural Creative Industry Co., Ltd. 38,000 (22,385) - - 15,615
Worthing Honor Holdings Ltd. 6,672 (3,895) 181 (14) 2,944
Cheng Hsin House Management Co. 3,915 (1,411) - (490) 2,014
E United Japan Co., Ltd. 8,027 (4,227) (240) - 3,560
Skylark Hot Spring & Resort Corp. 11,700 (13,834) - 2,541 407
Eda Entertainment CO., LTD 74,100 (22,111) - - 51,989
Li Hui Development CO., LTD 321,216 (7,230) - (45) 313,941
Ji Chang Enterprise CO., LTD 5,050 (72) - (1) 4,977
Yieh United Steel Corporation (Note) 4,579,423 (474,099) (67,141) (69,014) 3,969,169
Hong Yu Asset Management Co., Ltd. 338,000 (49,902) 401 (34,589) 253,910
E-Da Visual Effects Company Limited. 10,393 (8,059) - - 2,334
Lian So (H.K.) Co., Limited 15,766 (1,126) (128) - 14,512
Total $29,260,871 ($1,024,471) ($272,704) $1,082,629 $29,046,325
Notes: Including capital surplus of long-term investment, unrealized profit or loss
from financial instruments, cumulative gain or loss and unrealized downstream
transactions.
(4) Net Equity Value of investees under equity method are calculated based on
audited reports for the same period, except for financials from Hsing Jui
Investments Limited, Worthing Honor Holdings Ltd., E United Japan Co., Ltd, and Lian
So (H.K.) CO., Limited, which requires no CPA audit work.

471

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Refundable Deposits
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Refundable Deposit Guarantee
for land
leased		 $2,897
Others 947
Total $3,844

472

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Other Financial Assets – Non-current
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Mega International
Commercial Bank -
(Kaohsiung Metropolitan
Branch)		 Pledged
time
deposits		 $40,000
Mega International
Commercial Bank -
Kaohsiung		 Pledged
time
deposits		 857
Total $40,857

473

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Short-term Loans
December 31, 2016
Unit:
Thousands of
NTD/Foreign
Currency
Note
Creditor Description Ending balance Contract Duration Credit Limit
(Note 3)		 Collateral or
Pledge		 USD
Shin Kong Bank - CiSian Loans for material purchase $49,336 1051117-1060324 200,000 Note 1
Chinatrust Commercial Bank - Mintsu Loans for material purchase 64,999 1051027-1060425 230,000 Note 1
Bank of China - Taipei Loans for material purchase 319,000 1051006-1060317 659,300 Note 1
Taichung Bank - Kaohsiung Loans for material purchase 99,035 1051006-1060404 100,000 Note 1
Hua Nan Bank - Kangshan Loans for material purchase 94,031 1051027-1060526 120,000 Note 1
Bangkok Bank - Kaohsiung Loans for material purchase 404,758 1051013-1060627 647,600 Note 1
Mega International Commercial Bank -
Kaohsiung Metropolitan		 Loans for material purchase 140,780 1050908-1060620 669,500 Note 1
Taiwan Business Bank - Kaohsiung Loans for material purchase 305,845 1050922-1060524 360,800 Note 1
Shanghai Commercial & Savings Bank -
Chien Chin		 Loans for material purchase 154,595 1051110-1060322 161,625 Note 1
Bank of Panhsin - Hsin Hsing Loans for material purchase 49,723 1051215-1060620 200,000 Note 1
Land Bank of Taiwan - Kangshan Loans for material purchase 149,029 1051201-1060613 550,000 Note 1
Bank of Taiwan - Kangshan Loans for material purchase 324,529 1051103-1060620 750,000 Note 1
Taipei Fubon Commercial Bank -
Kaohsiung		 Loans for material purchase 83,510 1051117-1060407 300,000 Note 1
Chang Hwa Commercial Bank - Kaohsiung Loans for material purchase 448,648 1050919-1060627 700,000 Note 1
KGI Bank - Kaohsiung Loans for material purchase 249,310 1050811-1060512 400,000 Note 1
Taiwan Cooperative Bank - Kaohsiung Loans for material purchase 189,434 1050908-1060627 550,000 Note 1
JihSun International Commercial Bank -
Kaohsiung (foreign currency)		 Loans for material purchase 69,306 1051027-1060508 300,000 Note 1 2,149
Subtotal of loans for material
purchase		 $3,195,868
Chinatrust Commercial Bank - Mintsu Credit loan $150,000 1051013-1060113 230,000 None
Shin Kong Bank - CiSian Credit loan 100,000 1050919-1060319 200,000 None
Bank of China - Taipei Credit loan 250,000 1051209-1060407 659,300 None
Far Eastern International Bank -
Kaohsiung		 Credit loan 300,000 1051007-1060105 300,000 None

(continue on next page)

474

Note
Creditor Description Ending balance Contract Duration Credit Limit (Note 3) Collateral or Pledge USD
KGI Bank - Kaohsiung Credit loan 150,000 1051228-1060626 400,000 None
Bangkok Bank - Kaohsiung Credit loan 100,000 1051006-1060331 647,600 None
Sunny Bank - Liwun Credit loan 100,000 1051107-1061107 100,000 None
Taiwan Cooperative Bank -
Kaohsiung		 Credit loan 270,000 1050804-1061220 550,000 None
Mega International
Commercial Bank -
Kaohsiung		 Credit loan 200,000 1051227-1060625 600,000 None
Land Bank of Taiwan -
Kangshan		 Credit loan 100,000 1051109-1060108 550,000 None
Bank of Taiwan - Kangshan Credit loan 100,000 1051118-1060517 750,000 None
First Commercial Bank -
Hsin Hsing		 Credit loan 50,000 1051228-1060126 427,200 None
Chang Hwa Commercial Bank
- Kaohsiung		 Credit loan 60,000 1051013-1061013 700,000 None
JihSun International
Commercial Bank -
Kaohsiung		 Credit loan 200,000 1051123-1060223 300,000 None
Bank of Panhsin - Hsin
Hsing		 Credit loan 150,000 1051117-1060215 200,000 None
Bank of East Asia -
Kaohsiung		 Credit loan 60,000 1051125-1060524 64,720 None
Taihsin Bank - Linya Credit loan 250,000 1051205-1060125 250,000 None
Entie Commercial Bank -
Kaohsiung		 Credit loan 200,000 1051219-1060324 300,000 None
The Export-Import Bank of
the ROC - Kaohsiung		 Credit loan 200,000 1050801-1060801 200,000 None
Subtotal of credit loans $2,990,000
Total $6,185,868
Interest rate range 1.39%-2.25%
Note 1: Please refer to Note 8 for collateral for the short-term loans above.
Note 2: Exchange rate as of December 31, 2016 USD:NTD 1:32.25
Note 3: Credit lines shown above are the combined limits from each banks.

475

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Short-term Bills Payable
December 31, 2016
Unit: Thousands of NTD
Amount
Items Guarantee
or
Accepting
Institution		 Contract
Duration		 Issuing
Amount		 Discounts Carrying amount Note
Commercial
paper (CP2)		 Mega Bills
Finance
Corp.		 1051129-
1060125		 $100,000 $117 $99,883
Commercial
paper (CP2)		 Internation
al Bills
Finance
Corp.		 1051104-
1060105		 140,000 26 139,974
Commercial
paper (CP2)		 Da Chung
Bills
Finance
Corp.		 1051222-
1060119		 100,000 80 99,920
Total $340,000 $223 $339,777
Interest
rate range		 1.637%-1.738%

476

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Notes Payable
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Mega
Internation
al
Commercial
Bank (Note)		 Notes
payable for
purchase		 $301,669
Internation
al Paint
Taiwan		 Notes
payable for
purchase		 42,763
Asia
Industry
Co., Ltd.		 Notes
payable for
purchase		 32,338
Others (5% and
under)		 265,278
Total $642,048
Note: This is notes payable to China Steel
rights to Mega
International Commercial Bank.		 Corporation, which transferred all

477

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Accounts Payable
December 31, 2016
Unit: Thousands of NTD
Parties Description Amount Note
China Steel Corporation Trades payable $170,116
Yung Chi
Paint &
Varnish
Mfg.
Co.,Ltd.		 Trades payable 169,184
Shang Cheng Steel Co., Ltd. Trades payable 103,928
Others (5% and under) 256,831
Total $700,059

478

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Construction Contract Payable
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Sun Pao Tsun
Construction		 Constructio
n amounts
payable		 $10,925
Chung Lu
Construction
Co., Ltd.		 Constructio
n amounts
payable		 10,678
Wei Yi
Construction
Co., Ltd.		 Constructio
n amounts
payable		 4,769
Others (5% and
under)		 3,093
Total $29,465

479

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Advance Receipts
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
CLM Enterprises Inc. Unearned sales revenue $356,430
Metal One Americe Inc. Unearned sales revenue 320,616
Mitsui & Co. (USA) Inc. Unearned sales revenue 278,786
Toyota Tsusho America Inc. Unearned sales revenue 251,783
Others (5% and under) 300,699
Total $1,508,314

480

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Long-term Loans and Current Portion of Long-term Liabilities
December 31, 2016
Unit: Thousands of NTD
Creditor Description Borrowing Amount
Contract Duration
Collateral or Pledge		 Note
(1) Syndicated loan with
Mega International
Commercial Bank
Mega International
Commercial Bank - Kaohsiung
Metropolitan		 Mortgage loan $308,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Chang Hwa Commercial Bank -
Kaohsiung		 Mortgage loan 308,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Taiwan Cooperative Bank -
Kaohsiung		 Mortgage loan 237,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Agricultural Bank of Taiwan
- Operating Department		 Mortgage loan 237,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Land Bank of Taiwan -
Kangshan		 Mortgage loan 142,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Hua Nan Bank - Kangshan Mortgage loan 142,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Bank of Taiwan - Kangshan Mortgage loan 142,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Taiwan Business Bank -
Kaohsiung		 Mortgage loan 84,000 104.05.15~109.05.15
Land, plant, machinery and equipment
Mega International
Commercial Bank - Kaohsiung
Metropolitan		 Credit loan 342,000 104.05.15~109.05.15 None
Chang Hwa Commercial Bank -
Kaohsiung		 Credit loan 342,000 104.05.15~109.05.15 None
Taiwan Cooperative Bank -
Kaohsiung		 Credit loan 263,000 104.05.15~109.05.15 None
Agricultural Bank of Taiwan
- Operating Department		 Credit loan 263,000 104.05.15~109.05.15 None
Land Bank of Taiwan -
Kangshan		 Credit loan 158,000 104.05.15~109.05.15 None
Hua Nan Bank - Kangshan Credit loan 158,000 104.05.15~109.05.15 None
Bank of Taiwan - Kangshan Credit loan 158,000 104.05.15~109.05.15 None
Taiwan Business Bank -
Kaohsiung		 Credit loan 96,000 104.05.15~109.05.15 None
Subtotal $3,380,000

481

Creditor Description Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Note
(2) Syndicated loan with Taiwan
Cooperative Bank
Taiwan Cooperative Bank - Kaohsiung Mortgage loan $326,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Hua Nan Bank - Kangshan Mortgage loan 271,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Land Bank of Taiwan - Kangshan Mortgage loan 271,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Mega International Commercial Bank -
Kaohsiung Metropolitan		 Mortgage loan 217,000 104.09.22~109.09.22 Land, plant, machinery and equipment
First Commercial Bank - Hsin Hsing Mortgage loan 217,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Agricultural Bank of Taiwan -
Operating Department		 Mortgage loan 163,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Chinatrust Commercial Bank - Mintsu Mortgage loan 130,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Shanghai Commercial & Savings Bank -
Chien Chin		 Mortgage loan 109,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Taihsin Bank - Linya Mortgage loan 109,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Chang Hwa Commercial Bank - Kaohsiung Mortgage loan 87,000 104.09.22~109.09.22 Land, plant, machinery and equipment
Taiwan Cooperative Bank - Kaohsiung Credit loan 274,000 104.09.22~109.09.22 None
Hua Nan Bank - Kangshan Credit loan 229,000 104.09.22~109.09.22 None
Land Bank of Taiwan - Kangshan Credit loan 229,000 104.09.22~109.09.22 None
Mega International Commercial Bank -
Kaohsiung Metropolitan		 Credit loan 183,000 104.09.22~109.09.22 None
First Commercial Bank - Hsin Hsing Credit loan 183,000 104.09.22~109.09.22 None
Agricultural Bank of Taiwan -
Operating Department		 Credit loan 137,000 104.09.22~109.09.22 None
Chinatrust Commercial Bank - Mintsu Credit loan 110,000 104.09.22~109.09.22 None
Shanghai Commercial & Savings Bank -
Chien Chin		 Credit loan 91,000 104.09.22~109.09.22 None
Taihsin Bank - Linya Credit loan 91,000 104.09.22~109.09.22 None
Chang Hwa Commercial Bank - Kaohsiung Credit loan 73,000 104.09.22~109.09.22 None
Subtotal $3,500,000

482

Creditor Description Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Borrowing Amount
Contract Duration
Collateral or Pledge		 Note
Taiwan Business Bank - Kaohsiung Mortgage loan $169,180 104.01.21~111.01.21
Land, buildings
Mega International Commercial Bank
- Kaohsiung Metropolitan		 Mortgage loan 550,000 103.10.16~110.10.16
Land, buildings
Mega International Commercial Bank
- Kaohsiung Metropolitan		 Mortgage loan 800,000 105.08.12~112.08.12
Land, buildings
Mega International Commercial Bank
- Kaohsiung Metropolitan		 Mortgage loan 700,000 105.08.12~112.08.12
Land, buildings
Bank of Taiwan - Kangshan Mortgage loan 20,000 101.03.05~106.03.05 Land, plants
First Commercial Bank - Hsin Hsing Mortgage loan 92,300 102.07.29~117.07.29 Buildings
First Commercial Bank - Hsin Hsing Mortgage loan 93,320 104.08.03~119.07.15 Buildings
Taiwan Cooperative Bank - Kaohsiung Mortgage loan 200,000 103.10.09~110.10.09 Land
Sub-total of mortgage loan $2,624,800
O-Bank Credit loan $100,000 105.05.15-107.05.15 None
Subtotal $100,000
Total $9,604,800
Less: unamortized syndicated loan
arrangement fee		 (14,440)
Less: current portion (787,147)
Long-term loans $8,803,213
Interest rate range 1.72%~ 2.325%

483

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Deposits Received
December 31, 2016
Unit: Thousands of NTD
Item Description Amount Note
Deposits Received Guarantee from customers $2,000

484

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Operating Revenue
January 1, 2016 to December 31, 2016
Unit: Thousands of NTD
Item Quantity
(tons)		 Amount Note
Rolled Steel (Product)
Department:
Hot rolled steel coils 67,573 $806,342
Steel plates 1,814 34,505
Sub-total of revenue
from raw materials		 $840,847
Pickled steel coils 60 $595
Cold rolled steel coils 1,795 16,660
Galvanized steel coils 657,486 12,764,495
Pre-painted steel coils 273,294 8,401,838
Sub-total of revenue
from finished goods		 $21,183,588
Steel plate OEM 30,396 $127,928
Head & tail plates 21,025 $131,470 By-products
Zinc dross 2,371 121,488 By-products
Iron oxide 3,302 9,441 By-products
Shearing materials 12,644 91,756 scraps
Cutting plates 6,641 41,431 scraps
Scrap iron 4,012 28,328 scraps
Revenue from by-products
and scraps		 $423,914
Total of Steel Product
Department		 $22,576,277
Heavy Industry
Department:
Construction revenue $1,652,434
Total $24,228,711
Realized (unrealized)
gross profit from sales
of goods		 (52,191)
Less: Sales return (316)
Sales allowance (308,539)
Net Revenue $23,867,665

485

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Operating Costs
January 1, 2016 to December 31, 2016
Unit: Thousands of NTD
Item 2016
Rolled Steel (Product) Department:
Raw materials - beginning $716,931
Purchase 16,887,289
Other additions: shipment expense for purchase 89,886
Raw materials - ending (857,320)
Other subtractions: requisition transferred to
expenses, etc.		 (31,860)
Sale of raw materials (852,056)
Raw materials consumed $15,952,870
Supplies - beginning $12,226
Purchase 703,859
Supplies - ending (14,575)
Other subtractions: requisition transferred to
expenses		 (701,510)
Supplies consumed $ -
Direct labor $258,270
manufacturing overhead 2,874,389
Manufacturing Overhead $19,085,529
Work in process - beginning 384,362
Other additions: finished goods transferred in 47,151
Work in process - ending (610,016)
Other additions - Under-allocated fixed
manufacturing overheads
Production of scraps and by-products (396,450)
Cost of finished goods $18,510,576
Finishedgoods - beginning $880,724
Finished goods - ending (1,953,614)
Cost of processing transferred out (109,853)
Other subtractions: requisition transferred to
expenses		 (144,320)
Other subtractions: transferred to work in process (47,151)
Cost of finished goods sold $17,136,362

486

Item 2016
Adjustments to costs
Loss on inventory value decline
(gain on recovery)		 (16,647)
Unallocated fixed manufacturing
overheads		 18,796
Other changes - purchase
allowance, etc.		 (56,245)
Subtotal of cost for Rolled Steel
(Product) Department		 $17,082,266
Cost of raw materials sold $852,056
Cost of by-products sold 382,051
Processing of finished goods 109,853
Total cost for Rolled Steel
(Product) Department		 $18,426,226
Heavy Industry Department:
Construction costs $1,594,832
Loss on inventory value decline
(gain on recovery)		 (11,311)
Subtotal of cost for Heavy
Industry Department		 $1,583,521
Total operating costs $20,009,747

487

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
Manufacturing Overheads
January 1, 2016 to December 31, 2016
Unit: Thousands of NTD
Item Rolled Steel (Product)
Department		 Heavy Industry
Department:		 Total
Indirect labor $466,594 $90,359 $556,953
Rent expense 17,862 6,079 23,941
Stationary 2,475 627 3,102
Freight expense 57,916 21,234 79,150
Repairs 155,741 9,441 165,182
Packing expense 244,384 - 244,384
Utilities expense 453,517 17,143 470,660
Insurance expense 85,452 11,499 96,951
Processing fee 14,239 7 14,246
Taxes 4,557 3,809 8,366
Depreciation expense 478,951 32,091 511,042
Meals expense 10,661 2,201 12,862
Employee
benefits/welfare		 23,899 5,169 29,068
Miscellaneous
purchases		 5,570 359 5,929
Indirect material 699,430 186,403 885,833
Consumables 50,039 2,358 52,397
Pension 25,636 4,480 30,116
Import expense 2,279 - 2,279
Overtime allowance
expense		 38,285 6,274 44,559
Other expenses 55,698 20,690 76,388
Constructions in
progress- outsourced		 - 646,091 646,091
Unallocated fixed
manufacturing
overheads		 (18,796) - (18,796)
Total $2,874,389 $1,066,314 $3,940,703

488

Yieh Phui Enterprise Co., Ltd.
Selling Expenses
January 1, 2015 to December 31, 2015
Unit: In Thousands of New Taiwan
Dollars
Item 2016
Payroll expense $164,558
Rent expense 5,624
Stationary 575
Travelling expense 5,975
Freight expense 5,899
Postage 785
Repairs 3,968
Advertising expense 1,071
Utilities expense 314
Insurance expense 16,695
Entertainment expense 9,155
Donation 16
Taxes 852
Depreciation expense 7,342
Loss on export sales 561
Meals expense 3,550
Employee benefits/welfare 8,478
Training expense 98
Professional service fees 9,020
Pension 9,051
Miscellaneous purchases 856
Overtime allowance expense 5,900
Transportation expense 1,715
Export expense 1,127,238
Books and magazines 440
Other expenses 7,091
-----------------
Total $1,396,827
=================

489

Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd. Yieh Phui Enterprise Co., Ltd.
General & Administrative Expenses
January 1, 2015 to December 31, 2015
Unit: In Thousands of New Taiwan Dollars
Item 2016
Payroll expense $216,447
Rent expense 4,293
Stationary 1,704
Travelling expense 1,605
Freight expense 29
Postage 2,683
Repairs 7,126
Advertising expense 11,551
Utilities expense 6,235
Insurance expense 18,773
Entertainment expense 19,149
Donation 21,291
Taxes 2,730
Depreciation expense 9,155
Meals expense 3,993
Employee benefits/welfare 9,831
Training expense 209
Professional service fees 7,974
Pension 10,231
Miscellaneous purchases 2,356
Overtime allowance expense 4,760
Transportation expense 2,987
Books and magazines 205
Other expenses 31,047
-----------------
Total $396,364
=================

490

Company seal: Yieh Phui Enterprise Co., Ltd.

Company representative: I. S. Lin

491

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