NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2014 AND 2015 (With Independent Accountants

Transcription

1 NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, AND 2015 (With Independent Accountants Review Report Thereon)

2 Independent Accountants Review Report The Board of Directors Nan Ya Printed Circuit Board Corporation We have reviewed the accompanying consolidated statements of financial position of Nan Ya Printed Circuit Board Corporation (the Company ) and subsidiaries as of and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods ended and These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews. Except as described in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 36 Review of Financial Statements in the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards, the objective of which is to express an opinion regarding the consolidated financial statement taken as a whole. Accordingly, we do not express such an opinion. As discussed in note 10, we did not review the financial statements of an investee company, Formosa Petrochemical Corporation, which was accounted for under the equity method and its related information disclosed in note 30 as of and for the three-month periods ended and The Company s equity investment in this investee company accounted for under the equity method amounted to to NT$700,017 thousand and NT$671,921 thousand, respectively, representing 1.62% and 1.43% of the consolidated total assets as of and 2015, respectively. Share of the Company in the profit of this investee company accounted for under the equity method amounted to NT$10,992 thousand and NT$1,411 thousand, representing 35.23% and 0.22% of the net income before income tax for the three-month periods ended and 2015, respectively. The financial statements of this investee company were reviewed by other independent accountants. Our review report, insofar as it relates to the amounts included for this investee company was based solely on the review report furnished to us by other independent accountants dated May 5, However, such review report by the other independent accountants was qualified with respect to the financial statements supporting certain equity investments of this investee company in other investees, which were not reviewed by other independent accountants.

3 Based on our reviews and the review reports of other auditors, except for the adjustments to the consolidated financial statements that we might have become aware of had the financial statements of certain investee companies accounted for under the equity method described above been reviewed by independent accountants, we are not aware of any material modifications that should be made to the consolidated financial statements referred to in the first paragraph in order for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard No. 34 Interim Financial Reporting as endorsed by Financial Supervisory Commission, ROC. Taipei, Taiwan (the Republic of China) May 11, 2015 Notes to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with the International Accounting Standards No. 34 Interim Financial Reporting endorsed by the Financial Supervisory Commission, ROC and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the independent accountants review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and original Chinese version or any difference in the interpretation of the two versions, the Chinese language accountants review report and consolidated financial statements shall prevail.

4 Reviewed only, not audited in accordance with generally accepted auditing standards of and 2015 NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION MARCH 31, DECEMBER 31, and MARCH 31, 2015 (Expressed in thousands of New Taiwan Dollars) Current assets: (Adjusted) December 31, (Adjusted) 2015 Assets Amount % Amount % Amount % Cash and cash equivalents (note 6) $ 5,753, ,952, ,292, Available-for-sale financial assets-current (note 7) 5,331, ,966, ,223, Accounts receivable, net (note 8) 7,146, ,174, ,900, Accounts receivable-related parties (notes 8 and 2,272-6,448-11,015-24) Other receivables (note 8) 118, , ,932 - Other receivables-related parties (notes 8 and 24) 694, ,034, ,408,215 3 Inventories, net (note 9) 3,323, ,590, ,681,093 8 Other current assets 152, , ,878 1 Total current assets 22,523, ,224, ,948, Non-current assets: Investments accounted for using the equity method 700, , ,921 1 (note 10) Property, plant and equipment (note 11) 18,883, ,013, ,415, Intangible assets 51,703-12,066-11,462 - Deferred tax assets 923, , ,066 2 Other non-current assets 50,855-72,676-67,183 - Total non-current assets 20,609, ,650, ,010, Total assets $ 43,132, ,875, ,958, (Adjusted) December 31, (Adjusted) 2015 Liabilities and Equity Amounts % Amounts % Amounts % Current liabilities: Short-term loans (note 12) $ 791, , ,878 1 Accounts payable 1,536, ,362, ,403,289 4 Accounts payable-related parties (note 24) 421, , ,342 1 Other payables 1,380, ,729, ,354,263 3 Other payables-related parties (note 24) 86,858-86,628-95,247 - Current income tax liabilities 1, , ,651 - Other current liabilities 129, , ,071 - Current portion of long-term liabilities (note 13) 540, , ,101 1 Total current liabilities 4,888, ,014, ,598, Non-current liabilities: Long-term loans (note 13) 951, ,382, ,287,448 3 Deferred tax liabilities 1,200, ,372, ,372,774 3 Net defined benefit liabilities 1,488, ,522, ,530,182 3 Guarantee deposits 69,137-53,752-50,180 - Total non-current liabilities 3,710, ,332, ,240,584 9 Total liabilities 8,598, ,346, ,839, Equity (notes 15 and 16): Capital stock 6,461, ,461, ,461, Capital surplus 21,916, ,916, ,916, Legal reserve 4,240, ,240, ,240,724 9 Special reserve 2,726, , ,510 1 Retained earnings (accumulated deficit) (1,694,985) (4) 1,948, ,512,190 5 Other equity 883, ,288, ,315,327 5 Total equity 34,534, ,528, ,118, Total liabilities and equity $ 43,132, ,875, ,958, See accompanying notes to consolidated interim financial statements.

5 Reviewed only, not audited in accordance with generally accepted auditing standards NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, AND 2015 (Expressed in thousands of New Taiwan Dollars, except for loss per share) For the three-month periods ended (Adjusted) 2015 Amount % Amount % Operating revenues (note 24): $ 7,844, ,035, Operating costs (notes 9, 14 and 24) 7,636, ,308, Gross profit 207, ,090 9 Operating expenses (notes 14 and 24): Selling expense 158, ,193 2 Administrative expenses 285, ,695 4 Total operating expenses 444, ,888 6 Operating (loss) income (236,622) (3) 260,202 3 Non-operating income and expenses (notes 10 and 19): Other income 28,824-31,530 - Other gains and losses 234, ,408 5 Finance costs (6,571) - (3,517) - Recognized share of profit of associates accounted for using the equity method 10,992-1,411 - Total non-operating income and expenses 267, ,832 5 Income before income tax 31, ,034 8 Less: income tax expense (note 15) 21,030-85,603 1 Net income 10, ,431 7 Other comprehensive income (loss) (notes 15 and 16 and 20): Items that may be reclassified to profit or loss Exchange differences arising on translation of foreign operations 110,201 1 (170,937) (2) Unrealized gains (losses) on available-for-sale financial assets 15,858 - (801,851) (10) Less: income tax (income) expense relating components of other comprehensive income (loss) (18,734) Total of items that may be reclassified to profit or loss 107,325 1 (972,768) (12) Other comprehensive income (loss) (net after tax) 107,325 1 (972,768) (12) Total comprehensive income (loss) $ 117,497 1 (409,337) (5) Basic earnings per share (expressed in New Taiwan Dollars) (note 18) $ Diluted earnings per share (expressed in New Taiwan Dollars) (note 18) $ See accompanying notes to consolidated interim financial statements.

6 Reviewed only, not audited in accordance with generally accepted auditing standards NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSODILATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, AND 2015 (Expressed in thousands of New Taiwan Dollars) Equity Attributable to Owners of Parent Capital stock Retained Earnings Other Equity Items Common stock Capital surplus Legal reserve Special reserve Unappropriated retained earnings (accumulated deficit) Exchange differences on translation of foreign operations Unrealized (losses) gains on available-for-sale financial assets Total Equity Balance as of January 1, $ 6,461,655 21,910,181 4,240,724 2,726,512 (1,617,175) 202, ,728 34,498,102 Effects of retrospective application and adjustments (87,982) - - (87,982) Adjusted balance as of January 1, 6,461,655 21,910,181 4,240,724 2,726,512 (1,705,157) 202, ,728 34,410,120 Net income for the three-month period ended , ,172 Net other comprehensive income for the three-month period ended ,467 15, ,325 Total comprehensive income for the three-month period ended ,172 91,467 15, ,497 Share-based payment transactions - 6, ,401 Adjusted balance as of $ 6,461,655 21,916,582 4,240,724 2,726,512 (1,694,985) 293, ,586 34,534,018 Balance as of January 1, 2015 $ 6,461,655 21,916,582 4,240, ,510 2,051, ,319 2,547,776 38,631,164 Effects of retrospective application and adjustments (102,839) - - (102,839) Adjusted balance as of January 1, ,461,655 21,916,582 4,240, ,510 1,948, ,319 2,547,776 38,528,325 Net income for the three-month period ended , ,431 Net other comprehensive income (loss) for the three-month period ended (170,917) (801,851) (972,768) Total comprehensive income (loss) for the three-month period ended ,431 (170,917) (801,851) (409,337) Balance as of 2015 $ 6,461,655 21,916,582 4,240, ,510 2,512, ,402 1,745,925 38,118,988 See accompanying notes to consolidated interim financial statements.

7 Reviewed only, not audited in accordance with generally accepted auditing standards NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE-MONTH PERIODS ENDED MARCH 31, AND 2015 (Expressed in thousands of New Taiwan Dollars) For the three-month periods ended (Adjusted) 2015 Cash flows from operating activities: Net income before income tax $ 31, ,034 Adjustments for: Income and expenses not affecting cash flows Depreciation expense 746, ,804 Amortization expense 1, Provisions for bad debt expense (4,174) - Interest expenses 6,571 3,517 Interest income (17,353) (18,576) Compensation costs arising from share-based payments 6,401 - Share of profit of associates accounted for using equity method (10,992) (1,411) Loss (gain) on disposal of property, plant and equipment, net 527 (20,850) Gain on disposal of investment (21,408) (323,113) Gain on reversal of impairment loss of property, plant and equipment - (594) Unrealized foreign currency exchange (gain) loss, net (82,478) 378 Unrealized loss on market value loss of inventory 4,963 - Total income and expenses not affecting cash flows 630, ,758 Change in operating assets and liabilities: Change in operating assets, net: Decrease in accounts receivable (including related parties) 519, ,294 (Increase) decrease in other receivables (10,256) 162,140 Decrease (increase) in inventories 116,102 (89,678) Decrease (increase) in other current assets 70,121 (99,963) Change in operating assets,net 695, ,793 Change in operating liabilities, net: (Decrease) increase in accounts payable (including related parties) (142,405) 33,438 Decrease in other payables (including related parties) (51,957) (429,620) Increase in other current liabilities 11,069 7,622 Increase in net defined benefit liabilities 10,742 7,527 Change in operating liabilities, net (172,551) (381,033) Total change in operating assets and liabilities 523,415 (125,240) Total adjustments 1,154, ,518 Cash inflow generated from operations 1,185, ,552 Interest received 19,935 24,834 Interest paid (5,653) (3,131) Income tax paid (42,552) (6,783) Net cash provided by operating activities 1,156, ,472 Cash flows from investing activities: (Increase) decrease in other receivables due from related parties (104,860) 626,125 Proceeds from disposal of available-for-sale financial assets 1,532,527 2,264,685 Acquisition of property, plant and equipment (196,241) (233,477) Proceeds from disposal of property, plant and equipment 2,486 26,808 Decrease in other non-current assets 2,300 5,493 Net cash provided by investing activities 1,236,212 2,689,634 Cash flows from financing activities: Increase in short-term loans 301,794 - Decrease in short-term loans (369,070) (59,415) Increase in long-term loans - 188,407 Decrease in long-term loans (261,236) (271,372) Decrease in guarantee deposits (4,413) (3,572) Net cash used in financing activities (332,925) (145,952) Effect of exchange rate changes on cash and cash equivalents 39,903 (56,644) Increase in cash and cash equivalents 2,100,153 3,340,510 Cash and cash equivalents at the beginning of period 3,653,692 4,952,303 Cash and cash equivalents at the end of period $ 5,753,845 8,292,813 See accompanying notes to consolidated interim financial statements.

8 Reviewed only, not audited in accordance with generally accepted auditing standards of and 2015 NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES FOR THE THREE-MONTH PERIODS ENDED MARCH 31, AND 2015 (All amounts are expressed in thousands of New Taiwan Dollars, except for per share information or unless otherwise specified) (1) Description of business Nan Ya Printed Circuit Board Corporation (the Company ) was legally established with the approval by the Ministry of Economic Affairs on October 28, 1997, with registered address at 3F, No , Dunhua N. Rd., Songshan Dist., Taipei City, Taiwan. The Company and its subsidiaries (the Group ) main operating activities are primarily in the manufacturing and selling of printed circuit boards. (2) Approval date and procedures of the financial report The consolidated financial statements as of 2015 were authorized for issue by the Board of Directors on May 11, (3) New standards and interpretations not yet adopted (1) The impact of adoption of new and amended standards and interpretations endorsed by the Financial Supervisory Commission of the Republic of China ( FSC ). The Group adopted the 2013 version of IFRSs endorsed by the FSC (excluding IFRS 9 Financial Instruments) as they issue consolidated financial statements commencing from Related new, revised and amended standards and interpretations are listed below: Description Effective date per IASB Amendments to IFRS 1 Limited Exemption from Comparative IFRS 7 July 1, 2010 Disclosures for First - time Adopters Amendments to IFRS 7 Disclosures Transfer of Financial Assets July 1, 2011 Amendments to IFRS 7 Disclosures - offsetting Financial Assets and January 1,2013 Financial Liabilities IFRS 10, Consolidated financial statements January 1,2013 (With January 1, as the effective date investment entities)

9 2 Description Effective date per IASB IFRS 12, Disclosure of interests in other entities IFRS 13, Fair value measurement Amendments to IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets Amendments to IAS 19 Employee Benefits Amendments to IAS 27 Separate Financial Statements Amendments to IAS 32 Offsetting of Financial Assets and Financial Liabilities January 1,2013 January 1,2013 July 1, 2012 January 1,2012 January 1,2013 January 1,2013 January 1, Except for the following items, the Group believes that the adoption of aforementioned 2013 version of IFRSs endorsed by the FSC did not have any significant effect on the Group s consolidated financial statements. IAS 19 Employee Benefits The amendments to IAS 19 require the Group to calculate a net interest amount by applying the discount rate to the net defined benefit liability or asset to replace the interest cost and expected return on planned assets used in current IAS 19. In addition, the amendments eliminate the accounting treatment of either corridor approach or the immediate recognition of actuarial gains and losses to profit or loss when incurred, and instead, require to recognize all actuarial gains and losses immediately through other comprehensive income. The past service cost, on the other hand, is expensed immediately when incurred and is no longer amortized over the average period before vested on a straight-line basis. In addition, instead of recognizing liability and expense only when the demonstrable benefit commitment is made, the amendments require the Group to recognize liability and expense for termination benefit on (1) the date when the Group can no longer withdraw the offer of the benefit; or (2) the date when the Group recognizes related restructuring expense, whichever date is earlier. Moreover, the amendments also require a broader disclosure for defined benefit plans.

10 3 The Group has changed the accounting policy related to the measure and expression of net defined benefit assets, pension cost and actuarial gains or losses. With the elimination of the corridor approach, the Group has fully recognized the unrecognized prior service cost and actuarial gains or losses, and retrospectively adjusted the accumulated deficit. The influenced items and amounts are as follows: Consolidated statement of financial position: Affected items on the consolidated balance sheet 2010 IFRSs amounts Impact on transition 2013 IFRSs amounts Deferred tax assets $ 905,514 17, ,508 Net defined benefit liabilities $ 1,383, ,843 1,488,926 Accumulated deficit $ (1,607,136) (87,849) (1,694,985) Affected items on the consolidated balance sheet 2010 IFRSs amounts Impact on transition 2013 IFRSs amounts December 31, Deferred tax assets $ 860,325 21, ,389 Net defined benefit liabilities $ 1,398, ,903 1,522,655 Retained earnings $ 2,051,598 (102,839) 1,948,759 Consolidated statement of comprehensive income: Affected items on the consolidated comprehensive income statement 2010 IFRSs amounts Impact on transition 2013 IFRSs amounts For the three-month period ended Administration expenses $ 285,700 (160) 285,540 Income tax expenses 21, ,030 Net income 10, ,172 Total comprehensive income 117, ,497

11 4 (a) The IFRSs issued by IASB but not yet endorsed by FSC. New, revised and amended standards and interpretations for IFRSs issued by the IASB but not yet endorsed by the FSC are as follows: New, revised or amended standards and interpretations Effective date prescribed by IASB IFRS 9 Financial Instruments January 1, 2018 Amendments to IFRS 10 and IAS 28 Sale or Contribution of January 1, 2016 Assets between an Investor and its Associate or Joint Venture Amendments to IFRS 10, IFRS 12 and IAS 28 Investment January 1, 2016 Entities: Applying the Consolidation Exception Amendments to IFRS 11 Accounting for Acquisitions of January 1, 2016 Interests in Joint Operations IFRS 14 Regulatory Deferral Account January 1, 2016 IFRS 15 Revenue from Contracts with Customers January 1, 2017 Amendment to IAS 1 Disclosure Initiative January 1, 2016 Amendments to IAS16 and IAS 38 Clarification of Acceptable January 1, 2016 Methods of Depreciation and Amortization Amendments to IAS16 and IAS 41 Bearer Plants January 1, 2016 Amendments to IAS 19 Defined Benefit Plans: Employee July 1, Contributions Amendment to IAS 27 Equity Method in Separate Financial January 1, 2016 Statements Amendments to IAS 36: Recoverable Amount Disclosures for January 1, Non-Financial Assets Amendments to IAS 39 Novation of Derivatives and January 1, Continuation of Hedge Accounting Annual Improvements Cycle and July 1, Annual Improvements to IFRSs 2012 Cycle January 1, 2016 Amendments to IFRIC Interpretation 21 Levies January 1, The Group is evaluating the impact on its financial position and financial performance of the initial adoption of above mentioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

12 5 (4) Summary of significant accounting policies (a) Statement of compliance The accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to the Regulations) and guidelines of IAS 34 Interim Financial Reporting which are endorsed by the FSC. These consolidated financial statements do not include all disclosures required for full annual consolidated financial statements under the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as endorsed by the FSC (hereinafter referred to as IFRS endorsed by the FSC). Except as described below, the significant accounting policies adopted in the accompanying consolidated financial statements are the same as the consolidated financial statements as of and for the year ended December 31,. Please refer to note 4 of the consolidated financial statements as of and for the year ended December 31, for the detail disclosures of significant accounting policies and note 3 (a) for the impact of adopting the 2013 version of IFRSs endorsed and issued to be effective by the FSC commencing from January 1, (b) Basis of consolidation Except for note 3 (a), principle of preparing consolidated financial statements are the same as the consolidated financial statements as of and for the year ended December 31,. Please refer to note 4 (c) of the consolidated financial statements as of and for the year ended December 31, for relevant information. (i) The subsidiaries included in the consolidated financial statements are as follows: Name of Percentage of ownership (%) Investor subsidiary Business activity Note The Company NPUC Customer sales promotion 100% 100% 100% - and other services The Company NPHK Selling and investing in 100% 100% 100% - electronic products NPHK NPKC Producing and selling PCB 100% 100% 100% - (ii) Subsidiaries not include in the consolidated financial statements: None.

13 6 (c) Income tax The Group evaluates and discloses interim period income tax expense in accordance with paragraph B12 of IAS 34 Interim Financial Reporting. Income tax expense is best estimated by multiplying the pretax income for the interim reporting period by the effective annual tax rate as forecasted by the management, and should be allocated to current and deferred tax expense based on the proportion of the annual estimated and deferred tax expense. Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled and recognized directly in equity or other comprehensive income as tax expense. (d) Employee benefits The pension cost for the interim period is calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of prior fiscal year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. (5) Critical accounting judgments and key sources of estimates uncertainly The consolidated financial statements are prepared in conformity with IAS 34 Interim financial reporting as endorsed by the FSC, under which, management make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. In these consolidated financial statements, judgments and key sources of estimation uncertainty used by management in the application of critical accounting policies are expected to be consistent with those of note 5 of the consolidated financial statements for the year ended December 31,. (6) Significant accounts Except as described below, the description of significant accounts in the accompanying consolidated financial statements is not materially different from the consolidated financial statements as of and for the year ended December 31,. Please refer to note 6 of the consolidated financial statements as of and for the year ended December 31, for the detailed disclosures of these significant accounts.

14 7 Cash and cash equivalents December 31, 2015 Cash on hand $ Cash in bank 1,998,013 4,374,598 7,695,260 Cash equivalents short-term bills 1,082,452 63, ,903 Cash equivalents bonds with a put option 2,673, , ,615 $ 5,753,845 4,952,303 8,292,813 (7) Financial assets Financial assets consist of the following: December 31, 2015 Available-for-sale financial assets-current $ 5,331,072 9,966,531 7,223,108 December 31, 2015 Holding Holding Holding Amount share% Amount share% Amount share% Financial assets carried at cost-non-current: Stock-Antig Technology Corporation $ Financial assets carried at cost-non-current with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded shares of stock, are measured at their original cost. In 2008, the Group valuated the stock of Antig Technology Corporation and recognized impairment losses of $32,864, which was the total investment cost.

15 8 (8) Accounts receivable and other receivables December 31, 2015 Accounts receivable non-related parties $ 7,219,374 7,246,933 6,972,086 Accounts receivable related parties 2,272 6,448 11,015 Other receivables non related parties 118, , ,932 Other receivables related parties 694,315 2,034,340 1,408,215 Less: allowance for doubtful accounts (72,448) (72,084) (72,077) $ 7,962,103 9,554,130 8,489,171 Overdue but unimpaired aging of accounts receivable and other receivables of the Group were as followed: December 31, 2015 Overdue < 60days $ 171, ,455 79,698 Overdue from 61 days to 90 days ,039 7,473 Overdue from 91 days to 120 days 3,239 7, Overdue from 121 days to 1 year 1,938 34,910 15,392 $ 177, , ,163 Movements of allowance for doubtful accounts of accounts receivable and other receivables for the three-month periods ended and 2015 were as follows: Individually assessed impairment loss Collectively assessed impairment loss Total Balance as of January 1, $ - 76,617 76,617 Gain on recovery of impairment of accounts receivable - (4,174) (4,174) Effect of exchange rate Balance as of $ - 72,448 72,448 Individually assessed impairment loss Collectively assessed impairment loss Total Balance as of January 1, 2015 $ - 72,084 72,084 Effect of exchange rate - (7) (7) Balance as of 2015 $ - 72,077 72,077

16 9 (9) Inventories, net December 31, 2015 Finished goods $ 1,023,008 1,205,921 1,074,574 Work in progress 1,514,031 1,456,701 1,676,046 Raw materials 568, , ,962 Supplies 217, , ,511 $ 3,323,735 3,590,450 3,681,093 No inventory devaluation was recognized for the three-month period ended As the net realizable value of inventories has increased because the circumstance that caused the inventory devaluation in prior period has improved, the Group reversed the previously recognized valuation allowance of 4,963 for the three-month period ended, which were credited to cost of goods sold. (10) Investment accounted for using the equity method The components of the investments accounted for using equity method were as follows: December 31, 2015 Associates $ 700, , ,921 Summary of shares of the profit or loss of associates attributable to the Group were as follows: For the three-month periods ended 2015 Share of profit of associates accounted for using equity method $ 10,992 1,411 The fair value of investments in publicly traded stocks of associates was as follows: December 31, 2015 Formosa Petrochemical Corp. $ 926, , ,144

17 10 (11) Property, plant and equipment The cost and depreciation of the property, plant and equipment of the Group for the three-month periods ended and 2015 were as follows: Building Machinery and equipment Vehicles Miscellaneous equipment Under construction Total Cost: Balance as of January 1, $ 3,886,091 39,795,949 15,810 4,003,110 1,431,750 49,112,710 Additions - 2,697-8, , ,241 Disposals - (12,672) - (3,223) - (15,895) Reclassification - 282, (282,504) - Impact of exchange rate change 16, , ,603 11, ,092 Balance as of March 31, $ 3,882,615 40,207,323 15,843 4,009,989 1,346,378 49,462,148 Balance as of January 1, 2015 $ 3,960,944 40,943,133 16,566 4,027,789 1,544,862 50,493,294 Additions - 6, , ,477 Disposals - (558,987) - (30,259) - (589,246) Reclassification - 68,072-3,851 (71,923) - Impact of exchange rate change (24,849) (217,878) (53) (2,256) (21,121) (266,157) Balance as of March 31, 2015 $ 3,936,095 40,240,756 16,513 3,999,397 1,678,607 49,871,368 Accumulated depreciation: Balance as of January 1, $ 1,456,321 25,329,030 10,544 2,984,088-29,779,983 Depreciation for the year 42, , , ,885 Disposals - (9,658) - (3,224) - (12,882) Impact of exchange rate change 6,570 57, ,165-64,785 Balance as of March 31, $ 1,505,021 26,019,107 10,775 3,043,868-30,578,771 Balance as of January 1, 2015 $ 1,665,178 27,602,454 10,694 3,201,183-32,479,509 Depreciation for the year 41, , , ,804 Reversal of impairment loss - (594) (594) Disposals - (556,830) - (26,458) - (583,288) Impact of exchange rate change (11,176) (101,835) (29) (1,742) - (114,782) Balance as of March 31, 2015 $ 1,695,431 27,540,312 10,915 3,208,991-32,455,649 Carrying amounts: Balance as of $ 2,377,594 14,188,216 5, ,121 1,346,378 18,883,377 Balance as of December 31, $ 2,295,766 13,340,679 5, ,606 1,544,862 18,013,785 Balance as of 2015 $ 2,240,664 12,700,444 5, ,406 1,678,607 17,415,719 Please refer to note 19 for further information about the capitalized interest on borrowings for the purchase of the property, plant and equipment and gain (loss) on disposal of property, plant and equipment.

18 11 (12) Short-term loans December 31, 2015 Unsecured bank loans $ 791, , ,878 Unused credit facility for short-term loans $ 3,300,000 2,000,000 2,000,000 Range of interest rates 1.29%~2.24% 1.29%~1.49% 1.25%~1.50% Issuance and repayments of loans There were no significant issuance, repurchase and repayment of short-term loans of the Group for the three-month periods ended and Please refer to note 19 for information of interest expense. For other relevant information, please refer to note 12 of the consolidated financial statements as of and for the year ended December 31,. (13) Long-term loans Long-term loans consisted of the following: Currency Interest rate range Expiration Unused credit Amount Unsecured long-term bank loans USD %~0.6385% $ 320,362 15,255 Unsecured long-term bank loans USD 0.85%~1.70% - 262,383 Unsecured long-term bank loans USD 0.85%~1.70% 2015~ ,150 Unsecured long-term bank loans USD 1.66%~2.35% ,152, ,150 Less: current portion 540,022 Total $ 951,916 December 31, Currency Interest rate range Expiration Unused credit Amount Unsecured long-term bank loans USD 0.85%~1.73% 2015 $ - 545,548 Unsecured long-term bank loans USD 0.85%~1.73% ,774 Unsecured long-term bank loans USD 1.55%~2.35% ,611,299 1,110,112 Less: current portion 545,548 Total $ 1,382, Currency Interest rate range Expiration Unused credit Amount Unsecured long-term bank loans USD 0.81%~0.95% 2016 $ - 540,101 Unsecured long-term bank loans USD 1.36%~2.35% ,396,850 1,287,448 Less: current portion 540,101 Total $ 1,287,448

19 12 Issuance and repayments of loans The issuance of long-term loans was $188,407, the interest rate range was from 1.36% ~ 2.35%, the expiration date is May 6, 2018 and repayments of $271,372 were made for the three-month period ended Repayments of $261,236 were made for the three-month period ended. Please refer to note 19 for information of interest expense and note 13 of the consolidated financial statements as of and for the year ended December 31, for other relevant information. (14) Employee benefits (a) Defined benefit plan Subsequent to December 31,, there is apparently no evidence of any material market volatility, material curtailment, reimbursement and settlement or other material one-time events. Therefore, pension cost in the consolidated financial statements is measured and disclosed according to the respective actuarial report for the years ended December 31, 2013 and. Recognition as expense of pension cost was as follows: For the three-month periods ended 2015 Operating costs $ 14,386 14,123 Selling expenses Administrative expenses 1,740 1,822 Total $ 16,537 16,363 (b) Defined contribution plan The pension costs that were contributed to Bureau of Labor Insurance were as follows: For the three-month periods ended 2015 Operating costs $ 96, ,759 Selling expenses 1,324 1,525 Administrative expenses 7,117 8,222 Total $ 105, ,506

20 13 (15) Income tax (a) The details of income tax (benefit) expense were as follows: For the three-month periods ended 2015 Current income tax expenses Generated in current period $ 1,667 29,143 Current income tax before prior period adjustments 19,336 - Deferred tax expenses (benefit) Origination and reversal of temporary difference 27 56,460 Income tax expense (benefit) of continuing operations $ 21,030 85,603 (b) The details of income tax expense (benefit) under other comprehensive income were as follows: For the three-month periods ended 2015 Exchange differences on translation of foreign financial statements $ 18,734 (20) (c) The Company applies to the criterion of Emerging Important Strategical Industries and Related Technical Services, which was approved by the National Tax Administration. Thus, the Company is exempt from paying the profit-seeking enterprise income tax on related income for five consecutive years, commencing from the date of the Company s choice. Related tax-exempt information are as follows: Tax-exempt category Interpretation No. Encouraging items Tax-exempt period Expansion of capital increase No on IC substrate base (BGA substrate base) ~ (d) The Company s income tax returns have been examined by the ROC tax authority through 2012.

21 14 (e) The ROC Income Tax Act allows offset of net losses, as assessed by the tax authorities, against taxable income over a period of ten years for local tax reporting purposes. As of 2015, unused loss carry forward available to the Company were as follows: Year Unused loss carry forward Expiry year 2012 (Declared) $ 2,750, (Filed) 1,285, Total $ 4,035,449 (f) Information related to intergraded income tax were as follows: (16) Equity December 31, 2015 Undistributed earnings (accumulated deficit) on and after 1998 $ (1,694,985) 1,948,759 2,512,190 Imputation credit account balance $ 116, , , (actual) (estimated) Tax deduction ratio for earnings distribution to ROC residents Under the information for integrated income tax, the above imputation credit account and creditable ratio were calculated according to the formal interpretation No issued by Taxation Administration, Ministry of Finance, R.O.C. on October 17, Except for those described below, there were no material changes in equity for the three-month periods ended and Please refer to note 16 of the financial statements for the year ended December 31, for other relevant disclosures of equity. (a) Capital surplus The components of capital surplus were as follows: December 31, 2015 Paid-in capital in excess of par value $ 21,666,025 21,666,025 21,666,025 Exercise of employee stock options 250, , ,434 Others $ 21,916,582 21,916,582 21,916,582

22 15 (b) Special reserves of the company were as follows: December 31, 2015 Stockholders equity-reclassification from $ 2,054, negative items of other equities Others 672, , ,510 $ 2,726, , ,510 (c) Retained earnings Earnings appropriation and distribution According to the Company s articles of incorporation, the Company s earnings from the current year should be used to pay income tax, offset prior-year deficits, set aside 10% of the remainder as legal reserve, provide a special reserve when necessary, and pay dividends. After the above-mentioned appropriation, the remainder (the distributable earnings after dividends), if any, plus the undistributed earnings from previous years should be proposed by the board of directors and is subject to the shareholders approval. The Company appropriates 0.1% to 1% of the distributable earnings after dividends as employees bonus, and records it as periodic expense in the current year. The Company distributes dividends in cash or stock. Fifty percent or more of the distributable earnings after deducting legal reserve and special reserve should be distributed as dividends, of which cash dividends should be the priority, and the total of earnings and capital surplus transferred to share capital should be no more than 50% of all dividends for the year. For the three-month periods ended and 2015, the estimated employee bonus were $80 and $688, respectively, based on the distribution plan according to the Company s articles of incorporation, and the amount is reported under the operating cost and expense for the above periods. The difference between the amounts approved in the shareholders meeting and those recognized in the consolidated financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the following year. No dividend and employee bonus were distributed in because of the net loss in 2013 according to the shareholders meeting on June 24,, which also admitted the reversal of special capital surplus.

23 16 The appropriations of earnings and employee bonus amounted to $2,751 in were approved in the board of directors meeting on March 24, The distributing earnings are still under approval of the shareholders meeting. This information can be reviewed on the Market Observation Post System website after related meetings are held. The amounts of appropriation of dividends per share were as follows: (To be distributed) Allotment Rate (NTD) Amount Dividends distributed to common stock shareholders: Cash $ ,015 (d) Other equity Exchange differences on translation of financial statements for foreign operation Unrealized (loss) gain on available-for sale financial assets Total Balance as of January 1, $ 202, , ,205 Exchange differences on translation (net of tax) 91,467-91,467 Unrealized gain on available-for-sale financial assets - 15,858 15,858 Balance as of $ 293, , ,530 Balance as of January 1, 2015 $ 740,319 2,547,776 3,288,095 Exchange differences on (170,917) - (170,917) translation (net of tax) Unrealized loss on available-for-sale financial assets - (801,851) (801,851) Balance as of 2015 $ 569,402 1,745,925 2,315,327 (17) Share-based payment transactions Except for those described below, the Group believes that there was no material change on share-based payment transactions for the three-month periods ended and Please refer to note 17 of the consolidated financial statements for the year ended December 31, for related detail disclosures on share-based payment transactions.

24 17 The above details of transfer of employee stock options were as follows: Employee stock option plans Number of options (Units) For the three-month periods ended 2015 Number of Weighted-average options exercise price (Units) Weighted-average exercise price Outstanding at January 1 8,362 $ , Outstanding at 8,362 $ , Options exercisable at 8,362 8,362 (18) Earnings per share The basic earnings per share were calculated as follows: For the three-month periods ended 2015 Basic Earnings Per Share Net income attributable to equity shareholder s of the Company $ 10, ,431 Weighted average number of ordinary shares outstanding (basic) 646, ,166 Basic earnings per share $ Diluted Earnings Per Share Net income attributable to equity shareholder s of the Company $ 10, ,431 Weighted average number of ordinary shares outstanding (basic) 646, ,166 Effect of employee stock bonus 2 69 Weighted average number of ordinary shares outstanding (diluted) 646, ,235 Diluted earnings per share $ Since the exercise price of the options issued by the Company exceeded the average market price of the share during the three-month periods ended and 2015, the stock options were not included in the calculation of weighted average number of ordinary shares because they were anti-dilutive.

25 18 (19) Non-operating income and expenses (a) Other income The Group s other income were as follows: For the three-month periods ended 2015 Interest income of bank deposits $ 17,353 18,576 Gain on recovery of bad debt expense 4,174 - Others 7,297 12,954 $ 28,824 31,530 (b) Other gains and losses The Group s other gains and losses were as follows: For the three-month periods ended 2015 Foreign exchange gains (losses) $ 133,334 (43,421) Gains (losses) on disposal of financial liabilities and investments Net gain on disposal of available-for-sale financial assets 21, ,113 (Losses) gain on disposal of property, plant and equipments (527) 20,850 Gains on disposal of materials and spoilages 86,658 61,893 Gain on recovery of impairment loss Others (6,294) (3,621) $ 234, ,408 (c) Finance expenses The details of finance expenses were as follows: For the three-month periods ended 2015 Interest expense $ 10,557 7,609 Less: capitalized interest (3,986) (4,092) $ 6,571 3,517 Interest capitalization rate %~1.4076% %~1.5543%

26 19 (20) Reclassified adjustments of the components of other comprehensive income The details of the reclassified adjustments of the components of other comprehensive income were as follows: For the three-month periods ended 2015 Available-for-sale financial assets: Net change in fair value during the year $ 37,266 (478,738) Net change in fair value reclassified as profit or loss (21,408) (323,113) Net change in fair value recognized into other comprehensive income $ 15,858 (801,851) (21) Financial instruments Except for those described below, the Group believes that there was no material change with regard to the fair value and exposure risks of credit risk, liquidity risk and market risk on financial instruments. Please refer to note 21 of the consolidated financial statements for the year ended December 31, for the related detail disclosures on financial instruments. (a) Currency risk (i) The Group s exposure to significant foreign currency risk was as follows: Foreign Currency (in thousands) Exchange rate New Taiwan Dollars Financial assets: Monetary items USD $ 254, ,767,903 EUR JPY 1, HKD CNY 185, ,783 Financial liabilities Monetary items USD $ 109, ,336,172 JPY 331, ,140 CNY 64, ,717

27 20 Foreign Currency (in thousands) December 31, Exchange rate New Taiwan Dollars Financial assets: Monetary items USD 323, ,269,323 EUR JPY 3, HKD CNY 223, ,156,974 Financial liabilities Monetary items USD 108, ,434,012 EUR JPY 141, ,481 CNY 88, ,304 Foreign Currency (in thousands) 2015 Exchange rate New Taiwan Dollars Financial assets: Monetary items USD 429, ,489,798 EUR JPY 1, HKD CNY 88, ,375 Financial liabilities Monetary items USD 105, ,311,746 JPY 231, ,173 CNY 83, ,897 The Group s exposure to foreign currency risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable and other payables which are denominated in different foreign currencies. A 1% appreciation or depreciation of the NTD against the USD as of and 2015 would have decreased or increased the net income after tax by $44,317 and $101,781 for the three-month periods ended and 2015 respectively. This analysis assumes that all other variables remain constant and is performed on the same basis.

28 21 (ii) Other pricing risks The effects of the changes of the price equity securities (the analysis assumes that all other variables remain constant and is performed on the same basis) on the comprehensive income on the reporting date were as follows: Price of equity securities on reporting date Effect on other comprehensive income after tax for the three-month periods ended 2015 Appreciation of 1% $ 45,718 42,029 Depreciation of 1% $ (45,718) (42,029) (b) Information of fair value (i) Fair value of financial instruments The carrying and fair value of the Group s financial assets and liabilities are as follows: Carrying Value Fair Value Level 1 Level 2 Level 3 Total Available-for-sale financial assets Domestic listed stocks and mutual funds $ 5,331,072 5,331, ,331,072 Borrowings and receivables Cash and cash equivalents $ 5,753, Accounts receivable, net (including related parties) 7,149, Other receivable s(including related parties) 812, Total $ 13,715, Financial liabilities measured by amortized cost Short term loans $ 791, Accounts payable (including related parties) 1,958, Other payables (including related parties) 1,467, Long term loans (including current portion) 1,491, Total $ 5,708,

29 22 Carrying Value Fair Value Level 1 Level 2 Level 3 Total December 31, Available-for-sale financial assets Domestic listed stocks and mutual funds $ 9,966,531 9,966, ,966,531 Borrowings and receivables Cash and cash equivalents $ 4,952, Accounts receivable, net (including related parties) 7,181, Other receivables (including related parties) 2,372, Total $ 14,506, Financial liabilities measured by amortized cost Short term loans $ 516, Accounts payable (including related parties) 1,800, Other payables (including related parties) 1,878, Long term loans (including current portion) 1,928, Total $ 6,123, Available-for-sale financial assets Domestic listed stocks and mutual funds $ 7,223,108 7,223, ,223,108 Borrowings and receivables Cash and cash equivalents $ 8,292, Accounts receivable, net (including related parties) 6,911, Other receivables (including related parties) 1,578, Total $ 16,781, Financial liabilities measured by amortized cost Short term loans $ 456, Accounts payable (including related parties) 1,828, Other payables (including related parties) 1,449, Long term loans (including current portion) 1,827, Total $ 5,562, (ii) Valuation techniques and assumptions used in fair value determination (a) Non-derivative financial instruments If a quoted price is available on an active market, the market price should be used as the fair value; the market price published by the primary stock exchanges as the basis of fair value evaluation for listed equity instruments. Financial instruments have an active market price when the public offer of financial instruments, which represents the actual price of the fair market where transactions often incur, can be frequently and promptly obtained from brokers, underwriters, industrial unions, institutes of pricing services and authorities. The market is considered inactive when