A member firm of Ernst & Young Global Limited 1

1802

TAIWAN GLASS INDUSTRIAL CORPORATION PARENT COMPANY ONLY FINANCIAL STATEMENTS

WITH INDEPENDENT AUDITORS' REPORT FOR THE YEARS ENDED

31 DECEMBER 2016 AND 2015

Address: 11th Floor, No. 261, Sec. 3, Nanjing E. Rd., Taipei, Taiwan, R.O.C. Telephone: 886-2-2713-0333

TAIWAN GLASS INDUSTRIAL CORPORATIONPARENT COMPANY ONLY BALANCE SHEETS

31 December 2016 and 2015(Expressed in Thousands of New Taiwan Dollars)

NOTE 31 December 2016 31 December 2015 NOTE 31 December 2016 31 December 2015Current assets Current liabilities

Cash and cash equivalents 4, 6(1) $1,007,119 $1,197,154 Short-term loans 6(11) $600,000 $- Notes receivable, net 4, 6(2) 192,464 160,798 Short-term bills payable 6(12) 1,347,684 2,244,820Accounts receivable, net 4, 6(3), 7 1,201,996 1,251,880 Financial liabilities at fair value through 4, 6(13), 6(14) - 116,378Other receivables, net 4, 6(4), 7 1,726,193 1,477,486 profit or loss - currentCurrent tax assets 4 1,349 1,991 Accounts payable 7 951,686 960,908Inventories, net 4, 6(5) 2,425,434 2,508,014 Other payables 7 640,023 617,388Prepayments 340,226 320,775 Current tax liabilities 4 4,535 6,905Other current assets 7 2,359 56,512 Advanced receipts 621,482 556,052

Total current assets 6,897,140 6,974,610 Current portion of corporate bonds payable 4, 6(14) - 3,161,149Current portion of long-term loans 6(15) 2,693,360 1,960,000Other current liabilities 76,893 71,404

Total current liabilities 6,935,663 9,695,004

Noncurrent assets Noncurrent liabilitiesAvailable-for-sale financial assets - noncurrent 4, 6(6) 219,008 223,410 Long-term loans 6(15) 7,658,300 6,900,000Investments accounted for using the equity method 4, 6(7) 36,422,700 37,507,970 Deferred tax liabilities 4, 6(25) 279,145 255,672Property, plant and equipment 4, 6(8), 7 15,394,855 15,933,575 Net defined benefit liability - noncurrent 4, 6(16) 273,415 264,231Investment property 4, 6(9) 18,352 18,621 Deposits-in 1,445 2,532Deferred tax assets 4, 6(25) 284,477 278,720 Total noncurrent liabilities 8,212,305 7,422,435

Prepayment for equipment - 28,781 Total liabilities 15,147,968 17,117,439

Refundable deposits 8,100 8,193Total noncurrent assets 52,347,492 53,999,270 Capital 6(17)

Common stock 29,080,608 25,080,608Additional paid-in capital 6(17), 6(27) 1,918,910 754,472Retained earnings 6(17)

Legal reserve 5,616,758 5,616,758Special reserve 5,102,550 10,252,793Unappropriated retained earnings 3,787,706 295,210

Total retained earnings 14,507,014 16,164,761

Other components of equityExchange differences on translation of foreign operations 4 (1,241,289) 2,034,966

Unrealized gains or losses on available-for-sale financial assets (168,579) (178,366)

Total other components of equity (1,409,868) 1,856,600

Total equity 44,096,664 43,856,441

Total assets $59,244,632 $60,973,880 Total liabilities and equity $59,244,632 $60,973,880

As ofLIABILITIES AND EQUITY

As of

ASSETS

The accompanying notes are an integral part of the parent company only financial statements.

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TAIWAN GLASS INDUSTRIAL CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended 31 December 2016 and 2015

(Expressed in Thousands of New Taiwan Dollars Except Earnings Per Share Information)

Note 2016 2015

Operating revenues 4, 6(19), 7 $12,952,715 $13,073,437

Operating costs 6(5), 6(22), 7 (10,387,233) (10,965,973)

Gross profit 2,565,482 2,107,464

Unrealized intercompany profit (10,410) (29,662)

Realized intercompany profit 29,662 27,278

Net gross profit 2,584,734 2,105,080

Operating expenses 6(18), 6(21), 6(22)

Selling and marketing expenses (1,667,868) (1,655,538)

General and administrative expenses (276,301) (225,224)

Research and development expenses (90,972) (137,446)

Subtotal (2,035,141) (2,018,208)

Net amount of other revenues and gains and expenses and losses 6(20) 35,719 35,328

Operating income 585,312 122,200

Non-operating income and expenses

Other income 6(23), 7 245,845 460,763

Other gains and losses 6(23), 7 (178,811) (160,212)

Financial costs 4, 6(23) (242,961) (220,171)

Share of losses of subsidiaries, associates and joint ventures 4 (1,992,304) (4,858,964)

Subtotal (2,168,231) (4,778,584)

Losses from continuing operations before income tax (1,582,919) (4,656,384)

Income tax expenses 4, 6(25) (58,766) (31,213)

Net losses from continuing operations (1,641,685) (4,687,597)

Other comprehensive income 4, 6(24), 6(25)

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of defined benefit obligation (17,421) (553,328)

Share of other comprehensive loss of subsidiaries, associates (1,602) (3,383)

and joint ventures

Income tax related to items that will not be reclassified subsequently 2,961 94,065to profit or loss

Items that may be reclassified subsequently to profit or loss:

Unrealized gain (loss)on available-for-sale financial assets 9,787 (42,101)

Share of other comprehensive loss of subsidiaries, associates (3,291,392) (1,143,702)and joint ventures

Income tax related to items that may be reclassified subsequently - - to profit or loss

Total other comprehensive income, net of tax (3,297,667) (1,648,449)

Total comprehensive income $(4,939,352) $(6,336,046)

Earnings per share( NT$) 6(26)Earnings per share-basic $(0.62) $(1.97)

The accompanying notes are an integral part of the parent company only financial statements.

For the years ended 31 December

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TAIWAN GLASS INDUSTRIAL CORPORATIONPARENT COMPANY ONLY STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the years ended 31 December 2016 and 2015(Expressed in Thousands of New Taiwan Dollars)

CapitalAdditional Paid-

in CapitalLegal

ReserveSpecialReserve

UnappropriatedRetainedEarnings

ExchangeDifferences onTranslation of

ForeignOperations

Gainsor Losses onavailable-for-

saleFinancial Assets Total Equity

Balance as of 1 January 2015 $23,780,608 $370,850 $5,601,432 $10,252,793 $5,460,779 $3,169,867 $(136,265) $48,500,064 Appropriations and distributions of 2014 earnings:

Legal reserve appropriated 15,326 (15,326) -

Net income in 2015 (4,687,597) (4,687,597)Other comprehensive income, net of tax in 2015 (462,646) (1,143,702) (42,101) (1,648,449)Total comprehensive income - - - - (5,150,243) (1,143,702) (42,101) (6,336,046)

Increase through changes in ownership interests in subsidiariesIssuance of common stock 1,300,000 369,483 1,669,483

Increase through changes in ownership interests in subsidiaries 14,139 8,801 22,940

Balance as of 31 December 2015 25,080,608 754,472 5,616,758 10,252,793 295,210 2,034,966 (178,366) 43,856,441 Appropriations and distributions of 2015 earnings:

Reversal of special capital reserve (5,150,243) 5,150,243 -

Net losses in 2016 (1,641,685) (1,641,685)Other comprehensive income, net of tax in 2016 (16,062) (3,291,392) 9,787 (3,297,667)Total comprehensive income - - - - (1,657,747) (3,291,392) 9,787 (4,939,352)

Issuance of common stock 4,000,000 1,145,817 5,145,817

Increase through changes in ownership interests in subsidiaries (5,040) 15,137 10,097

Shared-based Payment Transaction 23,661 23,661

Balance as of 31 December 2016 $29,080,608 $1,918,910 $5,616,758 $5,102,550 $3,787,706 $(1,241,289) $(168,579) $44,096,664

The accompanying notes are an integral part of the parent company only financial statements.8

TAIWAN GLASS INDUSTRIAL CORPORATIONPARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended 31 December 2016 and 2015(Expressed in Thousands of New Taiwan Dollars)

For the years ended 31 December2016 2015

Cash flows from operating activities:Net losses before tax $(1,582,919) $(4,656,384)Adjustments to reconcile net losses before tax to net cash provided by operating activities:

Depreciation (including investment property) 1,143,686 945,880Gains on financial liabilities at fair value through profit or loss (39,800) 62,488Interest expenses 242,961 220,171Interest income (7,322) (5,637)Dividend income (11,829) (13,997)Share-based payments 22,855 - Exchange effect on bonds payable (153,634) 114,702Share of losses (income) of subsidiaries, associates and joint ventures 1,992,304 4,858,964Gains on disposal of property, plant and equipment (35,719) (35,328)Loss on impairment of financial assets 14,189 - Unrealized intercompany profit 10,410 29,662Realized intercompany profit (29,662) (27,278)Loss on retirement of bonds 111,349 - Other income from overdue dividend payable (3,187) (1,606)Changes in assets and liabilities:Notes receivable (31,666) 105,921Accounts receivable 49,884 441,758Other receivable 239,308 (105,196)Inventories 82,580 163,002Prepayments (19,451) (72,184)Other current assets 54,153 (20,912)Accounts payable (9,222) (394,669)Other payables 25,354 (95,460)Advanced receipts 65,430 78,262Other current liabilities 5,489 (5,242)Net defined benefit liability (8,237) - Cash generated from operations 2,127,304 1,586,917Interests received 2,307 5,782Dividends received 34,099 25,827Interests paid (214,907) (190,566)Income tax paid (39,817) (14,711) Net cash provided by operating activities 1,908,986 1,413,249

Cash flows from investing activities:Acquisition of investments accounted for using the equity method (4,155,801) (1,331,067)Acquisition of property, plant and equipment, excluding capitalized borrowing costs (570,570) (1,023,480)Capitalized borrowing costs from self-constructed assets (6,149) (30,346)Proceeds from disposal of property, plant and equipment 913 5,004Decrease in refundable deposits 93 7,250Increase in other receivable (483,000) - Net cash used in investing activities (5,214,514) (2,372,639)

Cash flows from financing activities:Increase in short-term loans 600,000 - Decrease in short-term loans - (3,685,568)Increase in short-term bills payable 8,898,000 450,169Decrease in short-term bills payable (9,798,000) - Repayments of bonds payable (3,220,125) - Proceeds from long-term loans 3,691,660 3,800,000Repayments of long-term loans (2,200,000) (2,140,000)Increase in deposits-in - 9Decrease in deposits-in (1,087) - Cash dividends (39) (115)Issuance of Common Stock 5,145,084 1,669,483 Net cash provided by financing activities 3,115,493 93,978

Net decrease in cash and cash equivalents (190,035) (865,412)Cash and cash equivalents, at beginning of the year 1,197,154 2,062,566Cash and cash equivalents, at end of the year $1,007,119 $1,197,154

The accompanying notes are an integral part of the parent company only financial statements.

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TAIWAN GLASS INDUSTRIAL CORPORATION NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

For the Years Ended 31 December 2016 and 2015 (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. History and organization

Taiwan Glass Industrial Corporation (“the Company”) was incorporated on 5 September 1964 and commenced operations in 1967. The main activities of the Company are manufacturing, processing and selling of various glass products. The Company’s common shares were publicly listed on the Taiwan Stock Exchange (TWSE) in July 1973. The Company’s registered office and the main business location is at 11F, No. 261, Section 3, Nanjing E. Rd., Taipei, Republic of China (R.O.C.).

2. Date and procedures of authorization of financial statements for issue The parent company only financial statements of the Company for the years ended 31 December 2016 and 2015 were authorized for issue by the Board of Directors on 20 March 2016.

3. Newly issued or revised standards and interpretations (1) Standards or interpretations issued, revised or amended, which are recognized by Financial

Supervisory Commission (“FSC”), but not yet adopted by the Group at the date of issuance of the Group’s financial statements are listed below. (a) IAS 36 “Impairment of Assets” (Amendment)

This amendments relate to the amendments issued in May 2011 and require entities to disclose the recoverable amount of an asset (including goodwill) or a cash-generating unit when an impairment loss has been recognized or reversed during the period. The amendments also require detailed disclosure of how the fair value less costs of disposal has been measured when an impairment loss has been recognized or reversed, including valuation techniques used, level of fair value hierarchy of assets and key assumptions used in measurement. The amendments are effective for annual periods beginning on or after 1 January 2014.

(b) IFRIC 21 “Levies” This interpretation provides guidance on when to recognize a liability for a levy imposed by a government (both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain). The interpretation is effective for annual periods beginning on or after 1 January 2014.

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(c) IAS 39 “Financial Instruments: Recognition and Measurement” (Amendment)

Under the amendments, there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The interpretation is effective for annual periods beginning on or after 1 January 2014.

(d) IAS 19 “Employee Benefits” (Defined benefit plans: employee contributions) The amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to provide a policy choice for a simplified accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The amendments are effective for annual periods beginning on or after 1 July 2014.

(e) Improvements to International Financial Reporting Standards (2010-2012 cycle): IFRS 2 “Share-based Payment” The annual improvements amend the definitions of ‘vesting condition’ and ‘market condition’ and add definitions for ‘performance condition’ and ‘service condition’ (which were previously part of the definition of ‘vesting condition’). The amendments prospectively apply to share-based payment transactions for which the grant date is on or after 1 July 2014. IFRS 3 “Business Combinations” The amendments include: (1) deleting the reference to “other applicable IFRSs” in the classification requirements; (2) deleting the reference to “IAS 37 Provisions, Contingent Liabilities and Contingent Assets or other IFRSs as appropriate”, other contingent consideration that is not within the scope of IFRS 9 shall be measured at fair value at each reporting date and changes in fair value shall be recognized in profit or loss; (3) amending the classification requirements of IFRS 9 Financial Instruments to clarify that contingent consideration that is a financial asset or financial liability can only be measured at fair value, with changes in fair value being presented in profit or loss depending on the requirements of IFRS 9. The amendments apply prospectively to business combinations for which the acquisition date is on or after 1 July 2014. IFRS 8 “Operating Segments” The amendments require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. The amendments also clarify that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly. The amendments are effective for annual periods beginning on or after 1 July 2014.

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IFRS 13 “Fair Value Measurement” The amendments to the Basis for Conclusions of IFRS 13 clarify that when deleting paragraph B5.4.12 of IFRS 9 Financial Instruments and paragraph AG79 of IAS 39 Financial Instruments: Recognition and Measurement as consequential amendments from IFRS 13 Fair Value Measurement, the IASB did not intend to change the measurement requirements for short-term receivables and payables. IAS 16 “Property, Plant and Equipment” The amendments clarify that when an item of property, plant and equipment is revalued, the accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendments are effective for annual periods beginning on or after 1 July 2014. IAS 24 “Related Party Disclosures” The amendments clarify that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. The amendments are effective for annual periods beginning on or after 1 July 2014. IAS 38 “Intangible Assets” The amendments clarify that when an intangible asset is revalued, the accumulated amortization at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendments are effective for annual periods beginning on or after 1 July 2014.

(f) Improvements to International Financial Reporting Standards (2011-2013 cycle): IFRS 1 “First-time Adoption of International Financial Reporting Standards” The amendments clarify that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS or applying early a new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits early application. IFRS 3 “Business Combinations” This amendments clarify that paragraph 2(a) of IFRS 3 Business Combinations excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3; and the scope exception only applies to the financial statements of the joint venture or the joint operation itself. The amendments are effective for annual periods beginning on or after 1 July 2014.

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IFRS 13 “Fair Value Measurement” The amendments clarify that paragraph 52 of IFRS 13 includes a scope exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis. The objective of the amendments is to clarify that this portfolio exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation. The amendments are effective for annual periods beginning on or after 1 July 2014. IAS 40 “Investment Property” The amendments clarify the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property; in determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property, separate application of both standards independently of each other is required. The amendments are effective for annual periods beginning on or after 1 July 2014.

(g) IFRS 14 “Regulatory Deferral Accounts” IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. IFRS 14 is effective for annual periods beginning on or after 1 January 2016.

(h) IFRS 11 “Joint Arrangements” (Accounting for Acquisitions of Interests in Joint Operations) The amendments provide new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments require the entity to apply all of the principles on business combinations accounting in IFRS 3 “Business Combinations”, and other IFRS (that do not conflict with the guidance in IFRS 11), to the extent of its share in a joint operation acquired. The amendments also require certain disclosure. The amendments are effective for annual periods beginning on or after 1 January 2016.

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(i) IAS 16“Property, Plant and Equipment and IAS 38 “Intangible Assets” — Clarification

of Acceptable Methods of Depreciation and Amortization The amendments clarify that the use of revenue-based methods to calculate depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset, such as selling activities and change in sales volumes or prices. The amendments also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendments are effective for annual periods beginning on or after 1 January 2016.

(j) IAS 16“Property, Plant and Equipment and IAS 41 “Agriculture” — Agriculture: Bearer Plants The IASB decided that bearer plants should be accounted for in the same way as property, plant and equipment in IAS 16 Property, Plant and Equipment, because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of IAS 16, and the produce growing on bearer plants will remain within the scope of IAS 41. The amendments are effective for annual periods beginning on or after 1 January 2016.

(k) IAS 27“Separate Financial Statements” — Equity Method in Separate Financial Statements The IASB restored the option to use the equity method under IAS 28 for an entity to account for investments in subsidiaries and associates in the entity’s separate financial statements. In 2003, the equity method was removed from the options. This amendments remove the only difference between the separate financial statements prepared in accordance with IFRS and those prepared in accordance with the local regulations in certain jurisdictions. The amendments are effective for annual periods beginning on or after 1 January 2016.

(l) Improvements to International Financial Reporting Standards (2012-2014 cycle): IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” The amendments clarify that a change of disposal method of assets (or disposal groups) from disposal through sale or through distribution to owners (or vice versa) should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. The amendments also require identical accounting treatment for an asset (or disposal group) that ceases to be classified as held for sale or as held for distribution to owners. The amendments are effective for annual periods beginning on or after 1 January 2016.

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IFRS 7 “Financial Instruments: Disclosures” The amendments clarify that a servicing contract that includes a fee can constitute continuing involvement in a financial asset and therefore the disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety under IFRS 7 Financial Instruments: Disclosures is required. The amendments also clarify that whether the IFRS 7 disclosure related to the offsetting of financial assets and financial liabilities are required to be included in the condensed interim financial report would depend on the requirements under IAS 34 Interim Financial Reporting. The amendments are effective for annual periods beginning on or after 1 January 2016. IAS 19 “Employee Benefits” The amendments clarify the requirement under IAS 19.83, that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. The amendments are effective for annual periods beginning on or after 1 January 2016. IAS 34 “Interim Financial Reporting” The amendments clarify what is meant by “elsewhere in the interim financial report” under IAS 34; the amendments state that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report. The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. The amendments are effective for annual periods beginning on or after 1 January 2016.

(m) Disclosure Initiative — Amendment to IAS 1 “Presentation of Financial Statements”: The amendments contain (1) clarifying that an entity must not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendments reemphasize that, when a standard requires a specific disclosure, the information must be assessed to determine whether it is material and, consequently, whether presentation or disclosure of that information is warranted, (2) clarifying that specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated, and how an entity shall present additional subtotals, (3) clarifying that entities have flexibility as to the order in which they present the notes to financial statements, but also emphasize that understandability and comparability should be considered by an entity when deciding on that order, (4) removing the examples of the income taxes accounting policy and the foreign currency accounting policy, as these were considered unhelpful in illustrating what significant accounting policies could be, and (5) clarifying that the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, classified between those items that will or will not be subsequently reclassified to profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2016.

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(n) IFRS 10“Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests in Other

Entities”, and IAS 28“Investments in Associates and Joint Ventures” — Investment Entities: Applying the Consolidation Exception The amendments contain (1) clarifying that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity when the investment entity measures all of its subsidiary at fair value, (2) clarifying that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated when all other subsidiaries of an investment entity are measured at fair value, and (3) allowing the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. The amendments are effective for annual periods beginning on or after 1 January 2016.

The abovementioned standards and interpretations were issued by IASB and recognized by FSC so that they are applicable for annual periods beginning on or after 1 January 2017. Apart from item (d) to (f) and (k) to (m) which would impact the financial statement disclosures and presentation or potential accounting treatment, the remaining standards and interpretations have no material impact on the Group.

(2) Standards or interpretations issued, revised or amended, by IASB but not yet recognized by FSC at the date of issuance of the Group’s financial statements are listed below. (a) IFRS 15 “Revenue from Contracts with Customers”

The core principle of the new Standard is for companies to recognize revenue to depict the transfer of promised goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The new Standard includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The Standard is effective for annual periods beginning on or after 1 January 2018.

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(b) IFRS 9“Financial Instruments”

The IASB has issued the final version of IFRS 9, which combines classification and measurement, the expected credit loss impairment model and hedge accounting. The standard will replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9 Financial Instruments (which include standards issued on classification and measurement of financial assets and liabilities and hedge accounting). Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore there is requirement that ‘own credit risk’ adjustments are not recognized in profit or loss. Impairment: Expected credit loss model is used to evaluate impairment. Entities are required to recognize either 12-month or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition. Hedge accounting: Hedge accounting is more closely aligned with risk management activities and hedge effectiveness is measured based on the hedge ratio. The new standard is effective for annual periods beginning on or after 1 January 2018.

(c) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full. IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The effective date of the amendments has been postponed indefinitely, but early adoption is allowed.

(d) IFRS 16“Leases” The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions). Lessor accounting still uses the dual classification approach: operating lease and finance lease. The Standard is effective for annual periods beginning on or after 1 January 2019.

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(e) IAS 12“Income Taxes” — Recognition of Deferred Tax Assets for Unrealized Losses

The amendments clarify how to account for deferred tax assets for unrealized losses. The amendments are effective for annual periods beginning on or after 1 January 2017.

(f) Disclosure Initiative — Amendment to IAS 7 “Statement of Cash Flows”: The amendments relate to changes in liabilities arising from financing activities and to require a reconciliation of the carrying amount of liabilities at the beginning and end of the period. The amendments are effective for annual periods beginning on or after 1 January 2017.

(g) IFRS 15 “Revenue from Contracts with Customers” — Clarifications to IFRS 15 The amendments clarify how to identify a performance obligation in a contract, determine whether an entity is a principal or an agent, and determine whether the revenue from granting a license should be recognized at a point in time or over time. The amendments are effective for annual periods beginning on or after 1 January 2018.

(h) IFRS 2 “Shared-Based Payment” — Amendments to IFRS 2 The amendments contain (1) clarifying that vesting conditions (service and non-market performance conditions), upon which satisfaction of a cash-settled share-based payment transaction is conditional, are not taken into account when estimating the fair value of the cash-settled share-based payment at the measurement date. Instead, these are taken into account by adjusting the number of awards included in the measurement of the liability arising from the transaction, (2) clarifying if tax laws or regulations require the employer to withhold a certain amount in order to meet the employee’s tax obligation associated with the share-based payment, such transactions will be classified in their entirety as equity-settled share-based payment transactions if they would have been so classified in the absence of the net share settlement feature, and (3) clarifying that if the terms and conditions of a cash-settled share-based payment transaction are modified, with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as an equity-settled transaction from the date of the modification. The equity-settled share-based payment transaction is measured by reference to the fair value of the equity instruments granted at the modification date and is derecognized in equity, on the modification date, to the extent to which goods or services have been received. The liability for the cash-settled share-based payment transaction as at the modification date is derecognizedd on that date. Any difference between the carrying amount of the liability derecognized and the amount recognized in equity on the modification date is recognized immediately in profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2018.

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(i) Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts — Amendments

to IFRS 4 The amendments help to resolve issues arising from the different effective dates for IFRS 9 “Financial Instruments” (1 January 2018) and the new insurance contracts standard about to be issued by the IASB (still to be decided, but not before 1 January 2020). The amendments allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 “Financial Instruments” before the IASB’s new insurance contracts standard becomes effective. The amendments introduce two approaches: an overlay approach and a temporary exemption. The overlay approach allows an entity applying IFRS 9 to remove from profit or loss the effects of some of the accounting mismatches that may occur from applying IFRS 9 before the new insurance contracts standard is applied. The temporary exemption enables eligible entities to defer the implementation date of IFRS 9 until 2021 (these entities that defer the application of IFRS 9 will continue to apply IAS 39).

(j) Transfers of Investment Property — Amendments to IAS 40 The amendments relate to the transfers of investment property. The amendments clarify that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use, the entity should transfer property into and out of investment property accordingly. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use. The amendments are effective for annual periods beginning on or after 1 January 2018.

(k) Improvements to International Financial Reporting Standards (2014-2016 cycle): IFRS 1 “First-time Adoption of International Financial Reporting Standards” The amendments revise and amend transition requirements relating to certain standards and delete short-term exemptions under Appendix E for first-time adopter. The amendments are effective for annual periods beginning on or after 1 January 2018. IFRS 12 “Disclosure of Interests in Other Entities” The amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs B10–B16, apply to an entity’s interests that are classified as held for sale or discontinued operations. The amendments are effective for annual periods beginning on or after 1 January 2017.

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IAS 28“Investments in Associates and Joint Ventures” The amendments clarify that when an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organization, or a mutual fund, unit trust and other qualifying entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with IFRS 9 “Financial Instruments” on an investment-by-investment basis. Besides, if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate's or joint venture's interests in subsidiaries on an investment-by-investment basis. The amendments are effective for annual periods beginning on or after 1 January 2018.

(l) IFRIC 22 “Foreign Currency Transactions and Advance Consideration” The interpretation clarifies that when applying paragraphs 21 and 22 of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. The interpretation is effective for annual periods beginning on or after 1 January 2018.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Group is still currently determining the potential impact of the standards and interpretations listed under (k)~(l), it is not practicable to estimate their impact on the Group at this point in time. All other standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies (1) Statement of compliance

The parent company only financial statements of the Company for the years ended 31 December 2016 and 2015 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

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(2) Basis of preparation

The Company prepared parent company only financial statements in accordance with Article 21 of the Regulations, which provided that the profit or loss and other comprehensive income for the period presented in the parent company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent company only financial statements shall be the same as the equity attributable to the parent company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments. The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value.

(3) Foreign currency transactions The Company’s parent company only financial statements are presented in NT dollars, which is also the Company’s functional currency. Transactions in foreign currencies are initially recorded by the Company at its respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following: A. Exchange differences arising from foreign currency borrowings for an acquisition of a

qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

B. Foreign currency items within the scope of IAS 39 Financial Instruments: Recognition and

Measurement are accounted for based on the accounting policy for financial instruments. C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net

investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

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When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of financial statements in foreign currency Each foreign operations of the Company determines its own functional currency and items included in the financial statements of each foreign operations are measured using that functional currency. The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Company: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation. On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss. Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and non-current distinction An asset is classified as current when: A. The Company expects to realize the asset, or intends to sell or consume it, in its normal

operating cycle; B. The Company holds the asset primarily for the purpose of trading; C. The Company expects to realize the asset within twelve months after the reporting period;

or D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or

used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

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A liability is classified as current when: A. The Company expects to settle the liability in its normal operating cycle; B. The Company holds the liability primarily for the purpose of trading; C. The liability is due to be settled within twelve months after the reporting period; or D. The Company does not have an unconditional right to defer settlement of the liability for

at least twelve months after the reporting period. 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.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value (include fixed-term deposits that have maturities of 3 months from the date of acquisition).

(7) 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 within the scope of IAS 39 Financial Instruments: Recognition and Measurement are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. A. Financial assets

The Company accounts for regular way purchase or sales of financial assets on the trade date. Financial assets of the Company are classified as financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The Company determines the classification of its financial assets at initial recognition.

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Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. A financial asset is classified as held for trading if: a. it is acquired or incurred principally for the purpose of selling or repurchasing it in the

near term; b. on initiation recognition it is part of a portfolio of identified financial instruments that

are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

c. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial asset at fair value through profit or loss; or a financial asset may be designated as at fair value through profit or loss when doing so results in more relevant information, because either: a. it eliminates or significantly reduces a measurement or recognition inconsistency; or b. a group of financial assets, financial liabilities or both is managed and its performance

is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Financial assets at fair value through profit or loss are measured at fair value with changes in fair value recognized in profit or loss. Dividends or interests on financial assets at fair value through profit or loss are recognized in profit or loss (including those received during the period of initial investment). If financial assets do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date. Available-for-sale financial assets Available-for-sale investments are non-derivative financial assets that are designated as available-for-sale or those not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables.

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Foreign exchange gains and losses and interest calculated using the effective interest method relating to monetary available-for-sale financial assets, or dividends on an available-for-sale equity instrument, are recognized in profit or loss. Subsequent measurement of available-for-sale financial assets at fair value is recognized in equity until the investment is derecognized, at which time the cumulative gain or loss is recognized in profit or loss. If equity instrument investments do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date. Held-to-maturity financial assets Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Company has the positive intention and ability to hold it to maturity, other than those that are designated as available-for-sale, classified as financial assets at fair value through profit or loss, or meet the definition of loans and receivables. After initial measurement held-to-maturity financial assets are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Company upon initial recognition designates as available for sale, classified as at fair value through profit or loss, or those for which the holder may not recover substantially all of its initial investment. Loans and receivables are separately presented on the balance sheet as receivables or debt instrument investments for which no active market exists. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

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Impairment of financial assets The Company assesses at each reporting date whether there is any objective evidence that a financial asset other than the financial assets at fair value through profit or loss is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset. When the financial assets are impaired, decrease the allowance account, than deduct the residual value from the carrying amount and recognize the net loss in the income statement. A significant or prolonged decline in the fair value of an available-for-sale equity instrument below its cost is considered a loss event. Other loss events include: a. significant financial difficulty of the issuer or obligor; or b. a breach of contract, such as a default or delinquency in interest or principal payments;

or c. it becoming probable that the borrower will enter bankruptcy or other financial

reorganization; or d. the disappearance of an active market for that financial asset because of financial

difficulties. For held-to-maturity financial assets and loans and receivables measured at amortized cost, the Company first assesses individually whether objective evidence of impairment exists individually for financial asset that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. Interest income is accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

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Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss. In the case of equity investments classified as available-for-sale, where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss – is removed from other comprehensive income and recognized in profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income. In the case of debt instruments classified as available-for-sale, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recognized in profit or loss. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss. Derecognition of financial assets A financial asset is derecognized when: a. The rights to receive cash flows from the asset have expired b. The Company has transferred the asset and substantially all the risks and rewards of the

asset have been transferred c. The Company has neither transferred nor retained substantially all the risks and rewards

of the asset, but has transferred control of the asset. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

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B. Financial liabilities and equity

Classification between liabilities or equity The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument. 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. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. Compound instruments The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element. For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled. For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not measured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IAS 39 Financial Instruments: Recognition and Measurement. Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized. On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

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Financial liabilities Financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and Measurement are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. A financial liability is classified as held for trading if: a. it is acquired or incurred principally for the purpose of selling or repurchasing it in the

near term; b. on initial recognition it is part of a portfolio of identified financial instruments that are

managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

c. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either: a. it eliminates or significantly reduces a measurement or recognition inconsistency; or b. a group of financial assets, financial liabilities or both is managed and its performance

is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid is recognized in profit or loss. If the financial liabilities at fair value through profit or loss do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial liabilities measured at cost on balance sheet and carried at cost as at the reporting date.

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Financial liabilities at amortized cost Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs. Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

C. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Derivative financial instrument The Company uses derivative financial instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as financial assets or liabilities at fair value through profit or loss (held for trading) except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging. Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in equity.

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Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.

(9) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: (a) In the principal market for the asset or liability, or (b) In the absence of a principal market, in the most advantageous market for the asset or

liability The principal or the most advantageous market must be accessible to by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories Inventories are valued at lower of cost and net realizable value item by item. Costs incurred in bringing each inventory to its present location and conditions are accounted for as follows: Raw materials – Purchase cost on a weighted average cost basis. Finished goods and work in progress – Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

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(11) Investments accounted for using the equity method

The Company accounted for its investments in subsidiaries using equity method and made necessary adjustments in accordance with Article 21 of the Regulations. Such adjustments were made after the Company considered the different accounting treatments to account for its investments in subsidiaries in the consolidated financial statements under IFRS 10 “Consolidated and Separate Financial Statements” and the different IFRSs adopted from different reporting entity’s perspectives, and the Company recorded such adjustments by crediting or debiting to investments accounted for under the equity method, share of profit or loss of subsidiaries, associates and joint ventures and share of other comprehensive income of subsidiaries, associates and joint ventures. Other than those classified as assets held for sale, the Company accounts for its investments in subsidiaries for which has control, significant influence or jointly control using the equity method. Under the equity method, the investment in the associate or a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or a joint venture. After the interest in the associate or a joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or a joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or a joint venture are eliminated to the extent of the Company’s related interest in the associate. When the changes of ownership in its associate or a joint venture don’t result from the gain and loss and other comprehensive income and doesn’t affect the Company’s ownership, it recognize the change of the ownership in proportion. Therefore, the Company recognize the gain or loss in proportion when dispose its associate or a joint venture in the future. When the Company subscribes for additional associate or a joint venture’s new shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate or a joint venture. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to paid-in capital and the investment under equity method. When the investment percentage decreases, reclassify the account which recognized to comprehensive income before to the gain or loss and suitable account in proportion. The financial statements of the associate or a joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

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The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or a joint venture is impaired by the requirements of IAS 39 Financial Instruments: Recognition and Measurement. If there is any objective evidence, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or a joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in the scope of IAS 36 Impairment of Assets. If the recoverable amount is under the investment value in use, the Company uses the following measurements to determine the relevant value: A. The Company’s right on the estimated future cash flow from its associate or a joint venture

includes associate or a joint venture’s cash flow from operation and the capital gain on the final settlement. Or

B. The Company’s expected present value of the dividend from the investment and the capital gain on the final settlement.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets. Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(12) Property, plant and equipment Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

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Depreciation is calculated on a straight-line method basis over the estimated economic lives of the following assets: Buildings 4~55 years Machinery and equipment 3~20 years Transportation equipment 6~10 years Office equipment 3~30 years Depletion of sand mining is provided by using the production-volume method according to the number of monthly actual mining volume of silica sand. An item of property, plant and equipment and any significant part initially recognized 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 recognized in profit or loss. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(13) Leases Company as a lessee Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

(14) Impairment of non-financial assets The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason. An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognized: Sale of goods Revenue from the sale of goods is recognized when all the following conditions have been satisfied: A. the significant risks and rewards of ownership of the goods have passed to the buyer; 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

entity; and E. the costs incurred in respect of the transaction can be measured reliably.

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Interest income For all financial assets measured at amortized cost (including loans and receivables and held-to-maturity financial assets) and available-for-sale financial assets, interest income is recorded using the effective interest rate method and recognized in profit or loss. Dividends Revenue is recognized when the Company’s right to receive the payment is established.

(16) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(17) Post-employment benefits All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore fund assets are not included in the Company’s parent company only financial statements. For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of: A.the date of the plan amendment or curtailment, and B.the date that the Group recognizes restructuring-related costs

37

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Share-based payment transactions The cost of equity-settled transactions between the Group and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model. The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share

38

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Group recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(19) Income taxes Income tax expense (benefit) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax. Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss. The 10% surtax on undistributed retained earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Stockholders’ meeting. Deferred income tax Deferred income tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, except: A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset

or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

B. In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

39

A. Where the deferred tax asset relating to the deductible temporary difference arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

B. In respect of deductible temporary differences associated with investments in subsidiaries,

associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. Significant accounting judgments, estimates and assumptions The preparation of the Company’s parent company only financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. (1) Judgment

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements: De facto control without a majority of the voting rights in subsidiaries

40

The Company does not have majority of the voting rights in certain subsidiaries. However, after taking into consideration factors such as absolute size of the Company’s holding, the Company reached the conclusion that it has de facto control over these subsidiaries. Please refer to Consolidated Financial Statement Note 4 for further details.

(2) Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. A. Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flow model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Inventories The Company estimates the net realizable value of inventory for damage, obsolescence and price decline. The net realizable value of the inventory is mainly determined based on reliable evidence of expected cash flow. Please refer to Note 6.

C. Pension benefits The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

D. Revenue recognition – sales returns and allowance The Group estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. Please refer to Note 6 for more details.

41

E. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Company’s domicile. Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets.

6. Contents of significant accounts (1) Cash and cash equivalents

As of 31 December 2016 2015

Cash on hand $180 $183 Checking and savings accounts 1,006,939 1,196,971 Total $1,007,119 $1,197,154

(2) Notes receivables, net As of 31 December 2016 2015 Notes receivables arising from operating activities $192,464 $160,798 Less: allowance for doubtful debts - - Total $192,464 $160,798 Notes receivables were not pledged.

42

(3) Accounts receivable, net

As of 31 December 2016 2015 Accounts receivable $1,128,369 $1,155,901 Less: allowance for doubtful debts (1,358) (2,379)

allowance for sales returns (3,172) - Subtotal 1,123,839 1,153,522

Accounts receivable from related parties 78,157 98,358 Less: allowance for doubtful debts - -

Subtotal 78,157 98,358 Total $1,201,996 $1,251,880 Please refer to Note 12. (11) for disclosure on information of accounts receivable transfer. Accounts receivable were not pledged. Accounts receivable are generally on 5-150 day terms. The movements in the provision for impairment of accounts receivable and accounts receivable from related parties are as follows (please refer to Note 12 for credit risk disclosure):

Individually

impaired Collectively

impaired Total As of 1 January 2015 $1,896 $3,200 $5,096 Reversal for the current period - (2,717) (2,717) As of 31 December 2015 1,896 483 2,379 Reversal for the current period (1,562) 541 (1,021) As of 31 December 2016 $334 $1,024 $1,358 Impairment loss that was individually determined for the years ended 31 December 2016 and 2015 arose due to the fact that the counterparty was in financial difficulties. The amount of impairment loss recognized was the difference between the carrying amount of the accounts receivable and the present value of its expected recoverable amount. The Company does not hold any collateral for such accounts receivable. Ageing analysis of accounts receivable and accounts receivable from related parties that are past due as at the end of the reporting period is as follows:

Neither past due Past due but not impaired As of nor impaired 1~90 days 91~365 days >366 days Total

31 December 2016 $1,148,724 $48,532 $4,740 $- $1,201,996 31 December 2015 1,210,975 40,462 443 - 1,251,880

43

(4) Other receivables, net

As of 31 December 2016 2015 Other receivables $1,726,193 $1,477,486 Less: allowance for doubtful debts - - Total $1,726,193 $1,477,486

The Company does not hold any collateral for such other receivables.

As of

Neither past due nor

impaired

Past due but not impaired >366

days

Total 31 December 2016 $1,468,931 $257,262 $1,726,193 31 December 2015 301,844 1,175,642 1,477,486

(5) Inventories, net As of 31 December 2016 2015 Raw materials $663,309 $682,805 Supplies 44,933 73,814 Work in progress 120,627 103,918 Finished goods 1,596,565 1,647,477 Total $2,425,434 $2,508,014

The cost of inventories recognized in expenses amounted to NT$10,387,233 thousand and NT$10,965,973 thousand for the years ended 31 December 2016 and 2015, respectively, including: For the years ended 31 December 2016 2015 Losses for market price decline of inventories $62,048 $352,997 Gains on physical inventory 244 2,086 Unallocated fixed costs 70,853 83,178 Revenue from sale of scraps (80,638) (79,083) Additions to operating costs $52,507 $359,178

No inventories were pledged.

44

(6) Available-for-sale financial assets

As of 31 December 2016 2015 Stocks: China Development Financial Holdings Corp. $174,751 $178,437 Chi-Ye Chemical Corp. 41,122 39,501 UniDisplay Inc. 3,128 5,466 Chang Hwa Commercial Bank, Ltd. 5 4 Hua Nan Financial Holdings Co., Ltd. 2 2 Total $219,008 $223,410

As of 31 December 2016 2015 Current $- $- Non-current 219,008 223,410 Total $219,008 $223,410

No available-for-sale financial assets were pledged.

(7) Investments accounted for using the equity method

As of 31 December

2016 2015

Investees

Carrying

amount

Percentage of

Ownership

Carrying

amount

Percentage of

Ownership

Taiwan Glass USA Sales Corp. $297,320 100.00% $287,507 100.00%

Taiwan Glass China Holding Ltd. 35,708,087 93.41% 36,876,916 92.71%

Taiwan Autoglass Ind. Corp. 321,033 87.00% 315,294 87.00%

TG Teco Vacuum Insulated Glass Corp. 75,090 65.00% 6,366 67.71%

Hario TG Glass Corp. 21,170 50.00% 21,887 50.00%

Total $36,422,700 $37,507,970

The Company accounted for its investments in subsidiaries using equity method and made necessary adjustments on the parent company only financial statements. No investment accounted for using the equity method was pledged.

45

(8) Property, plant and equipment

Land Buildings Machinery and

equipment Transportation

equipment Other

equipment

Construction in progress and equipment awaiting

examination Total

Cost: As of 1 January 2015 $3,796,048 $7,741,734 $17,859,475 $235,510 $303,861 $2,336,903 $32,273,531 Additions - 25,255 84,896 2,579 73,151 793,198 979,079 Disposals - - (77,294) (2,476) - - (79,770) Transfers - 406,995 2,370,543 11,846 35,175 (2,824,559) - Other changes - - 39,943 - - 274,211 314,154

As of 31 December 2015 3,796,048 8,173,984 20,277,563 247,459 412,187 579,753 33,486,994 Additions - 26,762 47,759 2,223 9,123 495,955 581,822 Disposals - (2,040) (17,559) (1,445) (42,221) - (63,265) Transfers - 18,572 539,921 - - (558,493) - Other changes - - 21,000 2,678 - - 23,678

As of 31 December 2016 $3,796,048 $8,217,278 $20,868,684 $250,915 $379,089 $517,215 $34,029,229

Depreciation and

impairment:

As of 1 January 2015 $- $4,559,104 $11,728,835 $191,237 $204,306 $- $16,683,482 Depreciation - 254,070 648,321 15,144 28,263 - 945,798 Disposals - - (73,405) (2,456) - - (75,861) Transfers - (24) 71 - (47) - - Other changes - - - - - - -

As of 31 December 2015 - 4,813,150 12,303,822 203,925 232,522 - 17,553,419 Depreciation - 287,358 807,955 16,344 31,760 - 1,143,417 Disposals - (1,982) (16,844) (1,415) (42,221) - (62,462) Transfers - - - - - - - Other changes - - - - - - -

As of 31 December 2016 $- $5,098,526 $13,094,933 $218,854 $222,061 $- $18,634,374

Net carrying amount as of: 31 December 2016 $3,796,048 $3,118,752 $7,773,751 $32,061 $157,028 $517,215 $15,394,855

31 December 2015 $3,796,048 $3,360,834 $7,973,741 $43,534 $179,665 $579,753 $15,933,575

Capitalized borrowing costs of property, plant and equipment are as follows:

Item 2016 2015 Construction in progress $6,149 $30,346 Capitalization rate of borrowing costs 1.418%~1.803% 1.484%~1.806% Components of machinery and equipment that have different useful lives are furnace and platinum, which are depreciated over 12 years and 20 years. No property, plant and equipment was pledged.

46

(9) Investment property

Land Buildings Depletable

assets Total Cost: As of 1 January 2015 $11,838 $16,257 $11,595 $39,690 Additions from acquisitions - - - - Disposals - - - - As of 31 December 2015 11,838 16,257 11,595 39,690 Additions from acquisitions - - - - Disposals - - - - As of 31 December 2016 $11,838 $16,257 $11,595 $39,690

Depreciation and impairment: As of 1 January 2015 $- $15,488 $5,499 $20,987 Depreciation - 45 37 82 As of 31 December 2015 - 15,533 5,536 21,069 Depreciation - 200 69 269 As of 31 December 2016 $- $15,733 $5,605 $21,338

Net carrying amount as of: 31 December 2016 $11,838 $524 $5,990 $18,352

31 December 2015 $11,838 $724 $6,059 $18,621

No investment property was pledged. Investment properties held by the Group are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized within Level 3. The fair value of investment properties is NT$155,420 thousand and NT$164,476 thousand, as at 31 December 2016 and 2015, respectively. The fair value has been determined based on valuations performed by an independent appraiser. The valuation method used is direct capitalized method, and the inputs used are discount rates and growth rates: Direct capitalization method: As of 31 December 2016 2015 Income Capitalization Rate 1.43%~2.24% 1.65%~2.5%

47

(10) Other noncurrent assets

As of 31 December 2016 2015 Overdue receivables $793,103 $793,103 Less: allowance for doubtful accounts (793,103) (793,103) Net $- $-

(11) Short-term loans As of 31 December 2016 2015 Unsecured interest rates $600,000 $- Secured interest rates 1.25%~1.50% - The Company’s unused short-term lines of credits amounted to NT$700,000 thousand and NT$5,166,500 thousand as of 31 December 2016 and 2015, respectively.

(12) Short-term bills payable As of 31 December 2016 2015 Short-term bills payable $1,350,000 $2,250,000 Less: unamortized discount (2,316) (5,180) Net $1,347,684 $2,244,820 Interest rates 1.40%~1.538% 1.40%~1.44%

(13) Financial liabilities at fair value through profit or loss As of 31 December 2016 2015 Held for trading:

Embedded derivatives $- $116,378 As of 31 December 2016 2015 Current $- $116,378 Non-current - - Total $- $116,378 Please refer to Note 12 for more details on derivative financial instruments.

48

(14) Bonds payable

As of 31 December 2016 2015 Unsecured convertible bonds $- $3,287,500 Less: discounts on bonds payable - (126,351) Total - 3,161,149 Less: current portion due within one year - (3,161,149) Noncurrent portion $- $- Embedded derivatives $- $116,378 In March 2014, the Company issued unsecured Euro convertible bonds due 2019. The terms of the convertible bonds were evaluated to include a liability component and embedded derivatives (an option for conversion into issuer’s ordinary shares). The major terms and conditions of the bonds are as follows: a. Issue amount: US$100,000 thousand b. Issue date: 10 March 2014 c. Maturity date: 10 March 2019 (5 years after issuance of the bonds) d. Coupon rate: 0% e. Conversion period: The bonds are convertible at any time on or after 20 April 2015 and

prior to the close of business on the tenth calendar day prior to the Maturity date. f. Conversion price: The conversion price was originally NT$35.5 per share. The

conversion price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The conversion price as of 31 December 2015 were NT$35.36; exchange rate was NT$30.317=US$1.00.

g. Redemption at the option of the Company: At any time after 30 months after the Issue Date and prior to the Maturity Date, the Company may redeem the Bonds in whole or in part at their Early Redemption Amount if the Closing Price of the Shares for each of the 20 consecutive Trading Days is at least 125% of the applicable Early Redemption Amount divided by the Conversion Ratio.

h. Put option of the bondholders at a premium: On 10 September 2016, the holder of each Bond will have the right at such holder’s option, to require the Company to redeem all or any portion of the principal amount thereof of such holder’s Bonds on the Put Option Date at 102.53 % of their principal amount (“Early Redemption Amount”).

i. Bondholders’ rights and obligation after the conversion: Same as stockholders. j. Other terms and conditions: None. The bonds already exchanged amounted to NT$0 thousand as of 31 December 2015. All of the second issuance unsecured overseas convertible bonds have been redeemed by bondholders on 8 September 2016 before maturity.

49

(15)Long-term loans

Details of long-term loans as of 31 December 2016 and 2015 are as follows:

As of 31 December

Lenders Terms Credit Line Interest Rate 2016 2015 Redemption

Industrial Bank of Taiwan 2014.02.20-

2017.02.20

NTD1,000,000 Floating interest

rate

$-

$1,000,000 Principal repaid at

maturity

Industrial Bank of Taiwan 2016.12.06-

2019.12.06

NTD1,000,000

″

1,000,000

- Principal repaid at

maturity

Bank of China 2016.03.10-

2018.02.01

NTD400,000

″

400,000

- Principal repaid at

maturity

Chang-Hwa Bank 2011.09.09-

2016.06.09

NTD1,200,000 ″ - 200,000 Repayable semiannually

from 9 June 2013

Chang-Hwa Bank 2015.09.01-

2020.09.01

NTD1,200,000 ″ 800,000 800,000 8 equal installments of

the principal made every

6 months from the sixth

year after borrowing date

Hua-Nan Bank 2015.05.22-

2017.05.22

NTD1,000,000

″

1,000,000 1,000,000 Principal repaid at

maturity

Hua-Nan Bank 2015.12.23-

2022.12.23

NTD3,000,000

″

3,000,000 3,000,000 Principal repaid at

maturity

Mega International

Commercial Bank 2013.07.19-

2016.10.25

NTD500,000

″

- 500,000 Principal repaid at

maturity

Mega International

Commercial Bank 2016.04.26-

2019.04.26

NTD500,000

″

500,000 - Principal repaid at

maturity

Taiwan Cooperative Bank

2013.12.09-

2016.12.09

NTD500,000

″

- 500,000

12 equal installments of

principal and interest

from three years after

borrowing date

Taiwan Cooperative Bank

2016.04.25-

2019.04.25

NTD500,000

″

500,000 -

12 equal installments of

principal and interest

from two years after

borrowing date

50

As of 31 December

Lenders Terms Credit Line Interest Rate 2016 2015 Redemption

KGI Bank(China

Development Industrial

Bank)

2014.12.30-

2016.12.30

NTD300,000 Floating interest

rate

$- $260,000 Principal repaid at

maturity

KGI Bank(China

Development Industrial

Bank)

2016.11.24-

2017.01.26

NTD300,000 〃 260,000 - Principal repaid at

maturity

En Tie Commercial Bank 2016.08.23-

2018.08.23

NTD500,000 ″ 500,000 - Principal repaid at

maturity

Taichung Commercial

Bank

2014.09.02-

2017.09.02

NTD500,000 ″ - 500,000 Principal repaid at

maturity

First Bank 2014.07.21-

2017.07.21

NTD600,000 ″ 600,000 600,000 2 equal installments of

principal and interest at

the 30th month and the

36th month

Union Bank of Taiwan 2014.09.05-

2016.03.05

NTD500,000 ″ - 500,000 Principal repaid at

maturity

Union Bank of Taiwan 2016.03.07-

2017.09.07

NTD500,000 ″ 500,000 - Principal repaid at

maturity

Union Bank of Taiwan 2016.05.03-

2017.11.03

NTD100,000 ″ 100,000 - Principal repaid at

maturity

King’s Town Bank

2016.03.30-

2023.03.30

NTD1,100,000 ″ 1,100,000 - Repayable semiannually

from 30 March 2018

COTA Commercial

Bank

2016.09.05-

2019.09.05

NTD100,000 ″ 91,660 - 12 quarter installments of

principal and interest

from 5 December 2016

Subtotal 10,351,660 8,860,000

Less: current portion of long-term loans (2,693,360) (1,960,000)

Total $7,658,300 $6,900,000

Note: As of 31 December 2015, part of long-term loan agreements contain covenants that

require the Company to maintain certain financial ratios such as the ratio of total current assets to total current liabilities and the tangible net worth amount. As of 31 December 2015, the Company did not contravene any financial covenants that could result in early settlement. As of 31 December 2016, none of the above incidents occurred.

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(16) Post-employment benefits

Defined contribution plan The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts. Expenses under the defined contribution plan for the years ended 31 December 2016 and 2015 were NT$85,338 thousand and NT$84,214 thousand, respectively. Defined benefits plan The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year. The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is managed in-house or under a mandate, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$55,050 thousand to its defined benefit plan during the 12 months beginning after 31 December 2016.

52

Apart from the above-mentioned pension funds, the Company has another fund managed by

the pension fund management committee, and the plan is categorized as follows:

Pension plan (%)

31 December

2016

31 December

2015

Investments with quoted prices in an active market

Equity instruments－domestic 100% 95%

Debt instruments－domestic 0% 5%

Other 0% 0%

As of 31 December 2016 and 2015, the Company’s defined benefits plan obligations are

expected to mature in 2021.

Pension costs recognized in profit or loss for the years ended 31 December 2016 and 2015:

For the years ended 31 December

2016 2015

Current period service costs $43,511 $44,494

Interest income or expense 3,303 (6,088)

Past service cost - -

Payments from the plan - -

Total $46,814 $38,406

Changes in the defined benefit obligation and fair value of plan assets are as follows:

31 December

2016 31 December

2015 1 January

2015

Defined benefit obligation at 1 January $1,958,632 $2,018,362 $1,930,410

Plan assets at fair value (1,685,217) (1,754,131) (2,200,962)

Other non-current liabilities - Accrued

pension liabilities recognized on the

consolidated balance sheets

$273,415 $264,231 $(270,552)

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Reconciliation of liability (asset) of the defined benefit plan is as follows: As at

Defined benefit

obligation Fair value of plan assets

Benefit liability (asset)

As at 1 Jan. 2015 $1,930,410 $2,200,962 $(270,552) Current period service costs 44,494 - 44,494 Net interest expense (income) 43,434 49,522 (6,088) Past service cost and gains and losses arising from settlements - - -

Subtotal 2,018,338 2,250,484 (232,146) Remeasurements of the net defined benefit liability (asset):

Actuarial gains and losses arising from changes in demographic assumptions

511 - 511

Actuarial gains and losses arising from changes in financial assumptions

98,702 - 98,702

Experience adjustments 18,915 - 18,915 Return on plan assets - (435,200) 435,200

Subtotal 118,128 (435,200) 553,328 Payments from the plan (118,104) (118,104) - Contributions by employer - 56,951 (56,951) Effect of changes in foreign exchange rates - - -

As at 31 December 2015 2,018,362 1,754,131 264,231 Current period service costs 43,511 - 43,511 Net interest expense (income) 25,230 21,927 3,303 Past service cost and gains and losses arising from settlements - - -

Subtotal 2,087,103 1,776,058 311,045 Remeasurements of the net defined benefit liability (asset):

Actuarial gains and losses arising from changes in demographic assumptions

(2,767) - (2,767)

Actuarial gains and losses arising from changes in financial assumptions

6,236 - 6,236

Experience adjustments (10,926) - (10,926) Return on plan assets - (24,878) 24,878

Subtotal (7,457) (24,878) 17,421 Payments from the plan (121,014) (121,014) - Contributions by employer - 55,051 (55,051) Effect of changes in foreign exchange rates - - -

As at 31 December 2016 $1,958,632 $1,685,217 $273,415

54

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation: As at 31 December 2016 2015 Discount rate 1.20% 1.25% Expected rate of salary increases 1.00% 1.00% A sensitivity analysis for significant assumption as at 31 December 2016 and 2015 is, as shown below: Effect on the defined benefit obligation 2016 2015

Increase defined benefit

obligation

Decrease defined benefit

obligation

Increase defined benefit

obligation

Decrease defined benefit

obligation Discount rate increase by 0.5% $(44,033) $- $(52,528) $- Discount rate decrease by 0.5% - 49,884 - 59,664 Future salary increase by 0.5% - 49,727 - 59,508 Future salary decrease by 0.5% (44,321) - (52,895) - The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(17) Equities A. Common stock

The Company’s authorized capital were NT$30,000,000 thousand and NT$26,000,000 thousand as of 31 December 2016 and 2015, respectively. The Company’s issued capital were NT$29,080,608 thousand and NT$25,080,608 thousand as of 31 December 2016 and 2015, respectively, each at a par value of NT$10. The Company has issued 2,908,061 thousand and 2,508,061 thousand common shares as of 31 December 2016 and 2015, respectively. Each share has one voting right and a right to receive dividends.

55

On 10 August 2015, the Company’s directors resolved to issue 130,000 thousand common stock at the Board of Directors meeting. The Company’s paid-in capital was NT$25,080,608 thousand after the issuance. The issuance process was approved by the competent authority and the registration was completed on 31 December 2015. On 17 June 2016, the Company’s directors resolved to issue 400,000 thousand common stock at the Board of Directors meeting. The Company’s paid-in capital was NT$29,080,608 thousand after the issuance. The issuance process was approved by the competent authority and the registration was completed on 26 September 2016.

B. Capital surplus As of 31 December 2016 2015 Additional paid-in capital $1,540,300 $394,483 Increase through changes in ownership interests in

subsidiaries 251,783 256,823

Exercise Employee Stock Warrants 23,661 - Gains on disposal of assets 103,166 103,166 Total $1,918,910 $754,472 According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its stockholders in proportion to the number of shares being held by each of them.

C. Rained earnings and dividend policies According to the Company’s Articles of Incorporation, the Company’s annual earnings shall be used first to offset an accumulated deficit, if any, then to be retained at a rate of 10% as legal reserve, retained or reserved as a special reserve, and retained at a rate of 1.5% as employee bonuses and 1.5% as remunerations paid to directors and supervisors. After the aforementioned deduction, the remaining earnings may be distributed as dividends. However, according to the amended Article 235-1 of the Company Act announced on 20 May, 2015, the Company shall provide a fixed amount or percentage of the actual profit for a year to be distributed as “employees’ compensation”, after deducting and setting aside an amount equal to the cumulative losses (if any). According to the Company’s Articles of Incorporation that were amended at the stockholders’ meeting held on 17 June 2016, the Company’s annual earnings, if any, shall first set aside 1.5% as employee bonuses and no higher than 1.5% as directors and supervisor’s remunerations. Nevertheless the Company shall first make up for losses if there is accumulated losses. The Company shall make distributions from its net income (less any deficit) in the following order:

56

a. Offset an accumulated deficit. b. Set aside 10% as legal reserve. c. Set aside or reverse special reserve. d. Following distributions of items “a” to “c” indicated above, the remaining amount, if

any, shall be proposed by the board of directors at a board meeting to be distributed as shareholders dividends and bonuses.

Based on the Company’s plan to achieve healthy financial standing, whether to distribute the beginning undistributed earnings should consider the actual operation of the year and the budget planning for the following year, to evaluate the necessity of providing funding via earnings distribution so as to determine the most appropriate dividend policy for sustainable business development. The said shareholders dividend and bonus distribution shall not be less than 50% of the distributable earnings after deducting the above items “a” to “c” from current net income. The Company’s Articles of Incorporation further provide that no more than 1% of the dividends to shareholders, if any, could be paid in the form of share dividends. At least 20% of the dividends must be paid in the form of cash. According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the stockholders. Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance: On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed. The special reserves booked from first-time adoption of International Financial Reporting Standards were both NT$3,232,749 thousand as of 31 December 2016 and 2015, respectively. The Company did not reverse special reserve to retained earnings for using, disposing of or reclassifying relevant assets in 2016 and 2015.

57

Details of the 2016 and 2015 earnings distribution and dividends per share as approved by Board of Directors’ meeting on 20 March 2017 and by the stockholders’ meeting on 17 June 2016, respectively, are as follows: Appropriation of earnings Dividend per share (NT$)

2016 2015 2016 2015 Legal reserve $- $- $- $- Special reserve reversal - 5,150,243 - - Common stock -cash dividend - - - - Common stock-stock dividend - - - - Please refer to Note 6. (22) for further details on employees’ compensation and remuneration to directors and supervisors.

(18) Share-based payment plans Certain employees of the Group are entitled to share-based payment as part of their remunerations; services are provided by the employees in return for the equity instruments granted. These plans are accounted for as equity-settled share-based payment transactions. On 17 June 2016, the Company was authorized by the board of directors to issue employee share options with a total number of 39,320 thousand units. Each unit entitles an optionee to subscribe for one share of the Company’s common shares. The exercise price of the option shall be the closing price of the Company’s ordinary shares on the grant day. The optionee may exercise the options since being granted the shares for a period of ten days. Settlement upon the exercise of the options will be made through the issuance of new shares by the Company. The fair value of the share options is estimated at the grant date using a binomial option pricing-model, taking into account the terms and conditions upon which the share options were granted. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for these employee share options. The relevant details of the aforementioned share-based payment plan are as follows:

Date of grant Total number of share options granted (in thousands)

Exercise price of share options (NT$)

2016.8.24 39,320 12.88

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The following table contains further details on the aforementioned share-based payment plan: 2016

Number of share options

outstanding (in thousands)

Weighted average exercise

price of share options (NT$)

Outstanding at beginning of period - - Granted 39,320 12.88 Exercised (1,181) 1 - Expired (38,139) - Outstanding at end of period - -

For share options granted during the period, weighted average fair value of those options at the measurement date (NT$) 13.50

1 The weighted average share price at the date of exercise of these options was $12.88. The unexecuted shares of the aforementioned share-based payment plan have all been invalid and expired. There were no shares outstanding as of 31 December 2016. As of 31 December 2015, the item did not occur. The expense recognized for employee services received during the years ended 31 December 2016 and 2015 is shown in the following table: For years ended 31 December 2016 2015 Total expense arising from equity-settled share-based

payment transactions $22,855 $-

(19) Operating revenue

For years ended 31 December 2016 2015 Sale of goods $13,003,897 $13,157,811 Less: sales returns, discounts and allowances (51,182) (84,374) Total $12,952,715 $13,073,437

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(20) Net amount of other revenues and gains and expenses and losses

For the years ended 31 December 2016 2015 Gains on disposal of property, plant, and equipment $35,719 $35,328

(21) Operating leases Operating lease commitments – Company as lessee The Company has entered into commercial leases on certain offices and plants. These leases have an average life of three to five years with no renewal option included in the contracts. There are no restrictions placed upon the Company by entering into these leases. Future minimum rentals payable under non-cancellable operating leases as of 31 December 2016 and 2015 are as follows: As of 31 December 2016 2015 Not later than one year $38,031 $25,231 Later than one year and not later than five years 312 25,543 Total $38,343 $50,774 Operating lease expenses recognized are as follows: For the years ended 31 December 2016 2015 Minimum lease payments $39,311 $25,231

(22)Summary statement of employee benefits, depreciation and amortization expenses by function:

For the years ended 31 December

2016 2015

Operating costs

Operating expenses

Total

Operating costs

Operating expenses

Total

Employee benefits expense Salaries $2,012,306 $332,319 $2,344,625 $1,997,324 $313,308 $2,310,632 Labor and health insurance 228,576 15,498 244,074 230,745 15,480 246,225 Pension 100,253 31,899 132,152 93,233 29,387 122,620 Other employee benefits expense 94,135 22,351 116,486 88,465 21,406 109,871 Depreciation(Note) 1,119,490 23,927 1,143,417 922,798 23,000 945,798

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The number of employees as of 31 December 2016 and 2015 was 4,422 and 4,346, respectively Note: The differences between the amount stated above and the depreciation stated in the

Parent Company Only Statements of Cash Flows was recognized in other gains and losses.

A resolution was passed at a Board of Directors meeting of the Company held on 28 March 2016 to amend the Articles of Incorporation of the Company. According to the resolution, 1.5% of profit of the current year is distributable as employees’ compensation and no higher than 1.5% of profit of the current year is distributable as remuneration to directors and supervisors. However, the Company's accumulated losses shall have been covered. The Articles of Incorporation are to be amended in the shareholders’ meeting in 2016. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE. Based on profit of current year, no employees’ compensation and remuneration to directors and supervisors was estimated for the year ended 31 December 2016 The Company estimated the amounts of the employee bonuses and remuneration to directors and supervisors for the year ended 31 December 2015 to be NT$0. No material differences exist between the estimated amount and the actual distribution of the employee bonuses and remuneration to directors and supervisors for the year ended 31 December 2015.

(23) Non-operating income and expenses A. Other income

For the years ended 31 December

2016 2015

Interest income $7,322 $5,637 Rental income 36,271 37,967 Dividend income 11,829 13,997 Others 190,423 403,162

Total $245,845 $460,763

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B. Other gains and losses

For the years ended 31 December 2016 2015 Foreign exchange losses, net $84,298 $(17,681) Gains on financial liabilities at fair value through

profit or loss 39,800 (62,488)

Loss on retirement of Bonds (111,349) - Loss on impairment of financial assets (14,189) - Others (177,371) (80,043) Total $(178,811) $(160,212)

C. Finance costs

For the years ended 31 December 2016 2015 Interest on borrowings from bank $214,486 $181,365 Interest on bonds payable 24,683 35,461 Interest on sale of accounts receivable 3,792 3,345 Total $242,961 $220,171

(24) Components of other comprehensive income

Year ended 31 December 2016

Arising during

the period

Reclassification

adjustments

during the

period

Other

comprehensive

income, before

tax

Income tax

relating to

components

of other

comprehensive

income

Other

comprehensive

income, net of

tax

Not to be reclassified to profit or loss in

subsequent periods:

Remeasurements of defined benefit plans $(17,421) $- $(17,421) $2,961 $(14,460)

Share of other comprehensive income of

subsidiaries, associates and joint ventures

accounted for using the equity method

(1,602) - (1,602) - (1,602)

To be reclassified to profit or loss in

subsequent periods:

Unrealized losses from available-for-sale

financial assets

(4,402) 14,189 9,787 - 9,787

Share of other comprehensive income of

subsidiaries, associates and joint

ventures accounted for using the

equity method

(3,291,392) - (3,291,392) - (3,291,392)

Total of other comprehensive income $(3,314,817) $14,189 $(3,300,628) $2,961 $(3,297,667)

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Year ended 31 December 2015

Arising during the period

Reclassification adjustments during the

period

Other comprehensive income, before

tax

Income tax relating to

components of other

comprehensive income

Other comprehensive income, net of

tax Not to be reclassified to profit or loss in

subsequent periods:

Remeasurements of defined benefit plans $(553,328) $- $(553,328) $94,065 $(459,263) Share of other comprehensive income of

subsidiaries, associates and joint ventures accounted for using the equity method

(3,383) - (3,383) - (3,383)

To be reclassified to profit or loss in subsequent periods:

Unrealized gains (losses) from available-for-sale financial assets

(42,101) - (42,101) - (42,101)

Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method

(1,143,702) - (1,143,702) - (1,143,702)

Total of other comprehensive income $(1,742,514) $- $(1,742,514) $94,065 $(1,648,449)

(25) Income tax

The major components of income tax expense (benefit) are as follows: Income tax expense (benefit) recognized in profit or loss For the years ended 31 December 2016 2015 Current income tax expense (benefit):

Current income tax charge $32,401 $21,617 Adjustments in respect of current income tax of prior

periods 5,688 (28,023)

Deferred tax expense (benefit): Deferred tax expense (benefit) relating to origination

and reversal of temporary differences 20,677 (42,346)

Deferred tax benefit relating to origination and reversal of tax loss and tax credit

- 49,329

Deferred tax expense arising from write-down - 30,636 Total income tax expense $58,766 $31,213 Income tax relating to components of other comprehensive income For the years ended 31 December 2016 2015 Deferred tax benefit: Actuarial (gains) losses on defined benefit $(2,961) $(94,065)

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Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: For the years ended 31 December 2016 2015 Accounting profit (loss) before tax from continuing

operations $(1,582,919) $(4,656,384) Tax at the domestic rates applicable to profits in the

country concerned $(269,096) $(791,585) Net investment losses accounted for using the equity method 338,692 826,024 Tax effect of revenues exempt from taxation (11,681) 8,274 Tax effect of expenses not deductible for tax purposes 17,632 8,163 Interest expense on the convertible bonds (11,627) 6,028 Non-deductible offshore tax 14,919 - Tax effect of other deferred tax assets/liabilities (25,761) 5,847 Adjustments in respect of current income tax of prior periods 5,688 (28,023) Others - (3,515) Total income tax expense recognized in profit or loss $58,766 $31,213 Deferred tax assets (liabilities) relate to the following: For the year ended 31 December 2016

Beginning

balance as of 1 January 2016

Recognized in profit or loss

Recognized in other

comprehensive income

Ending balance as of

31 December 2016

Temporary differences Depreciation difference $(51,527) $(10,448) $- $(61,975) Revaluations of available-for-sale

financial assets to fair value 149 2,412 - 2,561

Reserve for furnace cold repair 5,068 (4,239) - 829 Allowance for bad debt 1,525 (146) - 1,379 Net defined benefit liability - noncurrent 44,919 (1,400) 2,961 46,480 Employee benefits 3,497 4,005 - 7,502 Unrealized loss due to market price

decline of inventories 176,199 10,548 - 186,747

Capitalization of interest 6,733 (1,021) - 5,712 Provisions of employee benefit

obligations 14,074 222 - 14,296

Unrealized gain on foreign exchange 26,556 (39,581) - (13,025) Unrealized loss on foreign sales - 16,409 - 16,409 Other - 2,562 - 2,562 Land value increment tax (204,145) - - (204,145) Deferred tax income/ (expense) $(20,677) $2,961 Net deferred tax assets/(liabilities) $23,048 $5,332 Reflected in balance sheet as follows: Deferred tax assets $278,720 $284,477 Deferred tax liabilities $(255,672) $(279,145)

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For the year ended 31 December 2015

Beginning

balance as of

1 January 2015

Recognized in

profit or loss

Recognized in

other

comprehensive

income

Ending balance

as of 31

December 2015

Temporary differences

Depreciation difference $(42,817) $(8,710) $- $(51,527)

Revaluations of available-for-sale

financial assets to fair value

1,199 (1,050) - 149

Reserve for furnace cold repair 25,009 (19,941) - 5,068

Allowance for bad debt 1,051 474 - 1,525

Net defined benefit asset - noncurrent (45,994) (3,152) 49,146 -

Net defined benefit liability - noncurrent - - 44,919 44,919

Employee benefits 2,552 945 - 3,497

Unrealized loss due to market price

decline of inventories

116,188 60,011 - 176,199

Capitalization of interest 7,754 (1,021) - 6,733

Provisions of employee benefit

obligations

13,549 525 - 14,074

Unrealized gain on foreign exchange 12,289 14,267 - 26,556

Unused tax losses 74,891 (74,891) - -

Unused tax credits 5,076 (5,076) - -

Land value increment tax (204,145) - - (204,145)

Deferred tax income/ (expense) $(37,619) $94,065

Net deferred tax assets/(liabilities) $(33,398) $23,048

Reflected in balance sheet as follows:

Deferred tax assets $259,558 $278,720

Deferred tax liabilities $(292,956) $(255,672)

The following table contains information of the unused tax losses of the Company: Unused tax losses as of

Year Tax losses for

the period 31 December

2016 31 December

2015 Expiration year 2014 $160,078 $- $160,078 2024

Unrecognized deferred tax assets As of 31 December 2016 and 2015, deferred tax assets that have not been recognized as they may not be used to offset taxable profits amount to NT$138,126 thousand, respectively.

65

Unrecognized deferred tax liabilities relating to the investment in subsidiaries The Company did not recognize any deferred tax liability for taxes that would be payable on the unremitted earnings of the Company’s overseas subsidiaries, as The Company has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. As of 31 December 2016 and 2015, the taxable temporary differences associated with investment in subsidiaries, for which deferred tax liability has not been recognized, aggregated to NT$100,259 thousand and NT$82,445 thousand, respectively. Imputation credit information As of 31 December 2016 2015 Balances of imputation credit amounts $717,124 $688,664 The expected creditable ratio for 2016 and the actual creditable ratio for 2015 were 18.93% and 48.15%, respectively. The assessment of income tax returns As of 31 December 2016, the assessment of the income tax returns of the Company is to 2013.

(26) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. For the years ended 31 December 2016 2015 Basic earnings per share Profit attributable to ordinary equity holders of the

Company (in thousands)

$(1,641,685) $(4,687,597) Weighted average number of ordinary shares outstanding

for basic earnings per share (in thousands)

2,635,184 2,383,760 Basic earnings per share (NT$) $(0.62) $(1.97)

66

Since the Company posted a loss in the 2016 and 2015, diluted earnings per share was not calculated. There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of the financial statements.

(27) Changes in parent’s interest in subsidiaries

Acquisition of new shares in a subsidiary not in proportionate to ownership interest For the year end 31 December 2016 and 2015, the Company paid additional cash to acquire new shares of TG Teco Vacuum Insulated Glass Corp. issued in the amount of NT$97,500 thousand and NT$65,000 thousand, respectively, and consequently the ownership interest in TG Teco Vacuum Insulated Glass Corp. increased to 65.00% and 67.71%,respectively. The difference between the cash and the decrease in the non-controlling interest were NT$6,965 thousand and NT$(4,254) thousand,respectively, which was recognized in equity During the years ended 31 December 2016 and 2015, the Company paid additional cash to acquire TGCH’s new shares issued in the amount of USD126,350 thousand (NT$4,058,301 thousand) and USD42,600 thousand (NT$1,331,067 thousand), respectively, and consequently the ownership interest in TGCH was increased to 93.41% and 92.71%, respectively. The difference between the cash paid and the decrease in the non-controlling interests was NT$3,132 thousand and NT$27,194 thousand, respectively, and was recognized in equity.

7. Related party transactions

Significant transactions with related parties (1) Sales

For the years ended 31 December 2016 2015 Subsidiaries $407,038 $487,277 Other related parties 4,696 6,217 Total $411,734 $493,494 The sales price to the above related parties was determined through mutual agreement based on the market rates. The collection period for related parties was month-end 90 days. The outstanding balance at 31 December 2016 and 2015 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

67

(2) Purchases

For the years ended 31 December 2016 2015 Subsidiaries $97,030 $120,440 Associates 8,878 4,152 Other related parties 3,451 14,043 Total $109,359 $138,635 The purchase price to the above related parties was determined through mutual agreement based on the market rates. The payment terms from the related party suppliers are comparable with third party suppliers and are paid on delivery.

(3) Other income

For the years ended 31 December 2016 2015 Subsidiaries $145,583 $186,861 Associates 2,291 1,885 Entities with significant influence over the Company 5,902 5,902 Total $153,776 $194,648

(4) Rental income

For the years ended 31 December 2016 2015 Subsidiaries $28,549 $31,011 The rental income is due to a lease of building, plant, and warehouse and the rents were based on local market price.

(5) Manufacture expense – rental expense

For the years ended 31 December 2016 2015 Subsidiaries $14,277 $- Entity with significant influence over the Company 24,762 24,762 Total $39,039 $24,762 The Company has leased plant, warehouse, and land and the rent were based on local market price and prepaid for 1 year.

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(6) Other expense (service, administrative expenses, etc.)

For the years ended 31 December 2016 2015 Entity with significant influence over the Company $606 $- Other related parties 3,074 2,386 Total $3,680 $2,386

(7) Accounts receivable

As of 31 December 2016 2015 Subsidiaries $78,157 $98,289 Other related parties - 69 Total 78,157 98,358 Less: allowance for doubtful debts - - Net $78,157 $98,358

(8) Other receivables

a. Guarantee and Technical Service Receivable

As of 31 December 2016 2015 Subsidiaries $409,590 $1,459,120 Associates 2,294 1,949 Total $411,884 $1,461,069

b. Financing 31 December, 2016

Maximum Balance

Ending Balance

Rate Interest income

Interest Receivable

Subsidiaries $1,305,410 $1,285,930 3.25% $4,942 $5,015

(USD 15,000 thousand and JYP 2,902,772 thousand dollars)

31 December, 2015

Maximum Balance

Ending Balance

Rate Interest income

Interest Receivable

Subsidiaries $468,750 $- -% $- $-

(USD 15,000 thousand dollars)

69

(9) Other current assets

As of 31 December 2016 2015 Subsidiaries $- $53,048

(10) Accounts payable – related parties

As of 31 December 2016 2015 Subsidiaries $3,889 $15,739 Other related parties 326 - Total $4,215 $15,739

(11) Other payables – related parties

As of 31 December 2016 2015 Subsidiaries $13,832 $901 Other related parties 62 319 Entity with significant influence over the Company 233 - Total $14,127 $1,220

(12) The payment term to related parties has no significant difference to other third parties. The

outstanding balance at 31 December 2016 and 2015 was unsecured, non-interest bearing and must be settled in cash. The receivables from and the payables to the related parties were not guaranteed.

(13)The Company purchased the mechanical equipment from the related parties to amount of

NT$12,567 thousand in 2015. The item did not occur in 2016. (14) Key management personnel compensation

For the years ended 31 December 2016 2015 Short-term employee benefits $29,040 $27,828 Share-based payments 82 - Post-employment benefits 1,952 1,947 Total $31,074 $29,775

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8. Assets pledged as security

None.

9. Commitments and contingencies As of 31 December 2016, the contingency and off balance sheet commitments are as follows: (1) As of 31 December 2016, the outstanding promissory notes signed for business needs,

including importing equipment, purchase of equipment, performance bond, and loan guarantee, totaled NT$13,701,810 thousand.

(2) Commodity tax and export tariff were NT$24,769 thousand.

(3) Unsecured balance of letters of credit is as follows:

Currency Unused Balance (in thousands) USD $10,822 JPY 261,565 EUR 1,229 GBP 14

(4) Significant contracts of construction in progress and equipment are as follows:

Item Contract

Amount

Amount Paid Amount Unpaid

Project of Hsinchu Plant $120,909 $70,376 $50,533 Project of Taichung Plant 72,511 18,545 53,966 Others 78,812 62,515 16,297 Total $272,232 $151,436 $120,796

The above amount paid was recognized as construction in progress under property, plant and equipment and prepayment for equipment under noncurrent assets.

(5) The Company signed the promissory notes in amount of NT$984,000 thousand, US$636,700 thousand and CNY$425,000 thousand for its subsidiaries’ secured loans.

10. Losses due to major disasters

None.

71

11. Significant subsequent events

None

12. Others Financial Instruments (1) Categories of financial instruments

Financial assets As of 31 December 2016 2015 Available-for-sale financial assets $219,008 $223,410 Loans and receivables:

Cash and cash equivalents (excluding cash on hand) 1,006,939 1,196,971 Receivables 3,120,653 2,890,164 Refundable deposit 8,100 8,193 Subtotal 4,135,692 4,095,328

Total $4,354,700 $4,318,738

Financial liabilities As of 31 December 2016 2015 Financial liabilities at amortized cost:

Short-term loans $600,000 $- Short-term bills payable 1,347,684 2,244,820 Payables 1,591,709 1,578,296 Corporate bonds payable (including current portion) - 3,161,149 Long-term loans (including current portion) 10,351,660 8,860,000 Deposits-in 1,445 2,532 Subtotal 13,892,498 15,846,797

Financial liabilities at fair value through profit or loss - 116,378 Total $13,892,498 $15,963,175

(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies, measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

72

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and equity risk. In practice, it is rarely the case that a single risk variable changes independently from other risk variables, there are usually interdependencies between risk variables. The sensitivity analysis disclosed below does not take into account the interdependencies between risk variables. Foreign currency risk The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency). The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for US dollars. The information of the sensitivity analysis is as follows: When NTD weakens/strengthens against US dollars by 1%, the profit for the years ended of 31 December 2016 and 2015 is decreased/increased by NT$6,627 thousand and NT$23,855 thousand, respectively. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s loans and receivables at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

73

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit for the years ended 31 December 2016 and 2015 to increase/decrease by NT$7,346 thousand and NT$4,865 thousand, respectively. Equity price risk The fair value of the Company’s listed and unlisted equity securities and conversion rights of the Euro-convertible bonds issued are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s listed and unlisted equity securities are classified under available-for-sale financial assets, while conversion rights of the Euro-convertible bonds issued are classified as financial liabilities at fair value through profit or loss as it does not satisfy the definition of an equity component. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions. The amount of the investment in the unlisted equity securities classified under available-for-sale is not significant. Therefore, a change in the overall earnings stream of the valuations performed on the invested company would not have a significant impact on the income nor equity attributable to the Company for the years ended 31 December 2016 and 2015. As of 31 December 2016, a decrease of 10% in the price of the listed equity securities classified as available-for-sale could have an impact of NT$17,476 thousand on the income or equity attributable to the Company. An increase of 10% in the value of the listed securities would only result in an impact of NT$17,476 thousand on equity but would not have an effect on profit. As of 31 December 2015, a decrease of 10% in the price of the listed equity securities classified as available-for-sale could have an impact of NT$17,844 thousand on the income or equity attributable to the Company. An increase of 10% in the value of the listed securities would only result in an impact of NT$17,844 thousand on equity but would not have an effect on profit. The Company issued convertible bond which was evaluated to include embedded derivatives. The embedded derivatives are susceptible to evaluated price arising from uncertainties about the market price of the Company. As of 31 December 2015, an increase of 10% in the price of the listed equity securities classified as available-for-sale could have an impact of NT$2,535 thousand on profit. A decrease of 10% in the value of the listed securities could have an effect of NT$951 thousand on profit. As of 31 December 2016, the item did not occur.

74

Please refer to Note 12.(8) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counter party will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments. Customer credit risk is managed by each business unit subject to The Company’s established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain customer’s credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance. As of 31 December 2016 and 2015, accounts receivables from top ten customers represented amounts less than 10% of the total accounts receivables of the Company. The credit concentration risk of accounts receivables is insignificant. Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank borrowings and convertible bonds. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

75

Non-derivative financial instruments

Less than

1 year 2 to 3 years 4 to 5 years > 5 years Total As of 31 December 2016 Short-term loans $601,691 $- $- $- $601,691 Short-term bills payable 1,350,000 - - - 1,350,000 Payables 1,591,709 - - - 1,591,709 Long-term loans 2,854,274 5,173,238 1,879,567 914,264 10,821,343 As of 31 December 2015 Short-term bills payable $2,250,000 $- $- $- $2,250,000 Payables 1,578,296 - - - 1,578,296 Corporate bonds payable 3,347,125 - - - 3,347,125 Long-term loans 2,100,661 4,260,321 1,687,966 1,231,500 9,280,448

(6) Fair values of financial instruments

A. The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities: a. The carrying amount of cash and cash equivalents, accounts receivables, accounts

payable and other current liabilities approximate their fair value due to their short maturities.

b. For financial assets and liabilities traded in an active market with standard terms and

conditions, their fair value is determined based on market quotation price (including listed equity securities, beneficiary certificates, bonds and futures etc.) at the reporting date.

c. Fair value of equity instruments without market quotations (including private placement

of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

76

d. Fair value of debt instruments without market quotations, bank loans, bonds payable

and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

e. The fair value of derivatives which are not options and without market quotations, is

determined based on the counterparty prices or discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using the counterparty prices or appropriate option pricing model (for example, Black-Scholes model) or other valuation method (for example, Monte Carlo Simulation).

B. Fair value of financial instruments measured at amortized cost

Other than cash and cash equivalents, accounts receivables, accounts payable and other current liabilities whose carrying amount approximate their fair value, the fair value of the Company’s financial assets and financial liabilities measured at amortized cost is listed in the table below: Carrying value as of 31 December

2016 31 December

2015 Financial Liability Corporate bonds payable $- $3,161,149

Fair value as of 31 December

2016 31 December

2015 Financial Liability Corporate bonds payable $- $3,191,834

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12. (8) for fair value measurement hierarchy for financial instruments of the Company.

77

(7) Derivative financial instruments

The Company’s derivative financial instruments held for trading include embedded derivatives. The related information is as follows: Embedded derivatives The embedded derivatives arising from issuing convertible bonds have been separated from the host contract and carried at fair value through profit or loss. Please refer to Note 6 for further information on this transaction. The counterparties for the aforementioned derivatives transactions are well known local or overseas banks, as they have sound credit ratings, the credit risk is insignificant.

(8) Fair value measurement hierarchy A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows: Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or

liabilities that the entity can access at the measurement date Level 2 – Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly Level 3 – Unobservable inputs for the asset or liability For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

78

As of 31 December 2016 Level 1 Level 2 Level 3 Total Financial assets: Available-for-sale financial assets $174,758 $- $44,250 $219,008

Equity securities

As of 31 December 2015 Level 1 Level 2 Level 3 Total Financial assets: Available-for-sale financial assets

Equity securities $178,443 $- $44,967 $223,410 Financial liabilities: Financial liabilities at fair value through

profit or loss

Embedded derivatives $- $- $116,378 $116,378 During the years ended 31 December 2016 and 2015, there were no transfers between Level 1 and Level 2 fair value measurements. Reconciliation for fair value measurements in Level 3 of the fair value hierarchy is as follows: Assets Liabilities

Available-for-

sale

At fair value through profit or

loss Stocks Derivatives Beginning balances as at 1 January 2015 $46,523 $53,890 Total gains and losses recognized for the year ended

31 December 2015:

Amount recognized in profit or loss - 62,488 Amount recognized in OCI (1,556) -

Ending balances as at 31 December 2015 44,967 116,378 Total gains and losses recognized for the year ended

31 December 2016:

Amount recognized in profit or loss (14,189) (39,800) Amount recognized in OCI 13,472 - Settlement - (76,578)

Ending balances as at 31 December 2016 $44,250 $-

79

Total gains and losses recognized for the years ended 31 December 2016 and 2015 contained gains and losses related to securities and derivatives on hand as of 31 December 2016 and 2015in the amount of NT$(717) thousand and NT$(1,556) thousand, respectively; gains and losses related to liabilities as at 31 December 2016 and 2015 amounted to NT$(39,800) thousand and NT$62,488 thousand, respectively. Information on significant unobservable inputs to valuation Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

Valuation

techniques

Significant

unobservable

inputs

Quantitative

information

Relationship

between inputs

and fair value

Sensitivity of the input to

fair value

Financial assets:

Embedded derivatives at

fair value through profit

or loss

31 December 2015 Option

pricing

model

Volatility 37.12%~

39.12%~

The higher the

volatility, the

higher the fair

value.

1% increase (decrease) in

the volatility would result in

increase (decrease) in the

Group’s profit or loss by

NT$(317) and NT$634

thousand

C. Fair value measurement hierarchy of the Group’s assets and liabilities not measured at fair

value but for which the fair value is disclosed 2016.12.31

Level 1 Level 2 Level 3 Total Disclose assets of fair value ： Investment Property(Note6.(9)) $- $- $155,420 $155,420 2015.12.31

Level 1 Level 2 Level 3 Total Disclose assets of fair value ： Investment Property(Note6.(9)) $- $- $164,476 $164,476

80

(9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

(in thousands) As of 31 December 2016

Foreign currencies Foreign exchange

rate NTD Financial assets Monetary items:

USD $50,133 32.20 $1,614,281 EUR 2,389 33.70 80,500 JPY 2,906,167 0.2736 795,127

Non-Monetary items: USD 9,234 32.20 297,320

Financial liabilities Monetary items:

USD - - -

As of 31 December 2015

Foreign currencies Foreign exchange

rate NTD Financial assets Monetary items:

USD $45,664 32.775 $1,496,642 EUR 1,741 35.68 62,131 JPY 2,906,346 0.2727 786,748

Non-Monetary items: USD 8,772 32.775 287,507

Financial liabilities Monetary items:

USD 96,157 32.875 3,161,149 The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency). Since there were various functional currencies used within the subsidiaries of the Company, the Company was unable to disclose foreign exchange gain (loss) towards each foreign currency with significant impact. The realized and unrealized foreign exchange loss was NT$84,298 thousand and NT$(17,681) thousand for the years ended 31 December 2016 and 2015, respectively.

81

(10) Capital management

The primary objective of The Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize stockholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, The Company may adjust dividend payment to stockholders, return capital to stockholders or issue new shares.

(11) Information of finance assets transfer Transferred financial assets that are partially-derecognized in their entirety The Company entered into a factoring agreement with a financial institution, which is partly with recourse and partly non-recourse. The Group has transferred the right on those non-recourse factoring, and in accordance with the contract, the Group shall not be liable for the credit risks associated with uncollectable receivables (except for commercial disputes), which met the requirements for derecognizing financial assets. The related information is as follows:

105.12.31

Transferee

Amount transferred

Amount

Advanced amount

Interest rate range Credit

O-Bank $400,150 $360,135 $361,535 0.99%~1.15% $800,000

104.12.31

Transferee

Amount transferred

Amount

Advanced amount

Interest rate range Credit

O-Bank (Industrial Bank

of Taiwan)

$374,389 $336,950 $337,398

1.15%~1.16%

$800,000

13. Other disclosure

(1) Information at significant transactions

A. Lending fund to others: Please refer to Attachment 1. B. Endorsement/guarantee provided to others: Please refer to Attachment 2. C. Securities held at the end of the period: Please refer to Attachment 3. D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300

million or 20 percent of the capital stock or more: Please refer to Attachment 4.

82

E. Acquisition of real estate with amount exceeding NT$300 million or 20 percent of the capital stock or more: None.

F. Disposal of real estate with amount exceeding NT$300 million or 20 percent of the capital

stock or more: None. G. Related party transactions for purchases and sales amounts exceeding NT$100 million or

20 percent of the capital stock or more: Please refer to Attachment 5. H. Receivables from related parties with amounts exceeding NT$100 million or 20 percent of

capital stock or more: Please refer to Attachment 6. I. Financial instruments and derivative transactions: None. J. Business relationship between the parent and the subsidiaries and between each subsidiary,

and the circumstances and accounts of any significant transactions between them: Please refer to Attachment 7.

(2) Information on investees

Information of the investees in which the Company directly or indirectly has significant influence or control: Please refer to Attachment 8.

(3) Information on investments in Mainland China

A. Investee’s name, main businesses and products, total amount of capital, method of investment, accumulated inflow and outflow of investments from Taiwan, percentage of ownership, investment income or loss, carrying value of the investments, inward remittance of earnings and limits on investments in Mainland China: Please refer to Attachment 9.

B. Directly or indirectly significant transactions through other regions with the investees in

Mainland China, including price, payment terms, unrealized gain or loss, and other events with significant effects on the operating results and financial condition are disclosed as follows: a. Accumulated amount and percentage of purchase and related payables at the end of the

period: Please refer to Note 7 and Attachment 6. b. Accumulated amount and percentage of sales and related receivables at the end of the

period: Please refer to Note 7 and Attachment 6. c. Amount of property transaction and related gain or loss: None. d. Endorsement/guarantee provided to others at the end of the period: Please refer to

Attachment 2. e. Financing provided to others at the end of the period: None. f. Other significant transactions, such as service provided or received: Please refer to Note

7.

Attachment 1

Financing provided to others for the year ended 31 December 2016

(Note 1) Item Value

44,096,664 × 10% = 44,096,664 × 20% =

4,409,666 (in thousand) 8,819,333 (in thousand)

38,331,633 × 40% = 38,331,633 × 60% =

15,332,653 (in thousand) 22,998,980 (in thousand)

2,127,993 × 40% = 2,127,993 × 60% =

851,197 (in thousand) 1,276,796 (in thousand)

6,462,785 × 40% = 6,462,785 × 60% =

2,585,114 (in thousand) 3,877,671 (in thousand)

1,630,234 × 40% = 1,630,234 × 60% =652,094 (in thousand) 978,140 (in thousand)

(Dollar amount expressed in thousands of NTD unless otherwise specified)

FinancingCompany Counterparty

Financial StatementAccount(Note 2)

RelatedParty

MaximumBalance

for the Period(Note 3)

EndingBalance

(In Thousands)(Note 8)

Actual Amountprovided Interest Rate

Nature ofFinancing(Note 4)

TransactionAmounts(Note 5)

Reason forFinancing(Note 6)

Allowancefor

Bad Debt

Amount for IndividualCounterparty

(Note 7)

Financial Amountfor Financing

Company (Note 7)

〃

〃 〃

〃

- 〃 〃

- - - 〃 〃

-

- -

-

-

-

-

-

- 〃 〃557,013 557,013 5.60% 2 - Need for operating

869,400 - - 2 - Need for operating

Need for operating1,449,000 193,200 2.93% 2 -

TGCH QFG 〃 Yes 668,000 161,000

152,940 139,253

1,030,938 1,030,938

1,062,781

-2134,064 - - -

- - -

752,432 0.35%~4.42% 2

969,946 0.35% 2 〃- Need for operating

〃Need for operating - - - 〃-

〃

4 QFG QRG 〃 Yes - Need for operating

3 CDG TXY 〃 Yes

3 CDG TWAR 〃 Yes 1,467,215

- - 〃3 CDG TAH 〃 Yes 〃101,960 - - - 2 -

- - - 〃 〃150,389 150,389 0.35% 2 - Need for operatingYes 171,293

Need for operating -

-3 CDG CFG 〃 Yes

322,000 2.87% 2 -

- -

2 CFG TWAR 〃 Yes 29,401 29,401

2 CFG TTAR 〃 Yes 611,759

322,000 Need for operating

1,503,000 1 TGCH TXY

1 TGCH CFG 〃 Yes 334,000

〃 Yes

1 TGCH TBF 〃 Yes 901,800

Need for operating1 TGCH TCD 〃 Yes 5,087,600 5,087,600 3,799,600 2.58%~3.00% 2 -

- 〃 〃1,458,552 1,127,952 1,127,952 4.00% 2 -1 TGCH FPG 〃 Yes

1,017,060 888,260 2.91%~4.00% 21 TGCH TJG 〃 Yes 1,063,963

〃 〃945,300 483,000 322,000 3.58% 2 -

- - - 〃 〃- Need for operating

〃 〃- - -

1

〃 〃Need for operating

2 - Need for operating

74,060 - 2 - Need for operating - - -

- - -0

No. Collateral

1 TGCH TAH 〃 Yes 2,338,000 2,254,000 1,932,000 2.55%~2.94%

$483,000

TGI TCD 〃 Yes 822,410 802,930 802,930 - 2 -

$483,000 3.25% 2 $- Need for operating $- - $-

Need for operating

Need for operating - - -

Need for operating - -

〃 〃644,000 644,000 2.87%~2.94% 2 -1 TGCH HNG 〃 939,300 - - -

29,401 - 2 - Need for operating - - -

-695,366 633,138 633,138 0.35% 2 - Need for operating -

3 CDG HZSS 〃

〃 Yes

0 TGI TGCH Other receivables Yes

Yes

$483,000

1 TGCH TGF

W215

83

Attachment 1

Financing provided to others for the year ended 31 December 2016

(Note 1) Item Value3,157,235 × 40% = 3,157,235 × 60% =

1,262,894 (in thousand) 1,894,341 (in thousand)

863,549× 40% = 863,549× 60% =

345,420 (in thousand) 518,129 (in thousand)

5,299,057 × 40% = 5,299,057 × 60% =

2,119,623 (in thousand) 3,179,434 (in thousand)

4,639,001 × 40% = 4,639,001 × 60% =

1,855,600 (in thousand) 2,783,401 (in thousand)

1,708,894 × 40% = 1,708,894 × 60% =

683,558 (in thousand) 1,025,336 (in thousand)

Total $15,690,663

Note 1: The Company and its subsidiaries are coded as follows:

1. The Company is coded "0".

2. The subsidiaries are coded starting from "1" in numerical order.

Note 2: If the economic substance of transactions is financing to others, regardless of which component they recognized as in the financial statements, certain transactions are included herein.

Note 3: Maximum balance of the Company and its subsidiaries' financing to others for the year ended 31 December 2016

Note 4: Nature of financing is coded as follows:

1. The financing occurred due to business transactions

2. The financing occurred due to short-term financing

Note 5: Total amount of the financing is disclosed herein if the financing was related to business transactions. The amount shall mean the transaction amount between the lending entity and the borrower within the most recent year.

Note 6: The reasons and counterparties of the financing are addressed herein as the financing associated with short-term capital needs.

Note 7: The process of providing finance to others, the limits to individual counterparties and the total financing limit for the company should be noted, as well as the computations.

Note 8: If a listed company brings the financing proposal to the board of directors according to Paragraph 1, Article 1 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies,

the company still need to disclose the resolution amount of the board in the balance to disclose the risk, even if the funds are not appropriated yet.

With the return of the funds afterward, the company should disclose the amount returned to response to the adjustment of risk. If a listed company authorizes the chairman of the board of directors to appropriate or use certain limits of the funds several times in the period of a year according to Paragraph 2, Article 14 of Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the company still needs to disclose the amount approved by the board.

Amount for IndividualCounterparty

(Note 7)

Financial Amountfor Financing

Company (Note 7)

903,733

8

- - 〃 〃900,505 900,505 4.00% 2 - Need for operating8 -

- -2 - Need for operating55,701 4.00%

DHG FPG 〃 Yes

-

1,392,533 649,849

DHG QFG 〃 Yes 186,337 92,836

3.00% 2 - Need for operating -TGF

6 TBF TCD 〃 Yes 163,136 - - -

-7 Yes 2,329,209 -TCD 〃

$-HNG FPG Other receivables Yes

- Need for operating - - -2

5 $305,879 $278,507

No. Collateral

4.00% 2 $- Need for operating $- -$129,970

FinancingCompany Counterparty

Financial StatementAccount(Note 2)

RelatedParty

MaximumBalance

for the Period(Note 3)

EndingBalance

(In Thousands)(Note 8)

Actual Amountprovided Interest Rate

Nature ofFinancing(Note 4)

TransactionAmounts(Note 5)

Reason forFinancing(Note 6)

Allowancefor

Bad Debt

(Dollar amount expressed in thousands of NTD unless otherwise specified)

139,253 4.98% 2 - Need for operating - - -9 TAH TXY 〃 Yes 142,023 139,253

84

Attachment 2

Endorsement/guarantee provided to others for the year ended 31 December 2016

Company Name Relationship

(Note 2)

0 TGI TVIG 6 $22,048,332 $274,626 $234,000 $234,000 $ - 1% Y

0 TGI CFG 3 〃 97,680 97,680 - - 0% Y Y

0 TGI CDG 3 〃 504,728 461,388 461,388 - 1% Y Y

0 TGI TYSM 3 〃 765,120 709,410 620,790 - 2% Y Y

0 TGI TGF 3 〃 929,980 768,630 450,430 - 2% Y Y

0 TGI TCD 3 〃 2,068,978 1,055,151 775,831 - 2% Y Y

3.TGI：

0 TGI TYAU 3 〃 1,418,813 462,430 462,430 - 1% 44,096,664 thousand*120% = Y Y

52,915,997

0 TGI QFG 3 〃 1,485,844 615,000 300,700 - 1% 4.TGCH： Y Y

38,331,633 thousand *100% =

0 TGI TJG 3 〃 1,473,233 774,100 459,800 - 2% 38,331,633 Y Y

5.TGF：

0 TGI HNG 3 〃 2,420,332 768,600 314,300 - 2% 5,299,057 thousand* 100% = Y Y

5,299,057

0 TGI TTAR 3 〃 681,100 681,100 585,100 - 2% 6.CFG： Y Y

2,127,993 thousand* 100% =

0 TGI TWAR 3 〃 1,494,486 1,494,486 1,494,486 - 3% 2,127,993 Y Y

7.CDG：

0 TGI TAH 3 〃 2,224,620 900,493 804,493 - 2% 6,462,785 thousand* 100% = Y Y

6,462,785

0 TGI FPG 3 〃 3,583,104 2,213,672 140,863 - 5% 8.DHG： Y Y

4,639,001 thousand* 100% =

0 TGI TXY 3 〃 4,608,404 3,348,800 2,343,960 - 8% 4,639,001 Y Y

0 TGI TGCH 2 〃 12,408,300 8,719,330 6,774,080 - 20% Y

0 TGI ZZSS 3 〃 144,126 144,126 - - 0% Y Y

1 TGCH TGI 4 22,998,980 50,000 50,000 50,000 - 0% Y

2 TGF TKG 3 3,179,434 509,799 - - - 0% Y

2 TGF TCD 3 〃 509,799 464,178 464,178 - 9% Y

3 CFG CDG 3 1,276,796 203,920 92,836 92,836 - 4% Y

3 CFG TTAR 3 〃 637,249 371,342 232,089 - 17% Y

Receiving Party

1. In accordance with the Article 4 of theProcedures for Endorsement and Guarantee, theCompany may provide endorsement/guaranteeto others but shall not exceed 120% of its netassets. For endorsement/guarantee to individualentity, the amount is limited to 50% of theCompany's net assets.

2.Subsidiaries may provideendorsement/guarantee to others but shall notexceed 100% of their net assets. Forendorsement/guarantee to individual entity, theamount is limited to 60% of the subsidiary’snet assets.

(Dollar amount expressed in thousands of NTD unless otherwise specified)

No. (Note 1)

Endorser/Guarantor

Limits of Endorsement/Guarantee Amount for

receiving Party(Note 3)

Maximum Balancefor the Period

(Note 4)Ending Balance

(Note 5)

Actual Amountprovided(Note 6)

Amount ofEndorsement/

Guaranteecollateralized

Rercentage of AccumulatedEndorsement/Guarantee to

Net Equity per latestFinancial statements

Limit on the Endorsement/Guarantee Amount(Note 3)

Parent CompanyEndorsed

or Guaranteed forthe Subsidiaries.

(Note 7)

SubsidiariesEndorsed or

Guaranteed forthe Parent Company.

(Note 7)

Endorsement orGuarantee for

Entities in China.(Note 7)

85

Attachment 2

Endorsement/guarantee provided to others for the year ended 31 December 2016

Company Name Relationship

(Note 2)3 CFG TGF 3 $1,276,796 $1,121,558 $510,595 $431,266 $ - 24% Y

4 CDG TWAR 3 3,877,671 254,900 - - - 0% Y

4 CDG TXY 3 〃 1,019,598 464,178 - - 7% Y

5 DHG QFG 3 2,783,401 234,433 232,089 - - 5% Y

Note 1: The Company and its subsidiaries are coded as follows:

1. The Company is coded "0".

2. The subsidiaries are coded starting from "1" in numerical order.

Note 2: Receiving parties are disclosed as one of the following:

1. An investee company that has a business relationship with the Company.

2. A subsidiary in which the Company holds directly over 50% of equity interest.

3. An investee in which the Company and its subsidiaries hold over 50% of equity interest.

4. An investee in which the Company holds directly or indirectly over 50% of equity interest.

5. A company which needs mutual insurance basing on the construction agreement.

6. A company in which the Company endorses or guarantees basing on the holding proportion of mutual investments.

Note 3: The process of providing finance to others, the limits to individual counterparties and the total financing limit for the company should be noted, as well as the computations.

Note 4: The maximum amount of the Company and its subsidiaries' endorsement or guarantee to others for the year ended 31 December 2016

Note 5: The Company bears the responsibility of endorsements or guarantees as long as the ceilings on the amount of guarantees or endorsements are approved by banks.

Other occurrences related to endorsement or guarantee shall be included in the balance.

Note 6: Fill in the actual amount drawn from the balance.

Note 7: Fill in "Y" if it belongs to "Parent Company Endorsement or Guarantee for the Subsidiaries", "Subsidiaries Endorsement or Guarantee for the Parent Company", or "Endorsement or Guarantee for Entities in China".

(Dollar amount expressed in thousands of NTD unless otherwise specified)

No. (Note 1)

Endorser/Guarantor

Limits of Endorsement/Guarantee Amount for

receiving Party(Note 3)

Maximum Balancefor the Period

(Note 4)Ending Balance

(Note 5)

Actual Amountprovided(Note 6)

Amount ofEndorsement/

Guaranteecollateralized

Rercentage of AccumulatedEndorsement/Guarantee to

Net Equity per latestFinancial statements

Limit on the Endorsement/Guarantee Amount(Note 3)

Parent CompanyEndorsed

or Guaranteed forthe Subsidiaries.

(Note 7)

SubsidiariesEndorsed or

Guaranteed forthe Parent Company.

(Note 7)

Endorsement orGuarantee for

Entities in China.(Note 7)

Receiving Party

86

Attachment 3Securities held as of 31 December 2016

Remark

SharesCarrying Value

(Note 3)Percentage of

Ownership Fair Value (Note 4)TGI Securities:

China Development Financial Holdings - Available-for-sale financial assets - noncurrent 21,681,340 $174,751 0.14% $174,751 Chi-Ye Chemical Corp. - 〃 659,000 41,122 3.30% 41,122 UniDisplay Inc. - 〃 1,646,400 3,128 0.85% 3,128 Chang Hwa Commercial Bank, Ltd. - 〃 283 5 0.00% 5 Hua Nan Financial Holdings Co., Ltd. - 〃 129 2 0.00% 2 Total $219,008

Note 1: The securities herein shall refer to stocks, bonds, beneficiary certificates and other marketable securities derived from the above items in the scope of IAS39-Financial Instruments: Recognition and Measurement.Note 2: Securities issued by non-related parties are not required to fill in this column.Note 3: For items measured at fair value, the carrying value is the balance of the book value adjusted by fair value valuation deducting accumulated impairment. For items not measured at fair value, the carrying value is the book value balance of the historical cost or amortized cost after deducting accumulated impairment.

Financial Statement AccountAs of 31 December 2016

Note 4: Securities with restrictions because of being provided for security, as pledge or under other covenants should state the number of shares or dollar amount provided for security or pledge and the restriction terms.

(Dollar amount expressed in thousands of NTD unless otherwise specified)

Company Type and Name of the Securities (Note 1)Relationship

(Note 2)

87

Attachment 4

Individual securities acquired or disposed of with accumulated amount exceeding

NT$300 million or 20 percent of the capital stock for the year ended 31 December 2016

Counterparty Relationship

Company Financial Statement Account (Note 2) (Note 2) Shares Amount Shares Amount SharesSelling

Amount Carrying ValueGain or Loss on

Disposal Shares Amount

TGI Securities Investments TGCH 1,102,623,000 $36,876,916 126,350,240 $4,058,301 - $- $- $- 1,228,973,240 $35,708,087

TGCH accounted for using the equity method (Note 5)

(5,227,130)

(Note 6)

TGCH Securities Investments SCH Associates 1,116,180,000 2,832,942 205,605,176 780,848 - - - - 1,321,785,176 2,445,568

SCH accounted for using the equity method (Note 5)

(1,168,222)

(Note 6)

Note 1: The securities herein shall refer to stocks, bonds, beneficiary certificates and other securities derived from the above items.

Note 2: These columns are filled only if securities are investments accounted for using the equity method.

Note 3: Accumulated amount of securities purchased or sold are calculated at market value to determine whether they exceed NT$300 million or 20% of the capital stock.

Note 4: Paid-in Capital shall refer to the paid-in capital of parent company.

Note 5: Referring to cash injection.

Note 6: The amount includes share of losses of subsidiaries, share of other comprehensive income, and increase through changes in ownership interests in subsidiaries.

and other changes in stockholders' equity of equity investees.

Type and Name of the Securities(Note 1)

(Dollar amount expressed in thousands of NTD unless otherwise specified)

Parent-Subsidiary

Beginning Balance Acquisition (Note 3) Disposal (Note 3) Ending Balance

88

Attachment 5Related party transactions for purchases and sales amounts exceeding NT$100 millionor 20 percent of capital stock as of for the year ended 31 December 2016

CompanyTGI TAG Parent-subsidiary Sales $(135,031) (1)% 3 months $- - $23,854 1%

TGI QFG Parent-subsidiary Sales (103,698) (1)% 3 months - - 28,557 2%

CFG TKG Affiliate Company Sales (472,564) (22)% 3 months - - 10,130 2%

TKG CFG Affiliate Company Sales (163,957) (15)% 3 months - - 57,178 21%

TAH CFG Affiliate Company Sales (194,169) (9)% 3 months - - 119,452 25%

TAH TTAR Affiliate Company Sales (166,300) (8)% 3 months - - 184,931 39%

TAH TWAR Affiliate Company Sales (293,830) (13)% 3 months - - 92,046 20%

QFG TGUS Affiliate Company Sales (275,030) (14)% 3 months - - 22,269 23%

TJG TGUS Affiliate Company Sales (221,980) (15)% 3 months - - - -

TYAU DYK Other related parties Sales (313,601) (63)% 3 months - - 61,936 37 %

TAG TGI Parent-subsidiary Purchases 135,031 40% 3 months - - (23,854) (30)%

QFG TGI Parent-subsidiary Purchases 103,698 9% 3 months - - (28,557) (13)%

TKG CFG Affiliate Company Purchases 472,564 52% 3 months - - (10,130) (6)%

CFG TKG Affiliate Company Purchases 163,957 15% 3 months - - (57,178) (7)%

CFG TAH Affiliate Company Purchases 194,169 17% 3 months - - (119,452) (15)%

TTAR TAH Affiliate Company Purchases 166,300 76% 3 months - - (184,931) (53)%

TWAR TAH Affiliate Company Purchases 293,830 50% 3 months - - (92,046) (60)%

(Dollar amount expressed in thousands of NTD unless otherwise specified)Details Different from Non-arm's Length Transactions

(Note 1)

TermsPercentage of

Total ReceivableUnit Price BalanceRemark(Note 2)Counterparty Relationship

Transaction DetailsNotes and Accounts Receivable

(Payable)

Sale/Purchase AmountPercentage ofTotal Sales or Term

89

Attachment 5Related party transactions for purchases and sales amounts exceeding NT$100 millionor 20 percent of capital stock as of for the year ended 31 December 2016

CompanyTGUS QFG Affiliate Company Purchases $275,030 35% 3 months $- - $(22,269) (38)%

TGUS TJG Affiliate Company Purchases 221,980 28% 3 months - - - -

HNG SCJ Affiliate Company Purchases 274,621 22% 3 months - - (47,330) (20)%

DHG SCJ Affiliate Company Purchases 443,344 31% 3 months - - - -

TJG SCJ Affiliate Company Purchases 148,503 13% 3 months - - (48,550) (18)%

QFG SCJ Affiliate Company Purchases 233,201 20% 3 months - - (49,404) (23)%

TAH SCJ Affiliate Company Purchases 333,217 22% 3 months - - (62,402) (27)%

TKG SCJ Affiliate Company Purchases 299,926 33% 3 months - - (50,238) (28)%

FPG SCJ Affiliate Company Purchases 218,012 19% 3 months - - (87,332) (18)%

Note 1: If the related parties' trading terms are different from the general trading terms, the differences and reasons for such differences should be stated in the "Unit price" and "Terms" columns.Note 2: Transactions with advance receipts and prepayments should state the reasons, the terms of agreements, the amount and the difference from general transactions in the Remark column.Note 3: Paid-in Capital shall refer to the paid-in capital of parent company.

Notes and Accounts Receivable(Payable)

Unit Price Balance

(Dollar amount expressed in thousands of NTD unless otherwise specified)Details Different from Non-arm's Length Transactions

(Note 1)Remark(Note 2)

Percentage ofTotal Sales or Term Terms

Percentage ofTotal ReceivableCounterparty Relationship

Transaction Details

Sale/Purchase Amount

90

Attachment 6Receivables from related parties with amounts exceeding NT$100 million or 20 percent of capital stock as of for the year ended 31 December 2016 (Dollar amount expressed in thousands of NTD unless otherwise specified)

Amount CollectionOther receivables

TGI TGCH Parent-subsidiary $642,711 - $- - $- $-Other receivables

TGI TCD Parent-subsidiary 844,072 - - - - -Other receivables

TGCH CFG Parent-subsidiary 330,728 - - - - -Other receivables

TGCH HNG Parent-subsidiary 677,036 - - - - -Other receivables

TGCH TJG Parent-subsidiary 893,797 - - - - -Other receivables

TGCH FPG Parent-subsidiary 1,164,134 - - - - -Other receivables

TGCH TGF Parent-subsidiary 323,635 - - - - -Other receivables

TGCH TXY Parent-subsidiary 193,688 - - - - -Other receivables

TGCH TCD Parent-subsidiary 3,826,407 - - - - -Other receivables

TGCH TAH Parent-subsidiary 2,002,454 - - - - -Other receivables

QFG QRG Parent-subsidiary 134,064 - - - - -Other receivables

CDG CFG Affiliate Company 633,411 - - - - -Other receivables

CDG TWAR Affiliate Company 970,943 - - - - -

AmountReceived in

Allowance forBad DebtsCounterparty Relationship Turnover

Overdue ReceivablesCompany

Ending Balance (Note1)

91

Attachment 6Receivables from related parties with amounts exceeding NT$100 million or 20 percent of capital stock as of for the year ended 31 December 2016 (Dollar amount expressed in thousands of NTD unless otherwise specified)

Amount CollectionOther receivables

CDG HZSS Affiliate Company $150,522 - $- - $- $-Other receivables

CDG TXY Affiliate Company 753,620 - - - - -Other receivables

CFG TTAR Affiliate Company 599,086 - - - - -Other receivables

TKG CFG Affiliate Company 316,648 - - - - -Other receivables

TGF TCD Affiliate Company 673,821 - - - - -Other receivables

DHG FPG Affiliate Company 919,426 - - - - -Other receivables

HNG FPG Affiliate Company 131,583 - - - - -Other receivables

TAH TXY Affiliate Company 139,253 - - - - -Account receivables

TAH CFG Affiliate Company 119,452 - - - - -Account receivables

TAH TTAR Affiliate Company 184,931 - - - - -

Note 1: Fill as related parties account receivables, note receivables, other receivables, etc.Note 2: Paid-in Capital shall refer to the paid-in capital of parent company.

CompanyEnding Balance (Note

1)Amount

Received inAllowance for

Bad DebtsCounterparty Relationship TurnoverOverdue Receivables

92

Attachment 7Significant intercompany transactions for the year ended 31 December 2016 (Dollar amount expressed in thousands of NTD unless otherwise specified)

No.(Note

0 TGI TAG 1 Sales revenues $135,031 The same as domestic sales 0%0 〃 QFG 1 〃 103,698 〃 0%1 CFG TKG 3 〃 472,564 〃 1%2 TKG CFG 3 〃 163,957 〃 0%3 TAH 〃 3 〃 194,169 〃 0%3 〃 TTAR 3 〃 166,300 〃 0%3 〃 TWAR 3 〃 293,830 〃 1%4 QFG TGUS 3 〃 275,030 〃 1%5 TJG 〃 3 〃 221,980 〃 1%1 CFG TTAR 3 Other receivables - affiliates 599,086 1%2 TKG CFG 3 〃 316,648 0%3 TAH TXY 3 〃 139,253 0%0 TGI TGCH 1 〃 642,711 1%0 〃 TCD 1 〃 844,072 1%6 TGCH CFG 1 〃 330,728 0%6 〃 HNG 1 〃 677,036 1%6 〃 TJG 1 〃 893,797 1%6 〃 FPG 1 〃 1,164,134 1%6 〃 TGF 1 〃 323,635 0%6 〃 TXY 1 〃 193,688 0%6 〃 TCD 1 〃 3,826,407 4%6 〃 TAH 1 〃 2,002,454 2%4 QFG QRG 1 〃 134,064 0%7 CDG CFG 3 〃 633,411 1%7 〃 TWAR 3 〃 970,943 1%7 〃 HZSS 3 〃 150,522 0%7 〃 TXY 3 〃 753,620 1%8 HNG FPG 3 〃 131,583 0%9 TGF TCD 3 〃 673,821 1%

10 DHG FPG 3 〃 919,426 1%3 TAH CFG 3 Account receivables - affiliates 119,452 0%3 〃 TTAR 3 〃 184,931 0%

items on the income statement are calculated by their cumulative balance to the total consolidated income.Note 4: The disclosure of significant intercompany transactions in this attachment is determined by the company based on the materiality.

Note 3: The percentage is determined by the ratio of the transaction amount to the consolidated revenues or the total assets. Items on the balance sheet are calculated by the ending balance to total consolidated assets;

Related Party Counterparty

Transaction Details

Account Amount Terms

Relationship withthe Company

(Note 2) Percentage (Note 3)

Note 1: The Company and its subsidiaries are coded as follows: 1 The Company is coded "0". 2 Subsidiaries are coded consecutively starting from "1" in the order presented in the table above.Note 2: Transactions are categorized as follows: 1. Parent company to subsidiary 2. Subsidiary to parent company 3. Subsidiary to subsidiary

93

Attachment 8Names, locations and related information of investee companies as of 31 December 2016 (Dollar amount expressed in thousands of NTD unless otherwise specified)

Percentage ofOwnership Carrying Value

TGUS US Investment in QRG and selling of glasses. $17,676 $17,676 4,612 100.00% $297,320 $17,814 $17,814USD 461 USD 461

TGCH Bermuda 37,917,459 33,859,158 1,228,973,240 93.41% 35,708,087 (2,114,185) (1,976,764)USD 1,218,091 USD 1,091,741

TAG Taiwan Investment in TAGH and selling of auto glasses. 263,582 263,582 26,100,000 87.00% 321,033 (885) (887)

TVIG Taiwan Selling vacuum insulation glass 260,000 162,500 26,000,000 65.00% 75,090 (53,890) (35,749)

HTG Taiwan Selling kitchen appliance 10,000 10,000 1,000,000 50.00% 21,170 6,566 3,283

SCH Hong Kong 6,028,058 5,247,210 1,321,785,176 37.65% 2,445,568 (1,690,166) (612,334)USD 192,328 USD 168,228

TAGH Bermuda Investment in TYAU. 188,571 188,571 6,000,000 100.00% 88,964 (15,946) (15,946)USD 6,000 USD 6,000

Note 1: A listed company which has a foreign holding company that uses the consolidated financial statements as the master financial report according to its local regulations may disclose information regarding foreign investees only to the extent of the holding company.Note 2: Fill in information following the instruction below for matters not applied in Note 1 indicated above:

(1) The columns of "Name of investee", "Area Within", "Nature of Business", "Initial Investment" and "Investment as of 31 December 2016" should fill in information of the reinvestment of the listed company, reinvestment of every direct or indirect reinvestment of the investee, and disclose the relationship of the investees with the Company in the Remark column.

(Such as subsidiary or sub-subsidiary) (2) The column of "Profit or Loss of Investee" should fill in the current profit or loss of the investees. (3) The column of "Gain or Loss on Investment" only require profit / loss of the direct investees and all investees accounted for under the equity method. When filling in the above items, make sure the profit / loss of direct investee subsidiaries include the profit or loss of their reinvestments that are required to be recognized.

TGI

〃

〃

〃

〃

TGCH

TAG

Investment in QRG, QFG, YNSS, TGF, CFG, FYSS, CDG, DHG, HZSS,HNG, TKG, TJG, FPG, TXY, TTAR, TYAU, TAH, TYSM, TWAR, TCD,TBF, and SCH.

Investment in Shihlien Chemical Industrial (Jiangsu) Co., Ltd. (SCJ) andHuaian Shihyuan Brine Co., Ltd. (HSB).

Initial Investment Investment as of 31 December 2016

RemarkCompany Ending Balance Beginning Balance SharesInvestee

(Note 1,2) Nature of Business

Gain or Loss onInvestment (Note

2,3)Area WithinProfit or Loss ofInvestee (Note 2)

94

Attachment 9Investment in Mainland China as of 31 December 2016

Investee Nature of Business Outflow InflowQRG Manufacturing of photovoltaic glass 943,235 (i) $34,583 $- $- $34,583 $(59,288) 94.48% $(56,015) $231,895 $-

USD 29,293 USD 1,074 - - USD 1,074(Note19)

QFG Manufacturing of flat glasses 2,666,160 (ii) 1,525,926 - - 1,525,926 (17,827) 93.41% (16,652) 1,522,802 - USD 82,800 USD 47,389 - - USD 47,389

(Note13)YNSS Manufacturing of silica sand 129,090 (ii) 62,436 - - 62,436 (9,640) 59.20% (5,707) 96,588 -

USD 4,009 USD 1,939 - - USD 1,939(Note13)

CFG Manufacturing of flat glasses & 2,254,000 (ii) 2,060,800 - - 2,060,800 (257,800) 93.41% (240,811) 1,987,758 - low-emission glasses USD 70,000 USD 64,000 - - USD 64,000

FYSS Manufacturing of silica sand 138,460 (ii) 67,620 - - 67,620 (42,252) 93.41% (39,468) 187,395 - USD 4,300 USD 2,100 - - USD 2,100

(Note6)TGF Manufacturing of glass fabric & fiber 3,542,000 (ii) 2,933,935 - - 2,933,935 (235,195) 93.41% (219,696) 4,949,849 -

USD 110,000 USD 91,116 - - USD 91,116(Note12)

CDG Manufacturing of flat glasses & 2,254,000 (ii) 1,574,419 - - 1,574,419 238,237 93.41% 222,537 6,036,887 - low-emission glasses USD 70,000 USD 48,895 - - USD 48,895

(Note11)HZSS Manufacturing of silica sand 338,100 (ii) 338,100 - - 338,100 (18,071) 93.41% (16,880) 232,382 -

USD 10,500 USD 10,500 - - USD 10,500

HNG Manufacturing of flat glasses & 3,413,200 (ii) 2,849,700 - - 2,849,700 (223,906) 93.41% (209,151) 2,952,952 - low-emission glasses USD 106,000 USD 88,500 - - USD 88,500

(Note10)DHG Manufacturing of flat glasses 2,576,000 (ii) 1,610,000 - - 1,610,000 415,387 93.41% 388,013 4,333,291 -

USD 80,000 USD 50,000 - - USD 50,000(Note8、Note13、Note21)

TJG Manufacturing of flat glasses & 2,286,200 (ii) 1,899,800 - - 1,899,800 (535,536) 93.41% (500,244) 603,527 - low-emission glasses USD 71,000 USD 59,000 - - USD 59,000

(Note9)TKG Manufacturing of flat glasses 772,800 (ii) 386,400 - - 386,400 103,134 93.41% 96,337 1,071,039 -

USD 24,000 USD 12,000 - - USD 12,000(Note7)

FPG Manufacturing of photovoltaic glass & 2,670,282 (ii) 1,674,400 - - 1,674,400 114,286 93.41% 106,755 529,705 - cell module assembly USD 82,928 USD 52,000 - - USD 52,000

(Note20)SCJ Manufacturing of soda ash 25,760,000 (ii) 5,138,862 - - 5,138,862 (1,148,936) 35.17% (404,081) 6,151,271 -

USD 800,000 USD 159,592 - - USD 159,592(Note14)

HSB Manufacturing Brine 1,030,400 (ii) 193,200 - - 193,200 146,964 35.17% 51,687 459,600 - USD 32,000 USD 6,000 - - USD 6,000

(Note15)TXY Manufacturing of flat glasses & 3,220,000 (ii) 2,093,000 - - 2,093,000 (88,098) 93.41% (82,292) 1,895,999 -

low-emission glasses USD 100,000 USD 65,000 - - USD 65,000(Note16)

TTAR Manufacturing of low-emission glasses 1,127,000 (ii) 1,127,000 - - 1,127,000 (59,597) 93.41% (55,670) 638,343 - USD 35,000 USD 35,000 - - USD 35,000

TAH Manufacturing of flat glasses 2,737,000 (ii) 2,737,000 - - 2,737,000 (96,236) 93.41% (89,894) 1,596,278 - USD 85,000 USD 85,000 - - USD 85,000

Total Amount of Paid-inCapital

InvestmentMethod(Note 1)

Accumulated Outflows ofInvestment from Taiwan as of

1 January 2016

Investment Flows Accumulated Outflows ofInvestment from Taiwan as

of 31 December 2016

Profit or Lossof Investeecompany

Percentage ofOwnership

Profit orLosson

Investment(Note2(ii)c.)

(Dollar amount expressed in thousands of NTD unless otherwise specified)

Carrying Valueas of

31 December 2016

Accumulated Inward

Remittanceof Earnings

as of31

95

Attachment 9Investment in Mainland China as of 31 December 2016

Investee Nature of Business Outflow InflowTYSM Manufacturing of solar glasses $1,384,600 (ii) $966,000 $72,450 $- $1,038,450 $(196,836) 70.06% $(137,903) $339,565 $-

USD 43,000 USD 30,000 USD 2,250 - USD 32,250(Note17)

TWAR Manufacturing of low-emission glasses 1,127,000 (ii) 1,127,000 - - 1,127,000 (64,255) 93.41% (60,021) 522,011 - USD 35,000 USD 35,000 - - USD 35,000

TYAU Manufacturing of auto glasses 1,771,000 (ii) 579,600 289,800 - 869,400 (116,967) 55.35% (64,741) 467,700 - USD 55,000 USD 18,000 USD 9,000 - USD 27,000

(Note18)TBF Manufacturing of glass fabric 966,000 (ii) 644,000 322,000 - 966,000 (6,288) 93.41% (5,874) 806,641 -

USD 30,000 USD 20,000 USD 10,000 - USD 30,000

TCD Manufacturing of glass fabric 2,157,400 (ii) 2,157,400 - - 2,157,400 (481,025) 93.41% (449,325) 863,498 - USD 67,000 USD 67,000 - - USD 67,000

(Dollar amount expressed in thousands of NTD; thousands of USD)

Note 1: The methods for engaging in investment in Mainland China include the following: (i) Direct investment in Mainland China companies. (ii) Investment in Mainland China companies through a company invested and established in a third region (iii) Other methodsNote 2: In the column of profit or loss on investment: (i) The investment still in preparation and not generating profit or loss yet should be noted. (ii)The gain or loss on investment were determined based on the following: a. The financial report was audited and certified by an international accounting firm in cooperation with an R.O.C. accounting firm b. The financial statements certificated by the CPA of the parent company in Taiwan c. OthersNote 3: The amount of this attachment are expressed in New Taiwan Dollars.Note 4: The investment amount was authorized by Investment Commission, Ministry of Economic Affairs.Note 5: The Company does not have a limit on investment in Mainland China since it qualified as operation headquarter approved by the Industrial Development Bureau, Ministry of Economic Affairs.Note 6: The TGCH invested the other USD 2,200 thousand to the entity with its own capital.Note 7: The other USD 12,000 thousand was invested by third party through the TGCH.Note 8: Third party invested USD 3,000 thousand to the entity through the TGCH.Note 9: Third party invested USD 12,000 thousand to the entity through the TGCH.Note 10: Third party invested USD 17,000 thousand to the entity through the TGCH; The TGCH also invested to the entity USD 500 thousand with its own capital.Note 11: Third party invested USD 21,000 thousand to the entity through the TGCH.Note 12: Third party invested USD 17,000 thousand to the entity through the TGCH.Note 13: The QFG, YNSS, and DHG invested USD 27,800 thousand, USD 592 thousand, and USD13,000 thousand, their unappropriated earnings, respectively to the subsidiary.Note 14: The SCH, the investee of the TGCH, invested USD 640,408 thousand to the entity with its and third party’s capital. Note 15: The SCH invested USD 26,000 thousand to the entity with third party’s capital.Note 16: The USD 35,000 thousand earnings distributed by CFG and CDG was invested by TGCH. The Company did not provide any funding.Note 17: The USD 10,750 thousand was invested by the third party. The Company did not provide any funding.Note 18: The TAGH and third party invested additional USD 6,000 thousand and USD 22,000 thousand to the entity, respectively.Note 19: The QFG and TGUS invested USD 23,319 thousand and USD 4,774 thousand to the entity, respectively.Note 20: The FPG raised capital of USD 30,928 thousand through debt for equity swap. The Company did not provide any funding.Note 21: The DHG raised capital of USD 14,000 thousand through debt for equity swap. The Company did not provide any funding.

Limit on Investment Amount to Mainland China

USD 1,070,355 USD 1,233,335 and CNY 90,35634,465,431 (Note 5)40,132,799

Accumulated Investment in Mainland China as of 31 December 2016Investment Amount Authorized by

Investment Commission, Ministry ofEconomic Affairs (Note 4)

Total Amount of Paid-inCapital

InvestmentMethod(Note 1)

Accumulated Outflows ofInvestment from Taiwan as of

1 January 2016

Investment Flows Accumulated Outflows ofInvestment from Taiwan as

of 31 December 2016

Profit or Lossof Investeecompany

Percentage ofOwnership

Profit orLosson

Investment(Note2(ii)c.)

Carrying Valueas of

31 December 2016

Accumulated Inward

Remittanceof Earnings

as of31

December

(Dollar amount expressed in thousands of NTD unless otherwise specified)

96